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Navkar Corporation Ltd Research Report - 08th Sep 2016

Logistics | Published on Sep 08th 2016


Navkar Corporation (NCL) reported a good set of numbers for 1QFY2017. The consolidated top-line grew by ~10% yoy while on the operating front, the company reported a margin contraction on account of higher employee and other operating expenses. The net profit grew by ~41% yoy due to lower interest cost and higher other income. Top-line grew ~10% yoy: The consolidated top-line grew by ~10% yoy to ~`90cr led by higher volumes. NCL’s container volume handled stood at 81,866 TEUs (twenty-foot equivalent units) in 1QFY2017. However, growth in revenue was lower than volume growth, which rose by 15% yoy, primarily due to 6% yoy decline in realization to `10,748/TEU on account of higher share of empty cargoes at 5,300 containers vis-à-vis 1,200 in 4QFY2016. PAT grew ~41% yoy: On the operating front, the company reported a margin contraction of 318bp yoy to 42.4% on account of higher employee (up 103bp yoy) and other operating expenses (up 215bp yoy) as a percentage of sales. As a result, the EBITDA grew by ~2% yoy to `38cr. However, net profit grew by 41% on back of higher other income and lower interest cost. Outlook and Valuation: We estimate NCL to post a revenue CAGR of 32.7% and PAT CAGR of 31.3% over FY2016-18E. We have factored in lower utilization levels of 34.7% and 42.6% for FY2017E and FY2018E, respectively. At the current levels, the stock is trading at 16.7x its FY2018E earnings. Historically, NCL has consistently grown at JNPT and increased its utilisation from 68% in FY2012 to 87% in FY2015 by leveraging on its rail advantage during periods when JNPT posted flattish volume growth. Going forward, we expect NCL’s utilizations to improve; we expect the company to be able to garner a good chunk of business over the next three to four years due to its rail advantage at both JNPT and Vapi. We maintain our Buy recommendation on the stock with a target price of Rs265.

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CMP 192
Target Price 265
Investment Period12 Months

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Shareholding Pattern (%)

Public & Others2.0
Grand Total100.0

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