AllCargo Logistics, ILFS Transportation, Punj LLoyd

 AllCargo Logistics, ILFS Transportation, Punj LLoyd 

AllCargo Logistics

AllCargo Logistics

Allcargo Global

Allcargo Global

Allcargo Global, Corporation Bank, Sun Pharma, PNB, Sun TV

Allcargo Global, Corporation Bank, Sun Pharma, PNB, Sun TV

Allcargo Global

Allcargo Global

Allcargo Global

Allcargo Global

AllCargo Logistics

AllCargo Logistics

Allcargo, GSPL, Union Bank of India

Allcargo, GSPL, Union Bank of India

AllCargo Logistics

Shareholders with a long-term perspective can retain their exposures to the stock of Allcargo Global Logistics. While there is no denying that the company would also have to face the effects of the global economic slowdown, its unique business model plus presence across major ports in India places it in a better position to tide over the challenge.

Besides, its access to private equity money (Blackstone Group LP) to fund its expansion plans — an option that is no longer easy to come by — may also help it score over its competitors.

The company’s stock price, however, appears to have captured these factors. At the current market price of Rs 650, the stock discounts its CY-09 per share earnings by over 12 times, leaving little room for significant appreciation in the medium term.
Increased opportunities

The ongoing economic slowdown, which has forced most companies worldwide to tighten their belts could well translate into increased business opportunities for Allcargo given its leadership position in the domestic LCL (less-than-container load) segment.

Apart from reaping benefits from the shift of air cargo to ships, Allcargo may also see rekindling of interest in its LCL service offering. Aimed at large and small exporters and importers with cargo not enough to fill an entire container, this service may now find more takers.

Companies looking out for ways to manage costs are likely to switch to LCL freight forwarding as that will not only enable them to hold lesser inventory, but will also help them cut down on their logistics expenses.

Another factor in Allcargo’s favour is its relative insulation from the impact of a sudden plunge in freight rates vis-À-vis shipping companies whose margins suffered when freight rates plunged last year.

Allcargo’s margins are dependent only on its consolidation margins; the freight rates are merely passed through to clients.
CFS business to drive long-term growth

With an extensive presence in 23 cities in India and 120 offices in 65 countries, Allcargo can deliver and receive cargo to and from over 4,000 locations across the world.

The company also has a significant presence in the high-margin CFS segment — in JNPT, Chennai and Mundra ports. Including JNPT, which enjoys the highest volumes in the country, the company’s presence in Mundra also holds potential, what with Gujarat turning into an investment hot spot among Indian industrialists.

Having a presence in Chennai may help it rake in higher volumes once the manufacturing sector picks up. It has already expanded its Chennai CFS capacity from 50,000 TEUs to 84,000 TEUs.

The CFS business, which derives revenues from the rentals for containers stored on its premises, pending customs clearance, had benefited significantly from the increased dwell time last quarter.

From an average of 11 days, the dwell time had increased to 16 days in JNPT and 15 days in Chennai. Attributed mainly to the delayed payments and reluctance of banks to extend line of credit, the increased dwell time of containers had helped Allcargo (other CFS players too) rake in better realisations and margins. While sustaining this may no longer be practical, the company may still continue to enjoy decent margins.

Allcargo also has a presence in the equipment hiring business, by virtue of the merger of Transindia Freight Services with itself. This division undertakes the movement of containers principally from port to CFS and vice-versa and factory-stuffed containers from factories to the port. Presence in the equipment business has helped Allcargo not only broad base its service offerings but also expand its revenue base. The management has expended about Rs 100 crore towards building the equipment bank (cranes) for this division.
Capex funding in place

The company plans to spend Rs 140 crore, spread over the next year and a half, towards establishing CFS (container freight stations) and ICD (inland container depots) in Dadri, Hyderabad, Nagpur and Goa.

These will be funded through a mixture of debt and private equity money (Rs 242 crore) that the company had raised in February last year by selling 10.4 per cent stake to Blackstone Group LP.

While the next round of fund infusion from Blackstone is due only in September 2009, Allcargo may, till then, take the debt route to fill the funding gap. While this temporary preference for debt may not pose any immediate concern for the company (debt-to-equity ratio well below normal), it can become worrisome if the Blackstone PE deal is called off in the interim period; this poses a major risk for the company.
Financials

For the quarter ended September 2008, the company reported sales and earnings growth of over 56 per cent and 150 per cent respectively.

EBITDA margins for the same quarter expanded by a percentage point to 11.3 per cent. On a segmental basis, the company’s MTO business registered a sales growth of 60 per cent. There was, however, a sequential decline in volumes.

As this segment remains the main contributor to revenues (64 per cent in Sep ‘08), its performance in the coming quarters will need to be carefully monitored. The CFS segment, which made up for over 29 per cent of the total revenues, almost doubled its revenues, benefiting from the increased dwell time at ports.

The fledgling equipment division made up for the rest. Profit numbers of ECU Line, the company’s Belgium-based subsidiary, also witnessed a growth of over 160 per cent.

A slew of cost-cutting measures taken by the company last quarter have helped it keep a tab on cost overheads despite increase in revenues.

AllCargo Logistics

AllCargo Logistics

Today's Pick - Allcargo Logistics

We recommend investors buy the stock of Allcargo Global Logistics with a short-term perspective. From the charts, we see that it has been on a long-term downtrend from its January 2007 peak of Rs 1,355 to its June 2008 low of Rs 620.

However, the stock found support at around Rs 640 for the second time (a key support level) recently and commenced an up move. At around Rs 700, the stock crossed over the 21-day moving average, showing signs of bullishness.

Recently, the stock penetrated the 50-day moving average as well as the long-term down trendline. The daily relative strength index is featuring in the bullish zone and the weekly RSI is rising towards this zone. The moving average convergence and divergence is on the brink of entering positive territory.

We are bullish on the stock in the short-term. We expect the stock’s current up move to prolong until it hits our price target of Rs 895 in the approaching trading sessions. Traders with a short-term perspective can buy the stock while maintaining stop-loss at Rs 750.

via BL

AllCargo Logistics

AllCargo Logistics

Elder Pharma, Nestle India, Purvankara, Allcargo Global

Elder Pharma, Nestle India, Purvankara, Allcargo Global

AllCargo Logistics, Hotel Leela, Indian Hotels

AllCargo Logistics, Hotel Leela, Indian Hotels

AllCargo Logistics, Hotel Leela, Ramsarup Industries

AllCargo Logistics, Hotel Leela, Ramsarup Industries

AllCargo Logistics

AllCargo Logistics

Emkay - Allcargo Logistics

Emkay - Allcargo Logistics

IISL Result Reports - IFlex, Mphasis, Allcargo, OBC, UTV Software, Reliance Communiations

IISL - I-Flex Solutions Q4FY07 Result Update (REDUCE)

IISL - Mphasis BFL Q4FY07 Result Update (REDUCE)

IISL - Allcargo Global Logistics Q4FY07 Result Update (Accumulate)

IISL - OBC Q4FY07 Result Update (Accumulate)

IISL - UTV Software Q4FY07 Result Update (Accumulate)

IISL - Reliance Communications Q4FY07 Result Update (Buy)

Sharekhan Investor's Eye dated April 25, 2007

Ranbaxy Laboratories
Cluster: Apple Green
Recommendation: Buy
Price target: Rs558
Current market price: Rs369

Ranbaxy receives 180-day exclusivity for Pravastatin 80mg

Key points

• Ranbaxy Laboratories (Ranbaxy) has received the US Food and Drug Administration’s (USFDA) approval to manufacture and market Pravastatin sodium tablets (Pravastatin) of strengths 10mg, 20mg, 40mg and 80mg, with 180-day market exclusivity in the US healthcare system for the 80mg strength.
• Pravastatin is the generic version of Bristol Myer Squibb’s Pravachol. The product lost patent protection in April 2006. The total annual market sales for all strengths of Pravastatin were $1.19 billion. The annual sales for the 80mg strength alone stood at $209 million.
• We believe the launch of Pravastatin will generate $45.6 million in revenues and $17.2 million in profits in CY2007E, yielding incremental earnings of Rs1.8 per share for Ranbaxy. This implies a potential price upside of approximately Rs40 from the current levels. We maintain our Buy recommendation on Ranbaxy with a price target of Rs558.

Elder Pharmaceuticals
Cluster: Apple Green
Recommendation: Buy
Price target: Rs508
Current market price: Rs404

Another strong quarter

Result highlights

• Elder Pharmaceuticals (Elder) continued its strong performance during the fourth quarter of FY2007. The company’s net sales rose by 26.6% to Rs118.2 crore in Q4FY2007, on the back of a steady momentum in its core brands, a ramp-up in the sales of the Fairone brand due to the launch of the product in south India and the growing revenues from the in-licenced portfolio. The sales were in line with our estimate.
• Elder reported a 65-basis-point drop in its operating profit margin (OPM) to 19.6% during the quarter, on account of a 35.8% rise in the other expenditure and a 29.7% increase in the staff cost. The other expenditure was higher on account of the higher selling and promotional expenses incurred for its new launches.
• Consequently, the company’s operating profit rose by 25.4% to Rs23.7 crore in Q4FY2007.
• Despite a 26.6% drop in the other income, and an increase in the interest and depreciation costs, Elder’s net profit grew by 17.6% to Rs15.0 crore. The net profit was in line with our estimate.
• For FY2007, Elder’s revenues grew by 26.1% to Rs447.3 crore. The OPM expanded by 190 basis points to 19%, led by an improvement in the raw material cost, causing the operating profit to rise by 40% to Rs84.8 crore. Despite the increases in the depreciation and interest costs, the net profit showed a robust growth of 54.8% to Rs56.8 crore in FY2007. The net profit growth was aided by the sharp drop in the tax incidence (due to the shift of manufacturing to tax-free zones).
• In view of its strong growth potential, we remain positive on Elder’s future growth prospects. At the current market price of Rs404, the stock is quoting at 10.0x its estimated FY2008 earnings. We maintain our Buy recommendation on the stock with a price target of Rs508.

Maruti Udyog
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,050
Current market price: Rs790

Profits impacted due to higher costs

Result highlights

• Maruti Udyog Ltd's (MUL) Q4FY2007 results are ahead of our expectations on the profits front, but below expectations on the operating margins front.
• The net sales for the quarter marked a growth of 35.4% year on year (yoy) led by a volume growth of 30% and a realisation growth of 4.5%.
• On account of higher raw material prices, the losses at the new Manesar plant and higher power and fuel expenses, the operating margins for the quarter declined by 250 basis points to 12.4%. For the quarter under review, the Manesar plant recorded a loss of Rs58.5 crore at the net level.
• However, a higher other income of Rs205 crore and stable depreciation costs saw the company post a net profit growth of 24% to Rs448.6 crore.
• For the year FY2007, the volume growth was 20.1% yoy. The total income grew by 22% to Rs14,654 crore. The operating profit margin (OPM) for the year was stable at 13.6% as compared to 13.5% in FY2006. The profit after tax (PAT) for the year was Rs1,562 crore, registering a growth of 30%.
• The sales volume for H1FY2007 was very low. MUL launched three new products in Q4FY2007. Hence, we do not expect MUL to witness a sharp slowdown in the growth in FY2008. The profitability could be impacted due to rising raw material prices and higher expenditure on account of the new Manesar plant.
• Considering MUL's dominant position in the Indian car market, Suzuki's plans of making India its hub for small cars, and potential of exports, which shall commence in a big way starting FY2009, we maintain our positive view of the company. At the current market price of Rs790, the stock is quoting at 10.7x its FY2009E earnings. We maintain our Buy recommendation on the stock with a price target of Rs1,050.

Tata Tea
Cluster: Apple Green
Recommendation: Buy
Price target: Under review
Current market price: Rs774

Upside from stake in Glac�au
According to Reuters, Coca-Cola Co is in talks to acquire all or part of the vitamin water maker Energy Brands Inc (EBI), valuing the company at about $3 billion. It may be recalled that Tata Tea Ltd (TTL) and Tata Sons Ltd (TSL) have together acquired a 30% stake in EBI for $677 million or Rs3,110 crore, ie at a valuation of $2.2 billion.

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SECTOR UPDATE

Information Technology

Rupee pangs
For the front-line information technology (IT) companies, it is likely to be a tough year in terms of margin pressure due to the cumulative impact of wage inflation, higher visa costs and the appreciation of the rupee. Given the tightening supply of quality manpower, the salary hikes are indicated to be aggressive this year too. The average hikes are estimated to be in the range of 13-15% for offshore employees and 4-5% for the onsite workforce. This would translate into an adverse impact of 250-350 basis points on the operating margins. The abnormally high demand for visas this year (application window was closed on the first day itself) would result in higher visa costs.

To factor in a much higher than expected appreciation in the rupee, we have revised downwards the earnings estimates and accordingly the target prices of the front-line IT service companies.

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VIEWPOINT

Allcargo Global Logistics

Interesting times ahead
Allcargo Global Logistics (Allcargo) had hosted an analyst meet on Tuesday (April 24, 2007) to discuss its Q1CY2007 performance. We attended the same and present the key takeaways.


Sharekhan Investor's Eye dated April 25, 2007

SSKI - M&M Financial, AllCargo Global Logistics

M&M Financial

AllCargo Global Logistics