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Indian logistics shines in investors eyes as infrastructure improves
INDIA's logistics sector is attracting investor interest amid planned infrastructure development in the country, reports The Hindu of Chennai.
One of the beneficiaries is freight and logistics service provider Gateway Distriparks (GDL). The value unlocking from the listing of its subsidiary Snowman Logistics last September also helped.
Besides, expectations that another subsidiary, Gateway Rail Freight, may be listed soon pushed up GDL's stock price to a high in March.
Though it has corrected since, the company's 2014-15 consolidated earnings rose nearly 20 times. Though cheaper than the 30 times commanded by state-owned Container Corporation, a larger peer, GDL trades higher than its own average earnings multiple of 10 times in the past three years.
The company's revenue and profit have grown at an average annual rate of 11 per cent in the last three years. While some re-rating of logistics stocks may be justified given the ongoing infrastructure developments, which should aid freight volumes, GDL's valuation seems to be factoring in all the positives.
GDL operates in three inter-linked segments of freight, rail and cold storage. It owns six container freight stations offering transportation, storage, warehousing and related services in the port cities of Navi Mumbai, Chennai, Visakhapatanam and Kochi. Cargo volume grew 16 per cent in 2014-15 to 640,000 TEU.
The additions at the Jawaharlal Nehru Port Terminal (to be completed in 2020) should increase freight activity. The dedicated freight corridor (DFC) expected to be operational by 2019 will also aid volumes.
Still, the company faces some concerns given that rail-linked cargo volume growth may not improve in a hurry due to competition from the road segment.
Furthermore, its Chennai subsidiary's operations were suspended by the Customs department in December 2014 due to unauthorised removal or attempted theft of a container. The unit is not currently operational.
The subsidiary owns and operates 21 trains, over 270 road trailers and three rail-linked inland container depots in North India and Navi Mumbai with installed capacity of 500,000 TEU.
One of the beneficiaries is freight and logistics service provider Gateway Distriparks (GDL). The value unlocking from the listing of its subsidiary Snowman Logistics last September also helped.
Besides, expectations that another subsidiary, Gateway Rail Freight, may be listed soon pushed up GDL's stock price to a high in March.
Though it has corrected since, the company's 2014-15 consolidated earnings rose nearly 20 times. Though cheaper than the 30 times commanded by state-owned Container Corporation, a larger peer, GDL trades higher than its own average earnings multiple of 10 times in the past three years.
The company's revenue and profit have grown at an average annual rate of 11 per cent in the last three years. While some re-rating of logistics stocks may be justified given the ongoing infrastructure developments, which should aid freight volumes, GDL's valuation seems to be factoring in all the positives.
GDL operates in three inter-linked segments of freight, rail and cold storage. It owns six container freight stations offering transportation, storage, warehousing and related services in the port cities of Navi Mumbai, Chennai, Visakhapatanam and Kochi. Cargo volume grew 16 per cent in 2014-15 to 640,000 TEU.
The additions at the Jawaharlal Nehru Port Terminal (to be completed in 2020) should increase freight activity. The dedicated freight corridor (DFC) expected to be operational by 2019 will also aid volumes.
Still, the company faces some concerns given that rail-linked cargo volume growth may not improve in a hurry due to competition from the road segment.
Furthermore, its Chennai subsidiary's operations were suspended by the Customs department in December 2014 due to unauthorised removal or attempted theft of a container. The unit is not currently operational.
The subsidiary owns and operates 21 trains, over 270 road trailers and three rail-linked inland container depots in North India and Navi Mumbai with installed capacity of 500,000 TEU.
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