All­cargo Lo­gis­tics Ltd

(BSE Code: 532749) (CMP: Rs.165.05) (FV: Rs.2) (TGT: Rs.200+)

Money Times - - Stock Watch -

All­cargo Lo­gis­tics Ltd (ACLL) is a hold­ing com­pany en­gaged in pro­vid­ing in­te­grated lo­gis­tics so­lu­tions. It of­fers lo­gis­tics ser­vices across mul­ti­modal trans­port op­er­a­tions (MTOs), in­land con­tainer de­pot (ICD), con­tainer freight sta­tion (CFS) op­er­a­tions, con­tract lo­gis­tic op­er­a­tions and project and en­gi­neer­ing so­lu­tions. Its seg­ments in­clude Mul­ti­modal

Trans­port Op­er­a­tions (MTO), which in­volves non-ves­sel own­ing com­mon car­rier op­er­a­tions re­lated to less than con­tainer load con­sol­i­da­tion and full con­tainer load for­ward­ing ac­tiv­i­ties; CFS/ICD Op­er­a­tions, which in­volves im­port/ex­port cargo stuff­ing, de-stuff­ing, cus­toms clear­ance and other re­lated an­cil­lary ser­vices; and Project & En­gi­neer­ing So­lu­tions (P&E), which pro­vides in­te­grated end-to-end project, en­gi­neer­ing and lo­gis­tic ser­vices through a fleet of owned/rented spe­cial equip­ments such as hy­draulic axles, cranes, trail­ers, barges, reach-stack­ers, fork­lifts and ships.

Dur­ing Q1FY18, ACLL’s rev­enue grew 6% YoY to Rs.14.83 bn (higher than es­ti­mated) due to higher rev­enue from the MTO seg­ment. EBITDA de­clined 23% YoY (-2% QoQ) to Rs.1.03 bn (10% miss) due to lower-than-es­ti­mated EBIT from the P&E seg­ment on higher pro­vi­sion. PAT was at Rs.630 mn (+1% YoY, +6% QoQ), led by higher other in­come of Rs.159 mn (+169% YoY, +7% QoQ) and a lower tax rate of 11% (v/s 29.1% in Q1FY17).

CFS vol­umes stood at 78,732 Twenty Feet Equiv­a­lent Units (TEUs) (like-to-like growth of 2% YoY), led by higher vol­umes in Mun­dra CFS. EBIT mar­gin con­tracted ~0.7 bps YoY due to lease rentals of Kolkata CFS and ex­penses re­lated to new CFS at Mun­dra.

The P&E seg­ment’s rev­enue fell 25% YoY on sale of un­pro­duc­tive as­sets and main­te­nance of one of the ships. The seg­ment re­ported EBIT of Rs.1 mn v/s Rs.180 mn in Q1FY17, led by non-op­er­a­tion of as­sets due to re­pairs and the sale of low-yield­ing non-strate­gic as­sets.

EBIT mar­gin con­tracted to 4.1% from 4.3% in Q4FY17 due to cur­rency im­pact. Rev­enue grew 9% YoY to Rs.12.9 bn due to strong vol­ume growth. Mar­gin is likely to im­prove due to the lagged ef­fect of bet­ter con­tainer freight rates. ACLL is likely to see strong earn­ings trac­tion in con­tract lo­gis­tics, par­tic­u­larly with GST im­ple­men­ta­tion. Given RoE im­prove­ment in ex­cess of 5 pp over FY17-FY20E, strong fee cash gen­er­a­tion and earn­ings CAGR of 18%, we be­lieve that val­u­a­tion of 10x P/E FY20E earn­ings is ex­tremely at­trac­tive.

Tech­ni­cal Out­look The stock looks very good on the daily chart for medium-term in­vest­ment. It has taken sup­port at the Rs.150 level and has formed a down­ward chan­nel on the weekly chart. Start ac­cu­mu­lat­ing at this level of Rs.165.05 and on dips to Rs.145 for medium-to-long-term in­vest­ment and a pos­si­ble price tar­get of Rs.200+ in the next 6 months.

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