November 28, 2007|Logistics

Initiating Coverage
Current price Target price
Gateway Distriparks (GATDIS) Rs 145 Rs 159
Potential upside Time Frame
10% 12 months
Banking on EXIM growth … Time frame
Potential
Time frame
12 months
upside 13%
12 months
HOLD
Gateway Distriparks Ltd (GDL) is the second largest container operator in
India. It has the highest market share of 22% at JNPT, India's largest Analyst Name
container port. The company is expanding its CFS (container freight
station) capacities and setting up new ICDs (inland container depots) at Ember Pereira
ember.pereira@icicidirect.com
key locations to benefit from the high growth in the container traffic in
India. It has also forayed into the lucrative rail container business. We Siddhartha Khemka
siddhartha.khemka@icicidirect.com
initiate coverage with a HOLD rating, and a target price of Rs 159.

ƒ Integrated container logistics provider Sales & EPS trend

GDL operates in three business segments: container handling and 400 10
350 9
storage; container rail business; and cold chain logistics. The CFS and ICD 300
8
is the key business segment with 73% contribution to revenue in FY09E. 250

Rs crore

Rs
200 7
The other new businesses are expected to contribute significantly post 150 6
FY09. 100
5
50
0 4
ƒ Robust growth in containerisation FY05 FY06 FY07 FY08E FY09E

The Indian Port Association estimates the container traffic to grow at 18% Net Sales EPS (RHS)

CAGR from 5.4 million TEUs (twenty-foot equivalent unit, standard size of
a container) in FY07 to 12.5 million TEUs in FY12. We expect GDL to Stock metrics
benefit from this growth. Promoters holding 39.6%
Market Cap Rs 1,340 crore
ƒ Margin drop at JNPT, new CFS/ICDs take time to mature operations 52 Week H/L 214 / 114
The huge margins (60% EBIDTA) earned by CFS operators attracted a Sensex 19,127
large number of players at the JNPT port, resulting in a supply glut. This Average volume 3,56,496
impacted GDL’s overall EBIDTA margins, which declined from 60% in
FY06 to around 50% in FY07. Going forward, we expect the company’s
margins to decline further and stabilise at around 45%. Comparative return metrics
Stock return 3M 6M 12M
Valuations Gateway Distriparks 21.6 0.4 -2.5
Allcargo Global 7.1 -3.4 -7.1
GDL is likely to benefit from the growth in container traffic in India. However,
Balmer Lawrie 52.1 45.4 55.1
the high overhead costs of setting up new ICD facilities and rail operations
Concor -12.3 -12.5 -16.9
are likely to exert pressure on operating margins. At current price of Rs 145,
the stock trades at 20.9x its FY08E EPS of Rs 6.93 and 16.4x FY09E EPS of Rs
8.85. On an EV/EBIDTA basis, the stock is available at 14.4x FY08E earnings
and 9.7x FY09E earnings. We value the stock at 18x its FY09E EPS with a
target price of Rs 159.
Price trend
Exhibit 1: Key Financials
Year to March 31 FY06 FY07 FY08E FY09E 250

Revenue (Rs cr) 138.58 160.96 241.85 380.46 225

Absolute Sell
Net Profit (Rs cr) 72.17 76.21 80.08 102.29 200
Share Price (Rs)

EPS (Rs) 7.83 8.25 6.93 8.85 175 Target Price

150
% Growth 74.9% 5.4% -16.0% 27.7%
125
P/E (x) 18.53 17.57 20.93 16.38
100 Absolute Buy
Price/Book (x) 2.60 2.51 2.59 2.08
75
EV/EBIDTA (x) 12.15 14.04 14.40 9.72
50
NPM (%) 52.08 47.35 33.11 26.89
Apr-05

Aug-05

Oct-05
Dec-05
Feb-06
Apr-06

Aug-06
Jun-05

Oct-06

Dec-06
Feb-07
Apr-07

Aug-07
Jun-06

Jun-07

Oct-07

RoNW (%) 12.55 12.32 12.06 13.98

RoCE (%) 13.84 14.60 12.95 15.19
Source: ICICIdirect Research ICICIdirect | Equity Research
1|Page
Company Background Share holding pattern
Share holder % holding
Gateway Distriparks Ltd (GDL) is the second largest Promoters 39.62
container operator in India. It has one of the largest Institutional investors 39.79
container-handling capacities of 216,000 TEUs at Dronagiri
Other investors 9.36
CFS, and 150,000 TEUs at Punjab Conware, through its two
CFS at JNPT. The company was jointly promoted by the General public 11.23
Singapore-based Windmill Group, Parameswara Holdings,
and Thakral Corporation along with an Indian partner, Prism Promoter & Institutional holding trend
International Pvt. Ltd in 1994.
44 43.1
43
It operates in three business segments: container handling 42 41.4
and storage at CFS and ICDs; container rail business; and 40.5
41
39.6 39.8
cold chain logistics. It obtained a license for private 40 39.1

(%)
39 38.3 38.5
operation of rail containers in January 2006. It has entered
38
into a 51:49 JV with Container Corporation of India 37
(CONCOR) for ground handling of containers at the Garhi 36
ICD, Gurgaon. It forayed into the fast growing cold chain 35
business in November 2006 by acquiring a 50.1% stake in Q3FY07 Q4FY07 Q1FY08 Q2FY08
Snowman Frozen Foods Ltd. Snowman currently has 16
cold stores and operates around 90 refrigerated trucks. Promoters Institutional investors

Exhibit 2: Business Model

Gateway Distriparks

Container freight station Container rail / ICDs Cold chain Logistics

Dronagiri CFS Gateway Rail Freight Ltd. Snowman Frozen Foods

(Navi Mumbai) (100%) Ltd. (50.1%)

Gateway East India (P) ICD, Garhi Harsaru

Ltd. (74%) (51:49 JV with CONCOR)
(Vishakhapatnam) (Gurgaon)

Gateway Distriparks
(South) (P) Ltd. (100%)
(Chennai)

Gateway Distriparks
(Kerala) Ltd. (60%)
(Kochi)

Source: ICICIdirect Research

2|Page
INVESTMENT RATIONALE

Integrated container logistics provider

GDL operates in three business segments: container handling and storage;
container rail business; and cold chain logistics. The CFS/ICD business is the
key contributor to the company’s revenue and earnings. New businesses are
expected to contribute significantly post FY09.

ƒ CFS and ICDs

GDL’s business model is focused on handling and storage of containers,
offering port-related logistics, and ICD management. It has CFS operations at
strategic locations near key ports like JNPT (Navi Mumbai), Chennai,
Vishakhapatnam, Kochi and a rail-linked ICD at Garhi, near Delhi.

The company is the largest player with an 18% market share at India's biggest
container port terminal at JNPT (capacity: 216,000 TEU at Dronagiri). It
increased its market share to 22% after it acquired a 51% operational stake in
the Punjab State Container Warehousing Corporation-owned Punjab Conware The company has the largest
CFS (150,000 TEUs). GDL paid a one-time upfront fee of Rs 35 crore and market share of 22% at JNPT,
agreed to pay an annual fee of Rs 1 crore for 15 years with 5% escalation with a capacity of 366,000 TEUs
(linked to WPI). pa

Besides the existing locations, GDL entered the Cochin market in November
2007. It began operations at a CFS owned by PACE CFS under an O&M
(operations and management) agreement.

Exhibit 3: GDL’s existing CFS

Area Distance from Capacity pa
Location Ownership
(acres) port (km) (TEU)
Dronagiri (Navi Mumbai) Leasehold 35 9 216,000
Punjab Conware (Navi Mumbai) 15 years O&M 28 7 150,000
Chennai Owned 19 16 60,000
Garhi ICD, Gurgaon Owned 90 30,000
Vishakhapatnam Leasehold 20 9 12,000
Kochi (PACE CFS) O&M 3 12,000
Total 480,000
Source: Company, ICICIdirect Research

The revenue generated comprises of three components: transportation,

container handling charges and rent for the period the container is grounded
at the CFS. The realisation per container is a blended tariff of all these services
offered. These tariffs are governed by competition, fuel cost and client relation.

ƒ Container rail business

GDL integrated backwards from container handling and storage into rail
container business. It obtained a private license to operate container trains
GDL was among the first private
across India in January 2006, and subsequently commenced container rail
player to operate container
operations in May 2006. It formed a subsidiary, GRFL (Gateway Rail Freight trains on EXIM and domestic
Ltd), to manage this business. It operates container trains on Export-Import cargo routes
(EXIM) cargo routes from Garhi to JNPT container terminal and Garhi to
Mundra port. It also operates container trains on domestic cargo routes
between Orissa and the NCR (National Capital Region). It began operations
using CONCOR’s trains (rakes and wagons), and procured its own four trains
by November 2007. GRFL also entered a 51:49 joint venture agreement with
CONCOR to operate the rail -inked ICD at Garhi Harsaru.

3|Page
 ƒ Cold chain logistics
GDL forayed into the cold chain distribution business by acquiring a 50.1%
stake in Snowman Frozen Foods Ltd for Rs 48.12 crore in 2007. Snowman has
strong presence in southern India, with 16 cold stores and 8,600 pallets. It has
cold storages at Bangalore, Mumbai, Chennai, Hyderabad, Delhi and
Chandigarh. Post acquisition, Snowman’s net sales increased by 66% from Rs
8.2 crore in FY07 to Rs 13.6 crore during the first half of FY08. The company
believes it would breakeven at net profit level by FY08 on a top line of
approximately Rs 30 crore.

Robust growth in containerisation

India's increasing international trade has lead to a 10% growth in EXIM
volumes over FY02-07. Simultaneously container traffic has increased at a
faster pace (14.5% CAGR over the same period). However, the level of
containerisation in India is still low. According to Indian National Ship Owners IPA estimates India’s container
cargo to grow at 18% CAGR
Association, in developed countries about 70% to 80% general cargo has been
and reach 12.5 million TEUs in
containerised, where as in India the figure still hovers around 50%. Going
FY012E.
ahead, there is a huge potential for growth in container traffic in India on the
basis of key factors like increase in EXIM volumes, time and cost efficiency of
handling containers and increasing domestic trade. The Indian Port
Association (IPA) estimates an 18% CAGR in container cargo from 5.4 million
TEUs in FY07 to 12.5 million TEUs in FY12. We expect GDL to benefit from this
growth.

Exhibit 4: Growth in containerised cargo in India

14

12

10
16% CAGR
TEUs in million

0
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY12E

Source: Company, ICICIdirect Research

4|Page
 ƒ JNPT: India’s largest container port
JNPT handles approximately 61% of India’s total container traffic. It operates
three container terminals: JN Port Container Terminal (JNPCT), Nhava Sheva
International Container Terminal (NSICT), and Gateway Terminals India JNPT handles almost 61% of
Container Terminals (GTICT). It has a total container- handling capacity of 3.6 India’s total container volumes
million TEUs pa. During FY07, the port handled 3.3 million TEUs against 2.67
million TEUs in FY06. IPA estimates JNPT would handle about 4 million TEUs
in FY08. We believe this 21% growth in container volumes is a sign of
improved port-handling efficiency and increased EXIM volumes.

Exhibit 5: Contribution of major ports to container volumes

Calcutta Others
4% 9%

Cochin
4%

Tuticorin
7%

J.N.P.T.
Chennai
61%
15%

Source: IPA, ICICIdirect Research

Considering that only 33% of container traffic at JNPT is routed thought CFSs,
Demand for CFS operations to
there will be a demand of around 1.36 million TEUs against an existing
increase to 1.36 million TEUs
combined capacity of 1.15 million TEUs. To further facilitate the growing
against a capacity of 1.15
volumes in container traffic, JNPT port plans to construct a fourth container million TEUs by the end of
terminal with a 4.4 million TEU capacity. To meet this growing demand various FY08E
players are entering into this space, while existing players are expanding
capacities. We expect total capacity at JNPT to increase to 1.8 million TEUs by
the end of FY09E.

5|Page
Capacity expansion to drive volume growth

ƒ CFS / ICD business

GDL has lined up huge expansion plans. It has already acquired land to set up
rail linked ICDs at Ludhiana and Faridabad. These ICDs will have an initial Capacity to expand by 11% over
capacity of 36,000 TEUs pa and are expected to begin operations in the third FY07-09E to 582,000 TEUs from
quarter of FY09E. The total capex planned for the CFS/ICD business is around 450,000 TEUs in FY07
Rs 200 crore over the next two years. This will increase its total capacity by
10.7% to 582,000 TEUs by FY09E. The total containers handled by the
company are likely increase to 461,320 TEUs up from 240,494 TEUs in FY07.
We expect the revenue from this business to increase from Rs 153.2 crore to
Rs 278.3 crore with a 35% CAGR over FY07-09E.

Exhibit 6: Container handling capacities set to increase

600

500

400
TEUs ('000)

300

200

100

0
FY05

FY06

FY07

FY08E

FY09E

Dronagiri Chennai Garhi ICD Punjab Conware

Vishakhapatnam Kochi Ludhiana Faridabad
Source: Company, ICICIdirect Research

ƒ Container rail business

GDL has obtained a license to operate container trains across India. It currently
owns four trains, while it uses another two trains from CONCOR. The company
has placed an order for 10 rakes to be delivered by April 2008. It plans to have
30 rakes by 2010. The capex here is estimated at Rs 550 crore.
Capex of Rs 550 crore to boost
Exhibit 7: Capex for container rail business by FY10E rail operations by FY10E
Amount
Particulars
(Rs Cr)
30 Container cargo trains 350
License fee 50
Other cost 150
Total Cost 550
Source: Company, ICICIdirect Research

6|Page
Exhibit 8: Rail business revenue model
Particulars (Assumptions)
No of trains 1
Route (JNPT – NCR)
No of wagons per train 45
Throughput / train (2-ways) TEU 90
No of trips per train per month 10
Annual Throughput (TEUs) 10,800
Utilisation rate (%) 75
Total containers carried (TEUs) 8,100
Haulage charges per container (Rs) 20,000
Indian Railway charges per container (Rs) 14,000
Realisation per TEU (Rs) 6,000
Net Revenue per train p.a. (Rs cr) 4.86
Source: Company, ICICIdirect Research

Ports located on the western coast contribute around 77% of the total
container volumes in India. JNPT handled the largest volumes of around 3.3
million TEUs in FY07. It is estimated that around 30% of these containers move
to hinterland ICDs of which a third is being moved by rail. Factoring in an 18%
growth in volumes at JNPT over the next five years, it would translate into a
750,000 TEUs opportunity. Being one of the first private rail operators, we
believe GDL is best positioned to capture this huge potential.

Exhibit 9: Rail opportunity on JNPT – NCR region

Railway - Opportunity Size FY07 FY12E
Total traffic at India's major ports (million TEUs) 5.4 12.5
Total traffic at JNPT (million TEUs) 3.3 7.5
Share of railways in hauling traffic (milion TEU) 0.33 0.75
(30% of total traffic moves to ICDs form JNPT,
1/3rd of this traffic is being moved by rail)
Annual traffic hauled by 1 train (TEUs) 10,800 10,800
No of trains required 31 70
Source: Industry, ICICIdirect Research

We expect GDL’s rail business to contribute 16% to the total revenue, growing
from Rs 5.2 crore in FY08E to Rs 61.6 crore in FY09E. However, we believe that
this business will contribute significantly post 2010, when the company has a
total fleet of 30 trains. Further, due to high capex and infrastructural
constraints, this business might have a long gestation period.

7|Page
RISK AND CONCERNS

Margin drop at JNPT, new CFS/ICDs take time to mature operations

The huge margins (60% EBIDTA) earned by CFS operators attracted a large
number of players at the JNPT port, resulting in a supply glut. This impacted
GDL’s overall EBIDTA margins that declined from 60% in FY06 to around 50%
in FY07. The EBITDA per TEU at JNPT declined to Rs 6,144 in FY07 as against
Rs 6,386 in FY06. Going forward, we expect the company’s margins to decline
further and stabilise at around 45%.

Exhibit 10: Operating, net profit margins declining

70

60
EBIDTA margins to decline
50
form 60% in FY06 to 45% by
40 FY08E
(%)

30

20
10

0
FY05 FY06 FY07 FY08E FY09E

OPM NPM
Source: Company, ICICIdirect Research

The CFSs at Chennai, Vishakhapatnam and Kochi are operating at full capacity.
But they are fairly smaller in terms of scale of operations and realisations per
TEU. The new ICDs at Ludhinia and Faridabad are expected to be operational
only by the third quarter of FY09E. These ICDs will take some time to stabilise
operations and attain critical mass.

The cold chain business, which contributed only 4.8% to top line in FY07, is
still in the growth phases. Its EBITDA margins were 6.7%, which are
comparatively lower than the CFS business. Going ahead, contribution from
this business is likely to increase to 12%, which will further lead to overall
decline in GDL’s margins.

Rail business operations yet to deliver profitability

Though the container rail business holds a huge opportunity, there a few
challenges that may hamper smooth operations.
Infrastructure constraints
ƒ After the government allowed private players to participate in the rail likely to impact container
business, 15 operators have taken the license, and 6 have already begun rail business profitability
operations. Stiff competition among these players may lead to lower
realisations as well as decline in margins.

ƒ There are huge orders for container trains and wagons placed by these
private players together with Indian Railways and CONCOR. However, the
current manufacturing capacity in India may not support the total
demand, which may cause delays in procurement of wagons.

8|Page
ƒ Indian tracks are currently shared between passenger and cargo trains. As
such they are overcrowded and may lead to difficulty in finding slots to all
players.

ƒ The first phase of the DFC (dedicated freight corridor) planned by the
government to provide separate tracks for container trains is expected to
be operational only by 2015. We expect this to get delayed by 2-3 years,
on account of hurdles in acquiring land and getting various clearances.

In the initial phase there are huge capex and infrastructural constraints and we
believe this business would require time to generate profit. However, with the
expected growth in container traffic and attractive EDITDA margins of 28%,
the container rail business is likely to contribute significantly in a couple of
years.

9|Page
Financial Analysis

Exhibit 11: Revenue assumptions

Particulars Location / Year
Business FY08E FY09E
Throughput (TEUs) JNPT 189,557 193,000
Punjab Conware 51,002 82,500
Chennai 64,996 66,750
Vizag 13,239 14,370
Garhi 34,743 82,800
Kochi 6,600 6,600
Ludhiana - 7,650
Faridhabad - 7,650
Total 360,137 461,320

Revenue (Rs cr) CFS & ICDs 207.69 278.27

Rail 5.17 61.59
Cold chain 29.00 40.59
Total Revenue (Rs cr) 241.85 380.46
EBITDA 108.94 172.81
EBITDA Margins (%) 45.04 45.42
Source: ICICIdirect Research

Additional capacity and new business ventures to drive revenue growth

GDL’s container-handling capacity is set to increase by 30% to 582,000 TEUs
in FY09 from 4,50,000 TEUs in FY07. The additional capacities of Punjab
Conware and Kochi CFS are expected to collectively handle 57,000 TEUs. We
expect volumes to increase 38% to 461,320 TEUs by FY09E. The container rail Revenues to grow at 54%
business is also witnessing a rapid growth. GDL is expected to operate 10 CAGR while net profits to
grow at 16% CAGR over
container trains by FY08. Overall, we expect a 54% CAGR in revenues from Rs
FY07-FY09E
161 crore in FY07 to Rs 380.5 crore in FY09E. However, net profit is expected
to grow at a lower rate (16% CAGR) on account of declining margins.

Exhibit 12: Revenues, net profit set to grow (Rs crore)

400 120
350
100
300
80
250
200 60
150
40
100
20
50
0 0
FY06 FY07 FY08E FY09E
Revenue (LHS) Net Profit (RHS)
Source: Company, ICICIdirect Research

10 | P a g e
Muted growth in EPS
GDL plans to fund its capex partly through debt borrowing of Rs 180 crore,
and partly through internal accruals. Interest cost is expected to increase to Rs
18.7 crore in FY09, up from Rs 1.4 crore in FY07. It also issued bonus shares in
the ratio of 1:4 during Q2FY08. We expect the EPS to dip from Rs 8.25 in FY07
to Rs 6.93 in FY08E.

Exhibit 13: Trend in EPS over FY06 – FY09E

9.5
9.0
8.5
8.0
7.5
Rs

7.0
6.5
6.0
5.5
5.0
FY06 FY07 FY08E FY09E
Source: Company, ICICIdirect Research

11 | P a g e
VALUATIONS

GDL is the second largest container operator in India. It is slated to benefit

from the robust growth in containerised transportation. The company is
expanding capacities and vertically integrating backwards into the rail cargo
business. However, the cost of setting new ICD facilities and rail operations are
likely to exert pressure on operating margins. At current price of Rs 145, the
stock is trading at 20.9x its FY08E EPS of Rs 6.93 and 16.4x its FY09E EPS of
Rs 8.85. On an EV/EBIDTA basis, the stock is available at 14.4x FY08E earnings
and 9.7x FY09E earnings. On the one-year forward rolling P/E basis, the stock
is trading at 18x its FY08E EPS. We value the stock at 18x its FY09E EPS to
arrive at a target price of Rs 159.

GDL is expanding capacities and foraying into new business verticals like
container rail cargo and cold chain business. The company enjoyed high
operating margins of around 60% at JNPT, which are on a decline and are
likely to stabilise at 45%. The rail business requires huge capex and has a high
gestation period. Though the company’s earnings will remain stable till FY09E,
we believe that the scope for a significant upside is limited in the medium-
term. Post FY09E, the benefits of new businesses, which have huge growth
potential would start accruing. At the current price, we feel that the valuations
are already factored in and we rate the stock a HOLD.

Exhibit 14: One-year forward rolling P/E Band

250
225
200
Share Price (Rs)

175
22x
150
125 18x

100 14x
75 10x
50
25
Apr-05

Feb-06

Apr-06

Feb-07

Apr-07
Jun-05

Aug-05

Oct-05

Dec-05

Jun-06

Aug-06

Oct-06

Dec-06

Jun-07

Aug-07

Oct-07

Source: ICICIdirect Research

Exhibit 15: Peer comparison (Estimates for FY09E)

Price Market Cap Revenue PAT EPS EV / RoE RoCE
Company (Rs) (Rs cr) (Rs cr) (Rs cr) (Rs) P/E EBITDA (%) (%)
Gateway Distriparks 145 1339 380 102 8.9 16.4 9.7 14.0 15.2
Allcargo Global * 937 1898 1855 111 56.8 16.5 11.5 20.7 23.1
Balmer Lawrie 612 997 1695 102 62.5 9.8 6.0 27.4 41.8
Concor 1788 11620 4156 932 143.0 12.5 8.5 24.7 34.5
Source: Consensus Estimates, ICICIdirect Research (* Estimates for CY08E)

12 | P a g e
FINANCIAL SUMMARY
Profit and Loss Account (Rs Crore)
Year to March 31 FY06 FY07 FY08E FY09E
54% CAGR in revenue over
Revenue 138.58 160.96 241.85 380.46
FY07-09E
% growth 45.0% 16.2% 50.3% 57.3%
Total Expenditure 54.92 79.74 132.91 207.65
Operating Profit 83.65 81.22 108.94 172.81
% growth 59.6% -2.9% 34.1% 58.6%
Other Income 11.00 24.10 12.00 4.00 Decrease in interest income as
EBIDTA 94.65 105.31 120.94 176.81 cash balance used for capex
EBIDTA margin (%) 63.28% 56.91% 47.64% 45.99%
Depreciation 10.60 13.86 22.34 37.15
EBIT 84.05 91.45 98.60 139.67
Interest 2.54 1.37 3.94 18.75
PBT 81.50 90.09 94.66 120.92
% growth 100.7% 10.5% 5.1% 27.7%
Taxation 9.34 13.88 14.58 18.63
PAT 72.17 76.21 80.08 102.29 16% CAGR in net profit over
% growth 115.0% 5.6% 5.1% 27.7% FY07-09E
Shares O/S (crore) 9.22 9.24 11.56 11.56
EPS (Rs) 7.83 8.25 6.93 8.85
% growth 74.9% 5.4% -16.0% 27.7%

Balance Sheet (Rs Crore)

Year to March 31 FY06 FY07 FY08E FY09E
Sources of Funds
Issue of bonus shares in the
Equity Share Capital 92.20 92.37 115.57 115.57
ratio 1:4
Reserves & Surplus 482.97 526.41 548.61 616.24
Secured Loans 31.88 7.49 97.49 187.49
Deferred Tax Liability 12.20 15.01 15.01 15.01
Current Liabilities & Provisions 27.19 22.67 33.69 52.64
Minority interest 0.83 48.29 48.29 48.29
Total Liability 647.27 712.24 858.66 1035.23
Application of Funds
Net Block 202.26 365.99 559.25 712.11
Capital WIP 13.41 110.27 5.56 0.00
Investments 14.45 0.00 0.00 0.00
Cash 352.62 206.81 204.85 183.11
Trade Receivables 7.00 18.21 72.56 114.14
Loans & Advances 57.55 10.95 16.45 25.88
Total Asset 647.27 712.24 858.66 1035.23

13 | P a g e
Cash Flow Statement (Rs Crore)
Year to March 31 FY06 FY07 FY08E FY09E
Opening Cash Balance 92.67 352.62 206.81 204.85
Profit after Tax 72.27 76.95 80.08 102.29
Dividend Paid -31.57 -36.86 -34.67 -34.67
Depreciation 10.60 13.86 22.34 37.15
Provision for deferred tax 1.66 2.79 0.00 0.00
Cash Flow before WC Changes 52.97 56.75 67.74 104.77
Net Increase in Current Liabilities -3.02 -4.52 11.02 18.95
Net Increase in Current Assets 50.64 (35.38) 59.84 51.01
Cash Flow after WC Changes -0.69 87.61 18.92 72.71
Purchase of Fixed Assets (39.47) (274.46) (110.88) (184.44)
(Increase) / Decrease in Investment (14.45) 14.44 0.00 0.00
Increase / (Decrease) in Loan Funds -53.94 -24.40 90.00 90.00 Increase in loan funds on
Increase / (Decrease) in Equity Capital 368.49 51.00 0.00 0.00 account of capex
Net Change in Cash 259.94 (145.81) (1.96) (21.74)
Closing Cash Balance 352.62 206.81 204.85 183.11

Ratio Analysis
Year to March 31 FY06 FY07 FY08E FY09E
EPS (Rs.) 7.83 8.25 6.93 8.85
Book Value (Rs) 55.84 57.80 55.91 69.55
Enterprise Value (Rs. Crore) 1016.21 1140.00 1568.36 1680.10
EV/Sales (x) 7.33 7.08 6.48 4.42
EV/EBIDTA (x) 12.15 14.04 14.40 9.72
Market Cap to sales (x) 9.65 8.32 6.93 4.40
Price to Book Value (x) 2.60 2.51 2.59 2.08
Operating Margin (%) 63.28 56.91 47.64 45.99 Lower margins at JNPT and
Net Profit Margin (%) 52.08 47.35 33.11 26.89 high cost of new business to
impact profitability
RONW (%) 12.55 12.32 12.06 13.98
ROCE (%) 13.84 14.60 12.95 15.19
Debt/ Equity (x) 0.06 0.01 0.15 0.26
Current Ratio 15.87 10.41 8.72 6.14
Debtors Turnover Ratio 19.80 8.84 3.33 3.33
Fixed Assets Turnover Ratio 0.69 0.44 0.43 0.53

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RATING RATIONALE

ICICIdirect endeavours to provide objective opinions and recommendations. ICICIdirect assigns ratings to its
stocks according to their notional target price vs. current market price and then categorises them as
Outperformer, Performer, Hold, and Underperformer. The performance horizon is 2 years unless specified and
the notional target price is defined as the analysts' valuation for a stock.

Outperformer: 20% or more;

Performer: Between 10% and 20%;
Hold: +10% return;
Underperformer: -10% or more.

Harendra Kumar Head - Research & Advisory harendra.kumar@icicidirect.com

ICICIdirect Research Desk,

ICICI Securities Limited,
Gr. floor, Mafatlal House,
163, H.T. Parekh Marg,
Backbay Reclamation,
Churchgate,
Mumbai – 400 020

research@icicidirect.com

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