Logistics Karvy

March 22, 2012
INSTITUTIONAL EQUITIES
INDIA RESEARCH
LOGISTICS
Wake Up & Smell The Future
Rajesh Kumar Ravi
Prasun Kumar
+91-22-6184 4325
+91-22-6184 4313
rajesh.ravi@karvy.com prasun.kumar@karvy.com
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InstitutionalEquities
IndiaResearch
THEMEREPORT
March22,2012
Logistics
WakeUp&SmellTheFuture
OnGrowthTrack,GoodTimesAhead
AllcargoLogistics(AGLLIN)
Positiveonlogisticsdemandoutlook:WeexpectIndiasEXIMtrade(nonoil)
to grow by atleast 15% CAGR in FY1217E period (>2x Indias GDP growth)
inline with Indias 25x GDP growth over the last eight years. The IMF
projectsIndiasGDPCAGRof8%forFY1217Eperiod.
BUY
CMP
138
TargetPrice
213
Upside(%)
54
52WeekHigh/Low(Rs)
190/115
3mADV(Rsmn/US$mn)
02/0.0
Webelievethatgovernmentscontinuedimpetusoninfrastructurespending
should help achieve the growth targets: During the 11th & 12th FYPs, the ArshiyaInternational(ARSTIN)
infrastructureoutlayhasdoubledtoUS$500bnandUS$1,000bn,whichbodes
well for logistics demand in India. Additionally, the rising FDI in Indian CMP
companies (> Rs. 140 bn in CY0811) should drive the need for improved TargetPrice
logisticsrequirementinIndia.
Upside(%)
BUY
140
227
62
52WeekHigh/Low(Rs)
Capacity issues to get addressed going forward: Indian logistics sector

remains highly unorganized and inefficient due to lack of infrastructure 3mADV(Rsmn/US$mn)
capacity across railways, roadways, and ports etc. While the government has
ContainerCorp(CCRIIN)
laggeditsowninvestmenttargetsinthesesectorsby9%and21%in10th&11th
FYPs respectively, we expect things to improve going forward, as both the CMP
NHAI & the DFCCIL have been trying to speed up their road and rail track TargetPrice
expansion programmes. Meanwhile, the port capacities should benefit led by Upside(%)
thenewMaritimeAgenda20102020.
52WeekHigh/Low(Rs)
234/115
34/0.7
BUY
879
1,115
27
1,332/801
73/1.5
Favourable for companies which increase their asset base ahead of
infrastructure improvement: Various tax incentives (to attract investment in
BUY
GatewayDistriparks(GDPLIN)
logisticssector)andIndianRailwaysallowingprivatecontainertrainoperators
149
should benefit logistics companies that continue to invest in their asset base CMP
TargetPrice
204
(rakes,warehousing,andtechnologyetc).Thesecompaniesshouldbenefitthe
mostasinfrastructurestartsfallinginplace.TheGSTimplementationinFY13 Upside(%)
37
will be a big driver for the sector. It would pave way for larger, unified and 52WeekHigh/Low(Rs)
157/108
modernwarehousing,therebyallowingIndiatoslowlybutsteadilymoveup 3mADV(Rsmn/US$mn)
29/0.6
thelogisticschainfromcurrent2PLtowardintegratedlogistics.
Source;Bloomberg,KarvyInstitutionalResearch
3mADV(Rsmn/US$mn)
Welikegrowthfocusedcompanies:GatewayDistriparks(GDPL)continues
to grow across the CFS, rail and cold chain businesses without straining its
balancesheet.WhileAllcargoLogistics(AGLL)enjoysthe2ndpositionglobally
inthestableMTObusiness,itisexpandingitspresenceintheCFSandproject
logistics space. The stable presence of Arshiya International (ARST) in 3PL
servicesshouldfurthergetboostedastheCompanyisaggressivelyexpanding
its FTWZ division and is adding more rakes in its rail business. The leading
containertrainoperatorContainerCorporationofIndia(CCRI)withstrong
cash position is striving to increase value added services in its bid to protect
revenuegrowthandmarginstosustaincompetitivepressure.
AnalystsContact
RajeshKumarRavi
02261844313
rajesh.ravi@karvy.com
PrasunKumar
02261844325
prasun.kumar@karvy.com
ValuationSummary
Stocks
MCap
(Rsbn)
Rating
AGLL
ARST
CCRI
GDPL
17.6
8.3
113.7
16.3
BUY
BUY
BUY
BUY
RoE(%)
RoCE(%)
P/E(x)
FY12E
FY13E
FY14E
FY12E
FY13E
FY14E
FY12E
16.6
14.0
16.6
13.0
15.5
15.7
16.6
13.6
15.6
27.8
16.8
14.9
14.2
7.7
16.0
12.3
12.9
9.0
16.0
12.7
12.9
13.3
16.2
14.0
8.0
7.7
12.8
11.5
EV/EBITDA(x)
FY13E FY14E
7.2
6.0
11.2
9.9
6.2
2.8
9.6
8.0
FY12E
FY13E
FY14E
5.7
9.9
7.8
6.0
4.7
7.7
6.3
5.0
4.1
4.9
5.0
3.9
Source:KarvyInstitutionalResearch

March22,2012
LogisticsThematic
Tableofcontents
SECTOR
OnGrowthTrack,GoodTimesAhead....................................................................1
ExecutiveSummary....................................................................................................3
SummaryofCompaniescoveredintheReport.......................................................6
KeyFinancialSummary............................................................................................7
SensitivityAnalysis...................................................................................................8
ProfileofIndianLogisticsIndustry..........................................................................9
SegmentalAnalysisofCompaniesCoveredintheReport...................................10
KeyPositiveTriggersfortheIndianLogisticsIndustry..........................................10
1.
GrowingIndianeconomy,risinggovernmentspendsandFDItokeeplogistics
demandbuoyant..............................................................................................................11
2.
EnsuingLogisticsInefficiencyProvidesOpportunitiesforLogisticsProviders....16
3.
GovernmentInitiativestoAddresstheInfrastructureBottlenecks.......................18
4.
EmergenceofPrivateContainerTrainOperatorshavebroughtinCompetitiveness
23
5.
FDIPolicyrelatedtoLogisticsSectorhasEncouragedForeignPlayers/PEsto
investintheSector.........................................................................................................27
6.
ImpendingGSTAnotherBoosterfortheIndustry.............................................28
7.
ValueAddedServices3PL&abovetoProvidetheNextLevelofGrowthfor
LogisticsIndustry...........................................................................................................29
KeyRisks..................................................................................................................30
CompaniesSection...................................................................................................31
COMPANY
AllcargoLogistics..32
ArshiyaInternational....42
ContainerCorporationofIndia..52
GatewayDistriparks.62

March22,2012
LogisticsThematic
ExecutiveSummary
Concerns Overdone; Valuations Attractive Led by Long Term
Growth
Whileourlogisticscoverageuniversehasdeliveredupto40%returnCAGRover
thepastthreeyears,thelast12Msunderperformancehasresultedonaccountof
economygrowthconcerns.Onriskadjustedbasis,thevaluationmultiplesdonot
discount the long term sectoral growth potential and hence provides attractive
entrypoint.
SectorinanUpcyclePhaseGrowingEconomyandEXIMTrade
BoostsOutlookforLogisticsDemand
The demand for logistics services (transportation, warehousing and value added
services)inIndiahasremainedbuoyant,astheIndianeconomyhasgrownby~8%
CAGRduringthelasteightyearsandtheIMFprojectsIndiasGDPCAGRof8%
for FY1217E period (higher than world GDP CAGR of 4.5%). This reflects that
IndiasEXIMtradeshouldgrowat>15%CAGR(2xGDPgrowth),asithasgrown
at25xGDPinFY0311period.Thesustainedfocusonrisinginfrastructurespend
bythegovernment(US$500bnin10thFYPandUS$1trillionin12thFYP)andrising
FDIsinIndiancompanies(>Rs.140bnoverthelastfouryears)shoulddrivethe
needforimprovedlogisticsrequirement.
InfrastructureDevelopmentAccelerationKeytoAttractLogistics
Players
Despitebuoyantdemandforlogisticsthesectorremainshighlyunorganizedand
inefficientonaccountoflackofinfrastructurecapacityacrossrailways,roadways
and ports, etc. Capacity expansion has lagged the governments own targets laid
outintheplandocuments.Logisticsinvestmentsin10thand11thFYPshavemissed
their targets by 9% and 21%, respectively. We expect things to improve going
forward, as both the NHAI and the DFCCIL have been trying to speed up their
road and rail track expansions, which have been delayed by three to five years.
The Ministry of Shipping has launched the new Maritime Agenda 20102020 to
address the slow pace of port expansions. The Government has also introduced
varioustaxincentivestoattractseriouslogisticscompanies.
SectorDynamicsopeneduptoPrivateOperators
Railways opened up container train operations for private players thereby
attracting 15 operators, who have gained ~32% of market share from incumbent
ContainerCorporationofIndiaoverthelastfiveyears.
Whowouldbebenefitted?
Logistics companies who have been investing in asset base (rakes, warehousing
and technology, etc.) to provide logistics solutions across the various segments
shouldbethemajorbeneficiariesasinfrastructurestartsfallinginplace.Almostall
the three segments of Indian logistics (transportation, warehousing and value
added services) have strong growth potential and appear attractive on
comparativeanalysisandhaveseencontinuedinterestsinformofPEinvestments
andM&Aactivities.

March22,2012
LogisticsThematic
GST Implementation to Accelerate Indias Growth on Logistics

Front
Goods&ServicesTax(GST)tobeimplementedinFY13woulddoawaywith
multipletaxationsandothercomplexitiesthatthelogisticsprovidershavetodeal
with in different states of India. This will boost investments in large warehouses
with latest technologies thereby gaining economies of scale. This in turn will
increase the attractiveness of integrated logistics companies, which can provide
endtoendlogisticssolutions.
WeInitiateCoverageonFourStocks
WeinitiatecoverageonfourlargelogisticserviceprovidersGatewayDistriparks
(GDPL), Allcargo Logistics (AGLL), Arshiya International (ARST) and Container
CorporationofIndia(CCRI)withBUYrecommendation,astheyaretradingwell
belowtheirhistoricalvaluations.
Exhibit1: Comparativepositioningofthefourlogisticscompanies
Rail
Transport
Cold
chain
MTO
Project
logistics
Warehousing(CFS,
ICD,FTWZ,FTWZ)
3PL
Revenueprofile(%)
GatewayDistriparksLtd
50%
ArshiyaInternational
25%
7%
43%
15%
AllcargoLogistics
84%
ContainerCorporationofIndia
8%
60%
8%
75%
25%
KeyIndustrymetrics
MarketSize&Growth
Medium,1015%
Low,2030%
Low,1520%
Low,2030%
Medium,1525%
Low,2530%
Competitiveintensity
Medium&rising Low&stable
Low&stable
Low&stable
Low&rising
Low&stable
Low
Medium
High
Low
CapitalIntensity
EBITDAmargins
Overallsegmentalattractiveness
High
Medium
1825%
2530%
510%
2025%
5065%
1012%
Medium
Strong
Medium
Strong
Strong
Strong
Source:Company,KarvyInstitutionalResearch
ValuationSummaryofFourStocks
Exhibit2: Relativevaluations&Targetmultiples targetpricearrivedatmultiplyingFY1314EaverageEPS(EBITDAforARST)
bytheirrespectivetargetP/Emultiples(EV/EBITDAusedforARST)
CMP
(Rs)
MCap
(Rsbn)
AGLL
17.6
138
BUY
10.5
213
54
8.0
7.2
ARST
8.3
140
BUY
7.0
227
62
7.7
6.0
CCRI
113.7
879
BUY
13.2
1,115
27
12.8
GDPL
16.3
149
BUY
12.0
204
37
11.5
Rating
TargetP/E
multiple**(x)
TargetPrice
(Rs)
P/E(x)
Stocks
Upside
(%)
EV/EBIDTA
FY12E FY13E FY14E
FY12E
FY13E
FY14E
6.2
5.7
4.7
4.1
2.8
9.9
7.7
4.9
11.2
9.6
7.8
6.3
5.0
9.9
8.0
6.0
5.0
3.9
Source:KarvyInstitutionalResearch**ARSTtargetmultiple(x)isEV/EBITDA

March22,2012
LogisticsThematic
Logisticcompanieshavedeliveredstrongperformanceduringthe
lastthreeyears
The logistic sector in general and the stocks under coverage in particular have
delivered strong stock performance over the last three years. Most of the stocks
have delivered double digit price CAGR. However, over the last one year, the
stockshavemostlydeliverednegativereturnsandhavealsounderperformedthe
broader Index. As the companies fundamentals have remained fairly intact and
havebeenfurtherimproving;stockunderperformancecanlargelybeattributedto
the impact of governments policy inactions on slower pace of infrastructure
development.
Exhibit3: PriceperformanceofvariouslistedlogisticscompaniesinIndia
LogisticsStockPerformance(%)
CMP
Mktcap
Absolutereturn(%)
(Rs)
(Rsbn)
3mreturn 1yrreturn 2yrCAGR
ReltoSensex(%)
3yrCAGR
3mreturn
1yrreturn
ContainerCorporation
875
113.7
5.9
(26.3)
(17.1)
8.5
(10.2)
(24.5)
AllcargoLogistics
135
17.6
9.7
(14.0)
(14.9)
0.2
(6.4)
(12.1)
GatewayDistriparks
151
16.3
21.9
40.3
9.8
43.9
5.8
42.1
142
8.3
17.8
(33.2)
(12.4)
41.6
1.7
(31.4)
BlueDartExpress
1,934
45.9
33.7
98.5
65.3
69.7
17.6
100.3
TransportCorporationofIndia
61
4.5
12.6
(36.8)
(22.6)
23.2
(3.5)
(35.0)
GatiLtd
31
2.7
32.9
(41.5)
(25.9)
(7.9)
16.8
(39.7)
Source:Company,KarvyInstitutionalResearch;(CMPasoncloseof20thMarch2012)
Improved fundamentals to boost stock performance of stocks

undercoverage
Going forward, we expect the stocks under coverage to deliver higher absolute/
relativestockperformanceledbytheirstrengtheningfundamentalsandincreased
asset utilisations. We expect government reforms to accelerate from their current
levels,whichinturnshouldhelpspeeduplogisticsinfrastructureexecutions.
HigherDebttoEquityratioforARSTisaneartermconcernduetoitsaggressive
FTWZ expansions inFY1214E period.However, the same should get relaxedby
FY14E, as the expansion results in improved cash flows thereby helping the
Company reduce its debt exposure. This is turn should boost ARSTs asset turn
over and RoCE in FY14E. Similarly, as GDPLs rail and CFS businesses expand
alongwithhigherutilisation,weexpecttheCompanyssalesturnoverandreturn
ratiostogain.
Exhibit4: RelativescoringoflistedlogisticscompaniesCompaniesundercoveragehavefairwellontheirfinancialfundamentals
Companies
CFO/EBITDA
D:E
WC/Sales
SalesT.O.
RoCE
Capex/Sales
Overall
AllcargoLogistics
GatewayDistriparks
BlueDartExpress
TransportCorporationofIndia
Gati
Source:Capitaline,KarvyInstitutionalResearch

March22,2012
LogisticsThematic
SummaryofCompaniescoveredintheReport
Allcargo Logistics (AGLL IN): We initiate coverage on the stock with BUY
recommendationwithatargetpriceofRs.213pershare,valuingAGLLat10.5xits
FY13FY14EaverageEPS.
MTOsegmentbuoyedbyECULinegrowth:Globally,AGLListhe2ndlargest
LCLconsolidator(MultimodalTransportOperations)postacquisitionofECU
Line. This segment accounts for 80% of total revenues. With ECU Lines
increasing presence in the high growth Asian countries, we expect the MTO
revenuestogrowat14%CAGRduringFY1214E.
ExpandingCFS/ICDcapacitiestoboostprofitability:AGLLhasthreeCFSat
three major EXIM hubs JNPT, Mundra and Chennai. It is the number one
operatoratChennaiandMundraportswithmajorconcentrationtowardshigh
realisationimportcargohandling.
ArshiyaInternational(ARSTIN):WeinitiatecoverageonthestockwithBUY
recommendationwithatargetpriceofRs.227pershare,valuingARSTat7.0xits
FY1314EaverageEBITDA.
FTWZ expansion boosts earnings growth in FY1214E periods: Arshiya

International (ARST) is the pioneer of the FTWZ (Free Trade Warehousing
Zones)conceptinIndia.Itplanstorampupitswarehousecapacitiesatboth
theFTWZbytenfoldto35warehousesbyFY14E.Basedontheseexpansions,
we expect revenues of this high margin (EBIT margins of >55%) segment to
growby>100%CAGRduringFY1214E.
RailBusiness(Thirdlargestoperator)onexpansionspree:ARSTisthethird
largestcontainertrainoperatorinIndiawith16operationalrakesandplansto
addanothereightrakesduringFY1314E.Weexpecttheseadditionstoboost
the segmental revenues by 38% CAGR and EBITDA CAGR of 28% during
FY1214E.
ContainerCorporationofIndia(CCRIIN):Weinitiatecoverageonthestockwith
BUYrecommendationwithatargetpriceofRs.1,115pershare,valuingCCRIat
13.2xitsFY1314EaverageEPS.
Largest container train operator in India: Container Corporation of India

(CCRI) is Indias largest container train operator (CTO) with container train
fleet strength of 240 container trains and 61 terminals spread across India.
Currently,CCRIhas~68%oftotalcontainerfleetoperationalinIndia.
Strategic tieups with competitors &customers to support revenue growth:

CCRI has formed various JVs across India partnering with its customers as
wellascompetingCTOstosupportitsrevenuegrowth.Inthedomestictrain
handling,CCRIsFY1112EvolumegrowthsgotimpactafterIndianRailways
in Dec10 announced commodityspecific haulage charges increase for
domesticcargoes.However,thequarterlyvolumetrendssuggestabottomout
situation in FY12E. Subsequently, we expect revenues to grow at 12% CAGR
duringFY1214E.

March22,2012
LogisticsThematic
Gateway Distriparks (GDPL IN): We initiate coverage on the stock with BUY
recommendationwithatargetpriceofRs.204pershare,valuingGDPLat12.0xits
FY1314EaverageEPS.
CFSBusinessthecashcow;expandingcapacitiestofuelgrowth:Weexpect
GDPLs CFS volume to grow by 3% and 7% during FY1314E vs. 3% during
FY12E, as new capacities get commissioned at JNPT and Kochi. Strong
relationship with shipping lines should boost the growth as it the shipping
lines that notify which CFS to do business with (and not the cargo owners).
Further,CFSisacashcow,asithasveryhighOPMof~54%andthesegment
generates>80%ofPAT.
Leadershippositioninthecontainertrainbusiness:GDPLcurrentlyoperates
21 rakes (2nd largest after Container Corp) with >85% of its capacity being
deployed in the EXIM container transportation. It plans to add another 68
rakesduringFY13E.WeexpectGDPLsrailvolumestogrowby29%and15%
duringFY12EandFY13E.
KeyFinancialSummary
Exhibit5: Keyfinancialsofthefourstockscoveredinthereport
Companies
AGLL
ARST
CCRI
GDPL
Year
FY12E
Revenues
(Rsmn)
43,325
YoY
(%)
21.1
EBIDTA
(Rsmn)
4,927
OPM
(%)
11.4
PAT
(Rsmn)
2,765
YoY
(%)
33.6
P/E
(x)
8.0
RoE
(%)
16.6
RoCE
(%)
14.2
FY13E
40,391
16.5
4,667
11.6
2,446
10.6
7.2
15.5
12.9
FY14E
43,169
6.9
5,320
12.3
2,845
16.3
6.2
15.6
12.9
FY12E
10,326
25.7
2,497
24.2
1,079
32.4
7.7
14.0
7.7
FY13E
13,886
34.5
3,686
26.5
1,378
27.8
6.0
15.7
9.0
FY14E
19,404
39.7
6,045
31.2
2,988
116.8
2.8
27.8
13.3
FY12E
41,471
8.3
10,821
26.1
8,878
1.1
12.8
16.6
16.0
FY13E
47,374
14.2
12,321
26.0
10,185
14.7
11.2
16.6
16.0
FY14E
54,129
14.3
14,077
26.0
11,813
16.0
9.6
16.8
16.2
FY12E
7,712
28.7
2,593
33.6
1,423
47.1
11.5
13.0
12.3
FY13E
8,813
14.3
3,051
34.6
1,652
16.1
9.9
13.6
12.7
FY14E
10,103
14.6
3,590
35.5
2,029
22.8
8.0
14.9
14.0

March22,2012
LogisticsThematic
SensitivityAnalysis
Realisation changes have higher impact on earnings metrics and valuation
comparedtoimpactofrespectivevolumechangesingeneral.
Exhibit6: AGLL Impactofchangesinvolumes&realizationacrossCFSandNVOCC
(ECULine)verticalsontheearningsmetricsandtargetpriceestimates
FY14Eestimates
EPS(%)
RoE(bps)
RoCE(bps)
TP(%)
(11)
(160)
(108)
(6)
(5)
(74)
(50)
(3)
1%lowerECULinerealization
(10)
(142)
(96)
(5)
10%lowerECULinevolumes
(6)
(90)
(60)
(3)
10%lowerCFSrealization
10%lowerCFSvolumes
AGLLstargetpricesensitivitytoECULinerealisationishighest(~5x),asthis
isalowbutstablemargin(~57%)businessandconstitute>70%oftopline.
Exhibit7: ASRST ImpactofchangesinVASmultiple(FTWZ),volumes&realisation

acrossFTWZandRailverticalsontheearningsmetricsandtargetprice
estimates
FY14Eestimates
EPS(%)
RoE(bps)
RoCE(bps)
TP(%)
(6)
(148)
(53)
(6)
10%lowerFTWZvolumes
(11)
(279)
(98)
(12)
10%lowerFTWZrealisation
(17)
(427)
(150)
(18)
10%lowerVASmultiple(FTWZ)
10%lowerRailvolumes
10%lowerRailrealisation
(2)
(40)
(14)
(2)
(12)
(285)
(100)
(12)
ARSTs earnings have higher sensitivity to FTWZ business compared to the

railbusiness.
Exhibit8: CCRI Impact of changes in realization and volumes on the earnings metrics
andtargetpriceestimates
FY14Eestimates
10%lowervolumes
10%lowerrealization
EPS(%)
RoE(bps)
RoCE(bps)
TP(%)
(7)
(110)
(107)
(4)
(34)
(566)
(549)
(18)
Exhibit9: GDPL Impact of changes in realisation and volumes across CFS and Rail
verticalsontheearningsmetricsandtargetpriceestimates
FY14Eestimates
10%lowerCFSvolumes
10%lowerRailrealization
10%lowerRailvolumes
EPS(%)
RoE(bps)
RoCE(bps)
TP(%)
(16)
(221)
(185)
(9)
(9)
(121)
(102)
(5)
(19)
(261)
(219)
(10)
(4)
(53)
(44)
(2)
CFSbusiness,thecashcowwouldcontinuetohavehigherimpactonearnings
overthenexttwoyears.

March22,2012
LogisticsThematic
ProfileofIndianLogisticsIndustry
Indianlogisticsindustryis~3%ofthegloballogisticsandishighlyfragmentedso
far.Logisticsindustrycomprisesofthreemajorsegmentstransportation,storage
and value added services. Based on the analysis of various subsegments in the
Indian context on various comparative factors, we believe companies in the
storage and the value added service segments are wellplaced to capitalize on
growing Indian economy. In the transportation segment, we like companies
presentincontainertrainandprojectlogistics.
Exhibit10: Indianlogisticsmarketis~3%ofgloballogisticsin
valueterms(US$)
Exhibit11: andishighlyfragmentedeventhoughtheshareof
organizedplayersisexpectedtodoublebyFY15E
US$Bn
Indian
Logisitcs
industry,
105,3%
120%
100%
80%
60%
40%
20%
12%
6%
0%
Global
Logisitcs
industry,
3,500,97%
2008
2015E
Organised
Unorganised
Source:Industry,KarvyInstitutionalResearch
Source:CII,ASSOCHAM,KarvyInstitutionalResearch
Exhibit12: ComparativeanalysisofIndianlogisticssectoracrossitsvarioussubsegments
ValueAdded
Courier Services
3PL / 4PL
Freight Forwarding
Ports
Services
Container Freight
Stations
Inland Container
Depots
Logistics Parks
Modern
Warehousing
Project Logistics
Storage
Cold Chain
Coastal Shipping
Express Logistics
- LTL
Comparative factors
Road Transport FTL
Sub segment/
Transportation
Container Rail
Transportation
Segments
Current Market Size

Growth Potential
Innovation Potential
Technology Requirement
Competitive Intensity
Niche
Capital Intensity
Profit Margins
Overall Attractiveness
Source:KPMG,Industry,KarvyInstitutionalResearch

March22,2012
LogisticsThematic
SegmentalAnalysisofCompaniesCoveredinthe
Report
Exhibit13: Comparativepositioningofthefourlogisticscompanies
Rail
Transport
Cold
chain
GatewayDistriparks
50%
7%
25%
MTO
(LTL)
Project
logistics
Warehousing(CFS,
ICD,FTWZ,FTWZ)
3PL
Revenueprofile(%)
43%
15%
AllcargoLogistics
84%
ContainerCorporationofIndia
8%
75%
60%
8%
25%
KeyIndustrymetrics
MarketSize&Growth
Medium,1015% Low,2030%
Low,1520%
Low,2030%
Medium,1525%
Low,2530%
Competitiveintensity
Medium&rising Low&stable
Low&stable
Low&stable
Low&rising
Low&stable
CapitalIntensity
High
Medium
Low
Medium
High
Low
EBITDAmargins
1825%
2530%
510%
2025%
5065%
1012%
1.Growingeconomy,risinggovernment
spendstobuoyEXIMtradeandlogistics
demand
2.
EXIM trade to double to US$ 1 trillion by

CY16E
ContainerizedEXIMthroughouttogrowat
12%CAGRduringFY0826E
Logistic spends to rise on sustained
infrastructureinvestments
RisingFDIinIndiancompanies
Increased container penetration provides
opportunitiesforvariedlogisticsservices
Ensuing inefficiency in logistics

sector provides opportunities for
logisticsproviders
Indialagsonlogisticsefficiencyduetoits
poorinfrastructure
Hinterland connectivity has been a
bottleneckforlogisticssector
Rail Road mix should complement each
other
KeyPositive
Triggersforthe
IndianLogistics
4. Emergence of Private Container
3. Government initiatives to address the
Industry
Train Operators have brought in
competiveness
infrastructurebottlenecks
DFC(Railways)toaugmenttrackcapacityby
~2,750Kms
NHAIhasspedupitsroadexecutionrates
New Maritime Agenda 20102020 will boost
portcapacity
Coastal/ Inland waterways can further relax
logisticsconstraints
Container ports Major ports are operating
atpeakcapacity
Growth of minor ports & private ports
brightensupsectoroutlook
Multipletaxincentivestoattractinvestment
inthesector
5. FDI policy related to logistics sector has

encouraged foreign players to invest in the
sector
Private CTOs reduce Container Corps

monopoly,improvecompetitiveness
Growth opportunities abound for CTOs
evenonaconservativebasis
EconomicsofaCTO/ICDOperator
6. Impending GST another booster the

industry
Modern warehousing segment to be a large

beneficiaryofGST
7.ValueAddedServices 3PLandabove
to provide the next level of growth for the
logistics industry

10
March22,2012
LogisticsThematic
1. Growing Indian economy, rising government spends

andFDItokeeplogisticsdemandbuoyant
Growth in logistics sector is related to increased economic activities and rising
EXIMtrade.IndiasGDPhasgrownby~8%CAGRduringthelasteightyearsand
theIMFforecastsittogrowbysimilarrateduringFY1217Eperiod.TheIMFalso
forecastsworldGDPgrowthtopickupinCY1216Eperiod.Thesebodewellfor
the Indian logistics sector, as the growing economies should boost demand for
logisticsservices.
Exhibit14: IMFexpectsIndiasGDPtogrowat8%CAGRduringCY1116Eperiodsat
thesameatwhichitgrewduringthepreceding78years
10.1
8
6
5.4
5.3
4.6
7.8
6.8
6.2
5.1
4.0
7.5
4.0
8.1
8.1
8.1
8.1
4.5
4.7
4.8
2015E
10.0
9.5
9.0
2014E
10
2013E
12
4.9
2.8
4
2
WorldGDP
2016E
2012E
2010
2009
2008
2007
2006
2005
(0.7)
2011E
0
2
IndiaGDP(%)
Source:IMF,KarvyInstitutionalResearch
1.1 IndiasEXIMtradeshoulddoubletoUS$1trillionbyCY16E
During FY0311 period, EXIM trade (nonoil) has grown at ~25x GDP growth.
Assuming EXIM trade (nonoil) growth of 2 times GDP growth, Indias EXIM
tradeshouldgrowatmorethan15%CAGRthroughCY16EtoUS$1trillion.Over
the last eight years, Indias global trade has grown at ~1.7x global trade in value
term. This resulted in 100 bps expansion in Indias share in global trade thereby
boostingIndiassignificanceontheglobaltrademap.
Exhibit15: BothimportsandexportsgrowthinIndiapickedup Exhibit16: IndiasEXIMtrade(nonOil)hasgrownat>2xGDP
afteratemporarydipinFY10
growthduringthelastnineyears
50
Exim/GDPMultiple
40
39
30
32
20
6
4
11
10
2.7
3.4
4.5
3.8
2.5
3.0
2.0
4.8
Source:CEIC,KarvyInstitutionalResearch(NonOilExportImporttrends)
FY11
FY09
FY08
FY07
FY06
FY05
FY04
ImportsYoY(%)
(0.4)
FY10
FY11
FY10
FY09
FY08
FY07
FY06
0
1
FY03
ExportsYoY(%)
FY05
FY04
FY03
2002
2001
2000
10
Source:CEIC,KarvyInstitutionalResearch

11
March22,2012
LogisticsThematic
Exhibit17: At 2x GDP growth, Indias EXIM (non Oil) trade Exhibit18: Strong EXIM growth has increased Indias share in
shoulddoubletoUS$1trillionbyCY16E
globaltradeby~100bpsduringthelasteightyears
200
2002
2016E
2015E
2014E
2013E
2012E
2011E
2010
2009
2008
2007
2006
2010
197
0.8%
2009
400
2008
476
2007
600
2006
800
2005
1,000
1.8%
2004
1,000
2003
2.0%
1.8%
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
1,200
1.2 ContainerizedEXIMthroughouttogrowat12%CAGRduring
FY0826Etobenefitlogisticsservicesacross3verticals
Indian Port Association (IPA) forecasts Indias EXIM volumes at major Indian
portstogrowat6.5%CAGRduringFY0826Eataboutthesimilarrateof7%at
which volumes grew during FY0010 period. Containerized cargo handling at
majorportswouldbethemajorbeneficiaryandisexpectedtogrowat12%CAGR
duringthesameperiod.Atthisrate,EXIMthroughputatmajorportswilldouble
to228bnMTduringFY1117Eperiod.Evenifweassumethisgrowthratetobe
optimistic and factor in an 8% base case scenario, EXIM throughput should
grow by 1.6 times to 182 bn MT by FY17E thereby depicting strong demand
potential for logistics services across all the three verticals transportation,
warehousingandvalueaddedservices.
Exhibit19: EXIM volumes handled at major ports in India has Exhibit20: EXIM traffic handled at major ports in India is
grownby7%CAGRduringFY0010
expectedtogrowby6.5%CAGRduringFY0826E
600
14%
500
12%
400
10%
400
8%
300
mnMT
mnMT
800
300
600
200
400
100
200
6%
200
4%
TotalEXIM(BnMT)atmajorports
YoYGrowth(%)RHS
FY08
FY10
FY09
FY08
FY07
FY06
FY05
FY04
FY03
0%
FY02
FY01
2%
FY00
100
POL
Coal
OtherCargo
FY26E
IronOre
Fertilisers
Containers(RHS)
Source:IPA,KarvyInstitutionalResearch

12
March22,2012
LogisticsThematic
Exhibit21: Containerizedcargoisexpectedtowitnesshighest Exhibit22: and at this rate EXIM container throughput (mn
MT)atmajorportsshoulddoubleinnextsixyears
~12%growthduringthesameperiod(FY0826E)
14.0%
250,000
12.3%
225,095
12.0%
200,000
10.0%
8.0%
6.0%
5.3%
4.2%
4.0%
5.0%
5.6%
6.5%
150,000
2.1%
100,000
2.0%
50,000
Total
OtherCargo
Fertilisers
Containers
IronOre
Coal
0.0%
POL
114,040
FY11
FY17E
1.3 Logisticspendtoriseonsustainedinfrastructureinvestments
Whilethe11thand12thFiveYearPlanshaveseenthegovernmentsinvestmentin
the infrastructure segment double during each plan period to Rs. 5.7 trillion
duringthe11thFYP,the12thFYPhasfurtherdoubledittoRs.11.3trillion.
Exhibit23: Infrastructure investment outlay has doubled during each of 10th
11thand12thFYPs
Power
Telecom
Irrigation
Gas
Water&Sanitation
Storage
Airports
Ports
Railways
Roads
2,000
4,000
ExpenditureXIPlanAllocation
6,000
8,000
10,000
12,000
Expenditure XIIPlanAlloacation(Rsbn)
Source:PlanningCommissionofIndia,KarvyInstitutionalResearch
%ofGDP
Exhibit24: Infrastructure investment share of GDP has risen Exhibit25: Transportationspend(%ofGDP)hasalsogrownby

~100bpsto~6%duringthelast20years
sharplyduringFYP1012(FY0217)
14
7.0
12
6.5
10
6.0
8
6
5.5
5.0
4.5
Source:PlanningCommissionofIndia,KarvyInstitutionalResearch
FYP12
4.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
FYP11
FYP10
FiveYearPlans
FYP9
FYP8
FYP7
FYP6
FYP5
FYP4
FYP3
FYP2
FYP1

13
March22,2012
LogisticsThematic
1.4 Rising FDI in Indian companies should increase demand for

organizedlogisticsplayers
Strong economic growth during the last several years has attracted strong FDI
across various industries in India. These foreign companies have seen the cost
benefits of enhanced logistics systems in their countries. Hence, these companies
should be willing to allocate their logistics requirements to organized logistics
playerstherebyincreasingthedemandforintegratedlogisticsserviceprovidersin
India.
Exhibit26: FDI Inflow in India has grown multifold over the Exhibit27: Major beneficiaries of FDI Inflows in India during
lastdecade
thelastfiveyears
200
50
9.0
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
FDIinIndia(Rsbn)
2006
2007
2008
2009
Metallurgy
6.1
IndustrialMach
4.3
Hotel&Tourism
5.0
FoodProc.
6.1
Pharma
4.0
Electricals
50
22.8
20
10
100
32.9
30
Chemicals
34.8
150
37.7
Cement&Gypsum
Prod
41.9
40
2010
1.5 Increased container penetration provides opportunities for

varied logistics services multimodal transport, warehousing
&valueaddedservices
WhilecontainerlogisticsinIndiawasintroducedbyIndianRailwaysasearlyasin
1966toprovidedoortodoorservicetotheircustomers,itwasonlyafter20years
whenGovernmentofIndiarealizedtheimportanceofcontainerization.In1988,it
commissionedtheJNPTandsubsequentlycreatedaCorporationcalledContainer
CorpofIndia,whichconstructeditsfirstICDatTughlakabadinNewDelhi.
Container traffic in India has grown at 11% CAGR during FY0112 boosted by
rising EXIM trade. Increased containerization has further facilitated multimodal
transportinIndia.

14
March22,2012
LogisticsThematic
Exhibit28: Container traffic throughput at major Ports has Exhibit29: Containerizedcargomarketsharehasbeenonarise
grownat~11%CAGRduringFY01FY12
overthelastsixyears
10.0
21%
MnTEUs
20.0%
19%
18%
6.0
17%
17.6%
18.0%
15.8%
16%
4.0
17.8%
2009
8.0
2008
20%
14.6%
15%
14%
2.0
13%
2011
2010
2007
12%
2006
FY11
FY12E
FY10
FY09
FY08
FY07
FY06
FY05
FY04
FY03
FY02
FY01
FY00
FY99
FY98
FY97
FY96
FY95
0.0
Exhibit30: Railwaysshareincontainertradeincreasedto~44%in2005vs35%in1994
5.0
MnTEUs
4.0
3.0
2.0
1.0
Rail
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
Road
Source:IndianRailways,KarvyInstitutionalResearch

15
March22,2012
LogisticsThematic
2. EnsuingLogisticsInefficiencyProvidesOpportunities
forLogisticsProviders
2.1 Indialagsonlogisticsefficiencyduetoitspoorinfrastructure
India ranks 47 amongst 155 countries on a Logistics Performance Index (LPI) of
WorldBank.TherankshavebeenpopulatedbasedonsixparametersCustoms,
Infrastructure, International Shipment, Logistics competence, Tracking & Tracing
andTimeliness.
Exhibit32: asIndiaisattheearlystagesoflogisticsevolution
Exhibit31: IndiarankslowonWorldBankslogisticsindex
60
LPIRank
53
Internal
Integrated
Logistics3PL
China,
Phillipines,
Indonesia
47
50
40
27
30
20
10
15
1
Physical
Distribution
India,
Vietnam,Laos
Vietnam
India
China
USA
Sweden
Singapore
Germany
External
Integrated
logistics 4PL
HongKong,
Korea,Singapore
Global
logistics
Management
USA,UK,
Germany
Source:WorldBank,KarvyInstitutionalResearch
Source:IMaCS,KarvyInstitutionalResearch
2.2 Hinterland connectivity has been a bottleneck for logistics

sector
Indias freight traffic is heavily concentrated along the seven major routes (as
showninExhibit34below).Thesesevenroutesaccountfor~50%oftotalfreight
traffic (2007). I. The northern Corridors Delhi Mumbai and Delhi Kolkata
routeshandle~19%oftotaltraffic.Thehightrafficflowalongthesetworoutesis
on account of EXIM traffic from the hinterland areas to the ports of Kandla,
Mumbai and Kolkata. II. The Southern Corridors Chennai Mumbai and
Chennai Kolkata routes handle relatively lower freight traffic (10%). The
presenceofmostofthemajorandminorportsalongthecoastlineofthesouthern
halfofthecountryreducestheneedtotraverselongerdistancesalongthemajor
routesdiscussedabove.
Whiletrafficconcentrationalongtheseroutesisexpectedtogrowfurther,road
andrailinfrastructuredevelopmenthasnotkeptpacewithtrafficgrowth.
Rail: Almost 80% of the present railways network was built before Indias
independence in 1947. Rail traffic grew by >10x since independence, while track
lengthgrewbyamodest~1.5x.TheexistingtrunkroutesofHowrahDelhionthe
EasternCorridorandMumbaiDelhiontheWesternCorridorarehighlysaturated
withlinecapacityutilizationvaryingbetween115%and150%.
Road:Whileroadtrafficgrewby>200xsince1951,roadlengthhasgrownbyjust
8x thereby impacting transportation efficiency of the country. Almost 30% of the
existingNationalHighwayswereconstructedpriortoindependence.

16
March22,2012
LogisticsThematic
Exhibit33: Indian Roadways Highways form a meager 6% of total road network;
Developing the remaining 94% will enhance the last mile connectivity
(<100kms)akeyingredienttoimprovelogisticsefficiency
Expressways
0.01%
National
Highways
2.1%
StateHighways
4.0%
RuralandOther
Roads
79.8%
MajorDistrict
Roads
14.1%
Source:NHAI,KarvyInstitutionalResearch
Exhibit34: ThesevenmajorroutesinIndiaaccountedfor~50%offreighttrafficinIndia
in2007(Roadways24%,Railways20%,Waterways6%)
NewDelhi
Kandla
2
4
Kolkata
Mumbai
6
7
5
Chennai
Kochi
Source:McKinsey,KarvyInstitutionalResearch

17
March22,2012
LogisticsThematic
2.3 RailRoadMixshouldcomplementeachother
Predominance of road transport in India has added to higher logistics costs for
India. India spends ~13% of its GDP on logistics vs. 78% in the developed
countries. In India, a large chunk of cargo traffic moves through roadways even
though these are capable of being transported through railways. On an average,
railtransportcostsonethirdthetransportationcostbyroad.However,roadshave
theadvantageofthelastmileconnectivityandhencelogisticscostscanbereduced
byjudiciousmixofbothrailandroadtransport
Exhibit35: Even though India freight traffic comprises majorly Exhibit36: As road transport is the most expensive mode of
bulkmaterialsmovementoverlongerdistances,57%
transportation in India; Two thirds of road freight is
of freight traffic (~2.5 Bn MT in 2008) move through
structurally suitable for rail and waterways
roadwaysleadingtologisticsinefficiency
transportation
100%
80%
60%
22
37
57
47
40%
48
20%
36
0%
14
India
US
Airways
Waterways
Modes
Logisticscost
Pipelines
Rs0.11perkmperMT
Coastal
Rs0.35pernauticalmileperMT
Rail
Rs1.25perkmperMT
Road
Rs3.50perkmperMT
30
China
Railways
Roadways
Source:McKinsey,KarvyInstitutionalResearch
Source:IndiaInfrastructure,KarvyInstitutionalResearch
3. Government Initiatives to Address the Infrastructure

Bottlenecks
3.1 Planned Expenditure by Govt has missed targets 12th Plan
fixedatRs.13trillion
There have been initiatives to augment capacities across all the modes of
transportation.Whilethe10thFiveYearPlan(20022007)outlayRs.2.6trillionfor
thelogisticssector,thesamehasbeendoubledtoRs.5.6trillionin11thFYP.
There have been slippages in these investments with the railways being a major
laggard in terms of investments. In the 11th FYP, the port development suffered
majorsetbacks,astheactualspendingestimateswerehalved.Goingforward,the
12th FYP has doubled the outlay to ~Rs. 13 trillion to augment logistics
infrastructure.
Exhibit37: LogisticsdevelopmenthassufferedasplannedexpenditureshavemissedtargetsduringXthandXIthFYPs;XIIthFYP
hasfurtherdoubleditsoutlaytoRs13trillion
LogisticsSegment
(Rsbn)
Roads&bridges
Railways(incl.MRTS)
Ports(incl.inlandwaterways)
Airports
Storage
Total
%ofTotalInfrastructure
XthFYP
Actual
1,271
1,021
230
69
56
2,647
29
XthFYP
Planned
1,449
1,197
141
68
48
2,902
33
Dev
%
(12)
(15)
63
2
17
(9)
XIthFYP
Actual#
2,787
2,008
406
361
90
5,652
28
XIthFYP
Planned
3,142
2,618
880
310
224
7,173
35
Dev
%
(11)
(23)
(54)
17
(60)
(21)
Source:PlanningCommissionofIndia,KarvyInstitutionalResearch#RevisedinvestmentestimatesintheMidtermreviewoftheXIthFYP

18
March22,2012
LogisticsThematic
3.2 Dedicated Freight Corridors (railways) to augment track

capacityby~2,750Kms
The Ministry of Railways (MoR) set up the Dedicated Freight Corridor
Corporation of India Limited (DFCCIL) in 2006 to address the issue of capacity
constrain for freight traffic movement in India. The DFCCIL conceived the
quadrilateralprojecttoaugmentfreighthandlingcapacitybyIndianrailways.
ThequadrilateralincludesaWesternandEasternCorridorlinkingthefourmetro
cities Delhi, Mumbai, Chennai and Howrah. While it was expected to be
operational by 2017, inadvertent delays at various fronts have delayed the
project by 34 years. Nonetheless, the commissioning of the same would help
decongest the major traffic routes as well as improve the hinterland connectivity
withtheports.
Exhibit38: PhasingofDedicatedFreightCorridors;ExpectDelaysof34years
The Western Corridor would connect JNPT to Dadri via VadodaraAhmedabadPalanpur

PhuleraRewari,totaldistanceof1,483kmofdoublelineelectric(2X25KV)track.Thisrouteis
oneofthemostcongestedrailroutesandhencetheproposedexpansionwillbenefitbothtrain
operators in term of increased cargo volumes as well as companies in reducing their logistics
costs.
PhaseI
RewariVadodara(920Kms)
20092016
PhaseII
VadodaraJNPT(430Kms)
20102017
PhaseIII
RewariDadri(140Kms)
20102017
TheEasternCorridor connectsLudhianatoSonnagar,totaldistanceof1,279Kmcovering6
states and is projected to caterto a number of traffic streams coal for the power plants in the
northern region of U.P., Delhi, Haryana, Punjab and parts of Rajasthan from the Eastern coal
fields,finishedsteel,foodgrains,cement,fertilizers,limestonefromRajasthantosteelplantsin
theeastandgeneralgoods.
PhaseIAPL1
KhurjaKanpur(343Kms)
20092016
PhaseIIAPL2
KanpurMughalsarai(390Kms)
20102016
PhaseIIIAPL3
KhurjaLudhiana(397Kms)
20112016
PhaseIV(FundingthroughPPP)
DankuniSonnagar(550Kms)
20112016
PhaseIa(FundingbyMinistryofRailways)
SonnagarMugalSarai(125Kms)
20102016
Source:DFCCIL,KarvyInstitutionalResearch
3.3 NHAIhasspedupitsroadexecutionrates
Over the last few years, the National Highway Development Authority (NHAI
the apex government body in India for the planning and implementation of
development projects on national highways) has faced various hurdles such as
problems in land acquisition, non availability of funds and cost escalations, etc.,
whichhasledtoslippagesinimplementingthetargetssetoutinthevariousFYPs.
Recently, NHAIs project execution has sped up and this should help ease
infrastructureconstraintsforthelogisticsindustry.

19
March22,2012
LogisticsThematic
Exhibit39: Mostofthemajorexpansions2laning&6lanning,Expressways&Flyoversworksareyettobecompleted These
shouldimproveroadconnectivity
Project
Particulars
ApprovalDate
PlannedTimeline
GoldenQuadrilateral
Dec00
NSEWPhaseI&II
Dec03
Dec09
TotalLength
(Km)
Completedso
far
5,846
100%
7,300
81%
24%
NHDPPhaseIII
UpgradationofNHonBOTbasis
Mar05toApr07
Dec09Dec12
12,109
NHDPPhaseIV
TwolaningofsinglelanedNH
Dec06toDec09
Dec06Dec15
14,799
0%
NHDPPhaseV
SixlaningofGQ&otherstretches
Oct06
Dec12
6,500
11%
NHDPPhaseVI
BuildingExpressways
Nov06
Dec07toDec15
1,000
0%
NHDPPhaseVII
Flyover,bypasses,ringroads
Dec07
Dec06toDec14
700
1%
380
89%
PortConnectivity
Dec00
SARDP&Others
Total
1,778
53%
50,412
33%
Source:NHAI,KarvyInstitutionalResearch
3.4 New Maritime Agenda 20102020 will boost port capacity

drivingEXIMtradegrowth
Currentlythereare12majorports(capacity681mnMT)inIndiaand~187minor
ports(capacity392mnMT).Thenonmajorportshavemaximumconcentrationin
thestatesofGujarat(42)andMaharashtra(48).
The government had set up NMDP at the start of 11th FYP (FY0712) with an
investmentoutlayofRs.550bntodoublethe12majorportscapacityto1bnMT
(276projects)byFY12.However,itcouldonlyinvest10%ofthetotalfundduring
FY0710 period. Subsequently, the Government has recently scrapped NMDP
(expiringinMar12)andhaslaunchedtheMaritimeAgenda20102020.
The Maritime Agenda 20102020 has set aside US$110 bn fund size to develop
ports and shipbuilding industry by 2020. It envisages augmenting major ports
capacitiesto3.1bnMTby2020.Theportsectorunderthenewplanwouldinvest
US$66bn,ofwhichthemajoritywillbefromprivateinvestors.Twonewportswill
bebuilt,oneoneachcoast,whilefourofthe12existingmajorports(NhavaSheva,
Cochin,ChennaiandVisakhapatnam)willbesubstantiallyupgraded.
Exhibit40: Ongoing expansion programs at major ports in India These
projects are expected to increase major ports capacity by ~30% over

thenextfourfiveyears
MajorPorts
JawaharlalNehruPort
MumbaiPort
MormugaoPort
KandlaPort
TuticorinPort
VisakhapatnamPort
ParadipPort
ChennaiPort
EnnorePort
Kolkata(HDC)
CochinPort
NewMangalorePort
Total
ExistingPort
Capacity(MnMT)
64
51
41
88
27
65
77
80
31
72
41
46
681
Capex
(Rsmn)
17,000
14,600
2,500
12,798
1,490
3,040
5,886
9,640
11,280
3,301
60,330
2,300
144,165
CapacityExpansion
(MnMT)
34
10
5
26
11
8
23
18
23
11
46
3
218

20
March22,2012
LogisticsThematic
3.5 Coastal/inlandwaterwayscanfurthereaselogisticsconstraints
ThoughIndiaslongcoastlineof~7,500kmoffersopportunitiesfordevelopmentof
thismode,itremainsunleveragedduetolackofcoastalnavigationinfrastructure.
Comparatively, China utilizes its coastline much more effectively where 30% of
totaldomesticfreighttraffictravelsoverwater.
Lack of government focus towards the sector has kept it undeveloped and is
restricted only to barge and lighterage operations of bulk cargo. Recently, the
IndianGovernmenthasrelaxedCabotagelawtoallowforeignshippinglinesto
operate feeder services between Indian ports. This should encourage increased
containerservicesbetweentheportstherebyimprovinglogisticsflowinIndia.
Indiasnavigableinlandwaterwayscomprisealmost14,500km,outofwhich5,200
kmofmajorriversandsome500kmofcanalsaresuitableformechanizedcraft.So
far,InlandWaterwayTransport(IWT)islimitedtoonly1%oftotalinlandcargo
transportinIndia.
3.6 Container ports new expansions at major ports key to EXIM

throughputgrowth
JNPT,whichhandles~60%ofIndiancontainertrafficatmajorports,isoperatingat
saturated levels with minimal growth of ~3%. Chennai port handles ~20% of
Indias container traffic and is growing at ~6% and will soon operate at same
utilization levels as that of JNPT. These suggest that the urgent need for new
capacityadditionsacrossIndiatohandlegrowingEXIMcontainertraffic.
Exhibit41: Containerterminalexpansionslineduptohandletherisingcontainerthroughputgrowth
EXIMPorts
Currentcontainer ExpansionPlanned
Timeline/OtherDetails
capacity(mnTEUs)
(mnTEUs)
JNP,Mumbai
4.2(3terminals)
4.8 TobecompletedbyFY1516E,expansioncontractedtoPSA
Chennai
3.5(2terminals)
4.0 TobecompletedbyFY1819E,MundraPortwasthelonebidderfortheproject
Kochi
1.0(1terminal)
3.0
1stphasealreadydoneinFY11,3mnTEUstobeaddedin2ndphasebyFY15
16E,ContractedtoDPWorld

21
March22,2012
LogisticsThematic
3.7 Growth of minor ports & private ports brightens up sectoral

outlook
Gujarat has been aggressively adding port capacities led by rise in non major
portscapacityaswellasbycommissioningofprivateports.Gujarataccountsfor
73%ofthetotalnonmajorportcapacityof392mnMT.Ithasalsocommissioned
twoprivateportsGujaratPipavavPortandMundraPort.Thesetwoportshave
gainedtractioninbothcontainerandbulkcargomovements.
Exhibit42: Mundraportshinterland
connectivity
Exhibit43: GPPLshinterlandrail
connectivity
Exhibit44: GPPLshinterlandroad
connectivity
Exhibit45: While major ports still handle a large chunk, the Exhibit46: Privateportshavebeengainingmarketsharesover
thelastsixyears
minorportsvolumeshareisexpanding
35%
120%
80%
32.2%
33%
100%
25.5%
28.6%
27.7%
28.1%
31%
32.2%
29%
27%
60%
28.6%
28.1%
27.7%
FY07
FY08
FY09
25.5%
25%
40%
23%
21%
20%
19%
0%
FY06
FY07
FY08
FY09
17%
FY10
15%
MajorPorts
NonMajorPorts
FY06
FY10
Source:IPA,Crisil,KarvyInstitutionalResearch
Source:GMB,KarvyInstitutionalResearch

22
March22,2012
LogisticsThematic
3.8 Multipletaxincentivestoattractinvestmentinthesector
TheIndianGovernmenthasintroducedvarioustaxschemestoboostinvestments
(including FDIs) in the logistics sector. These incentives are in the form of profit
linkedtaxbenefitsorcapitalbaseddeductions.
Exhibit47: Governmenthasprovidedmanytaxincentivestoattractinvestmentinthelogisticssector
Sectors
Applicable
sectionsinITAct
FoodProcessing
80IB
ColdChain,CFS
&ICDs
35AD
Warehousing
Facility
35AD
Settingup&operatingwarehousefacilitiesfor
agriculturalproduce
FTWZ
80IAB
UndertakingengagedindevelopmentofFTWZ
TypeofActivity
Processing,preservation&packagingoffruits&
vegetablesormeat&meatproducts,dairy
products,foodgrains,etc
Settingup&operatingcoldchainfacilitieson&
after1stApril2009;CFS&ICDsincludedfrom
FY13E
AmountofDeductions
100%ofprofitsforfirst5years,30%ofprofitsfor
next5years
150%deductionsoncapexincurredduringtheyear
onotherthanlandacquisition/goodwill/financial
instruments
100%deductionsoncapexincurredduringtheyear
onotherthanlandacquisition/goodwill/financial
instruments
100%profitsfromthebusinessfor10consecutive
yearsoutofthefirst15years(fromstartof
notificationbyCentralGovt)
Source:IncomeTaxAct,KPMG,KarvyInstitutionalResearch
4. EmergenceofPrivateContainerTrainOperatorshave
broughtinCompetitiveness
In its bid to augment container penetration in India and bring in efficiency in
container logistics in India, the MoR (in consultation of Ministry of Shipping,
Ministry of Commerce & Industry andPlanning Commission) passeda policy in
Jan06, whereby the private companies were invited to operate container trains
along with the incumbent operator Container Corp using the IRs existing rail
infrastructure.
Keeping the traffic concentration in perspective, the entire network of IR was
classified into four categories (Category I to IV) based on the existing and
anticipatedtrafficvolumesofports.15privateplayersboughtlicensesforvarious
categories as Container Train Operators (CTOs) thereby during 20062008. While
the CTOs would procure their rolling stocks and would construct or lease their
InlandContainerDeports(ICD),theIRwouldprovidethelocomotivestoallthe16
operators(alongwithContainerCorp)onanondiscriminatorybasis.
We believe this is a move in the right direction as private participation should
facilitate faster penetration of containerized trade in India, as the private players
who have entered in this business are also present in other related services. This
pavesthewayforriseinintegratedlogisticsinIndiainthelonghaul.
Exhibit48: LicenseCategoriesCTOOperatorsLicense
Category
I
II
III
IV
AreasofOperation
RegistrationFee(Rsmn)
JNP/Mumbai Port National Capital Region rail corridor and beyond. This category will also 500(automaticallyincludesall
includealldomestictraffic.
fourcategories)
RailcorridorsservingJNP/MumbaiPortanditshinterlandinotherthanNationalCapitalRegion
100
andbeyond.ThiscategorywillalsoincludealldomestictrafficexceptoncategoryIroutes.
Rail
corridors
serving
the
ports
of
Pipavav,
Mundra,
Chennai/Ennore, Vizag and Kochi and their hinterland. This category will also include all
100
domestictrafficexceptoncategoryIroutes.
Rail corridors serving other ports like Kandla, New Mangalore, Tuticorin, Haldia/Kolkata,
Paradip and Mormugaoand their hinterlandand alldomestic traffic routes.This categorywill
100
alsoincludealldomestictrafficexceptoncategoryIroutes.
Source:IndianRailways,KarvyInstitutionalResearch

23
March22,2012
LogisticsThematic
4.1 Private CTOs reduce Container Corps monopoly while

improvingcompetitiveness
Promoters profile and their other business segments suggest that most of the
privateentrantsareseriousplayers.Theirpresenceinrelatedbusinessescontainer
shipping, container terminal operations, CFS operations and presence of
international related companies suggest these CTOs would continue to invest in
thesectorandwouldfurtherrampuptheiroperations.
Exhibit49: ContainerTrainOperatorsProfilePromotersprofileandtheirotherbusinessesimplymostofthemareseriouslong
terminvestors
CategoryI
GatewayRailFreightLtd
Rakes
OtherDetails
PromoterDetails
(210oldrakes30highspeedwagons),61terminals
(18EXIM,13Domestic,30both)
IndianRailways,PSU
21
ThreeICDsGarhi(Delhi),Sanewal(Ludhiana),
Kalamboli(Mumbai)
GatewayDistriparks;Blackstone
majorshareholder,CFS
18
Primarilydomestic(EXIMrouteChennaiBangalore)
HindTerminals
12
LinksfourICDsinNorthtoJNPT,Mundraand
Pipavav
IndiaInfrastructureLogisticsPvtLtd
(APL)
LinksfourICDsinNorthtoMumbai,Mundraand
Pipavav
ContainerRailRoadServices
TieupswithvariousCFS/ICDoperators
MSCGroupamajorcontainer
shippingline
APLIndia(SubsidiaryofNOL
Singapore)ContainerShipping
Line
DPWorldContainerTerminal
Operator,Ports
ETAFreightstar
LinksfourICDsinNorthWestregionstoMumbai,
MundraandPipavav
ETA(Dubai);Multimodal
transport,Shipping,Portservices
SMART
HasThreeCFS(Chennai,Tuticorin&Vizag);Tieup
withCFS/ICDoperators&privatesidings
SicalLogistics,CFS,Container
terminals
AdaniLogistics
ServicefromNCR&RajasthantoMundraandJNPT
AdaniGroupofIndustries
ContainerTerminal,Ports
10
CentralWarehousingCorp(CWC)
HasseveralICDsandCFSsofitsown
PSU,Warehousing
11
RelianceInfrastructureLeasing
NA
Reliance(ADAG)
12
Kribco
NA
PSU,Commoditymanufacturer
240
CategoryIIIV
OtherDetails
PromoterDetails
13
Innovative(B2B)LogisticsSolution
Rakes
15
Kalamboli(JNPT);TieupswithCFS/ICDoperators
CatIVLicense,Agency
14
Boxtrans
12
ConnectsVizag,Jaipur,Loni,Kolkata,Guwahati,
Gujaratports;TieupswithCFS/ICDoperators
CatIII,JMBaxi&CoContainer
terminal,CFS,Stevedoring
15
TransRailLogistics
DomesticMumbaiKolkatamainlySurat,Silvasa
andHaldia
DelhiAssamRoadwaysCorp
Trucking
16
PipavavRailCorporation(PRCL)
Doesnotowntrains,hasbuiltrailtracksinJVwith
WRandshares50%oftherevenueswithWR
JVbetweenGujaratPipavavPort
Ltd&IndianRailways
4.2 GrowthopportunitiesaboundforCTOsevenonaconservative
basis
Our base case analysis suggests that the demand for container trains should
growby10%CAGRinFY1217Eperiod.Thisimpliesadditionof>220container
trains by FY17E. Our bear case assumptions forecast need for >120 container
trains. We have based demand projections at lower rates than that envisaged by
IPA,asweseeportandrailinfrastructuregrowthtoremainconstrained.Further,
we have only factored in EXIM container traffic for major ports. Additional
demand should come in from private ports that have come in Gujarat and
Vishakhapatnam.

24
March22,2012
LogisticsThematic
Exhibit50: Containertraindemandprojectionseventhebearcasescenarioprojectsadditionaldemandfor>120rakesbyFY17E
Bull
Case
Base
Case
Bear
Case
EXIMContainerCAGRassumptionsforFY1217E
12%
8%
4%
FY12Ethroughput(mnTEUs)
7.84
7.84
7.84
EXIMContainerTEUsinFY17E(mnTEUs)
13.8
11.5
9.5
RailshareofEXIMContainermovement
35%
35%
35%
EXIMContainermovedbyRail(mnTEUs)
4.84
4.03
3.34
8,640
8,640
8,640
Tripspermonth(nos.)
4.0
4.0
4.0
ToandFrocapacitypertrip(TEUs)
180
180
180
AnnualrakescapacityinTEUs
RakesrequiredtohandleFY17EEXIMTargets
560
467
386
80%
80%
80%
TotalRakesdemandinFY17E(nos.)
700
583
483
CurrentFleetSize(nos.)
356
356
356
344
227
127
14%
10%
6%
EXIMtrains(%oftotal)
RakesAdditionsrequired(nos.)
RakesDemandCAGR
Comments
FY0612CAGR10%,FY0106CAGR14%,Lower
growthfactoredintofactorinportcapacityandrail
capacityexpansion(BullcaseCAGR=IPAsprojected
CAGRforFY0826E)
Railwayscarried~44%EXIMthroughputinFY05before
privateCTOscameinsince2006;Henceourestimates
areconservative
Assumed7.5daysforoneroundtripeachmonth,100%
utilisation
AsofFY12E,80%of~350rakesareservicingEXIM
traffic
Eventhebearcasescenarioprojectsdemandfor
additional120+rakesoverthenextfiveyears
4.3 EconomicsofaCTO/ICDoperator
Asshownbelow,wehaveworkedouttheprofitabilityofamodelCTOoperator,
whichownsfourICDsand40rakes.At80%utilisation,RoCEstandsat10%.With
apickupincontainerservices,theutilisationlevelsareexpectedtoremain>80%
and the operators would be able to sweat the assets effectively on both uphaul
anddownhauls.Thesectorbeingcapitalintensive,asutilisationanddemandpick
up,higherleverageshouldresultinlargeexpansioninthereturnratio.
Exhibit51: ModelProfitabilityofaCTOwithfourICDsand40rakes
Rakes(nos)
Cost/rake
40
120
Averagetimepertrip(days)
7.0
Averagetrip/year/rake(nos)
52.1
Costallrakes
4,800
Rakecapacity(to&fro)
180
Settingcostfor1ICD
1,500
Capacity(TEUs)
Settingcostfor4ICD
6,000
Utilisation
Equipcosts&FA
1,000
Volumehandled(TEUs)
Registrationcost
CapitalEmployed(Rsmn)
Gearing(X)
Debt
InterestCost(%)
Depreciationrate(%)
500
12,300
1.5
7,380
Realisation(Rs/TEU)
375,429
80%
300,343
24,790
Revenue(Rsmn)
7,445
Opex(%)
75%
EBITDA(Rsmn)
1,861
11.0
Interestcost(Rsmn)
(812)
5.0
Depreciation(Rsmn)
(615)
PBT(Rsmn)
435
Tax@20%
(87)
PAT(Rsmn)
348
RoE(%)
7%
RoCE(%)
10%

25
March22,2012
LogisticsThematic
4.4 OperationalissuesimpactingCTOsneedtobeaddressed
The entrants CTOs have incurred high capital costs towards license fees and
infrastructure building making the business highly capital intensive and with a
longgestationperiod.AmongsttheoperationalcostforaCTO,haulagechargesby
the IR accounts for 7075% of the operational cost. The IR has increased the
haulagechargesbyatleastfivetimessinceJan06.
Haulage charges by Indian Railways: While the haulage revenue accounts for
~3%ofIRtotalrevenues,itisasignificantcostfortheCTOs.Whenthewagons/
containershavetobemovedemptyontheirreturnjourney,theCTOsmarginsare
further compressed. Empty container movement is charged at 65% and empty
containerwagonat60%oftheloadedcontainerhaulagecharge.
Exhibit52: IndianRailwaysraisedthehaulagechargesby>15%withthreeyearofoperationsbyprivateCTOs.In2010,itfurther
raisedhaulagechargesforselectcommoditiesby~100%200%therebyimpactingoperatorsgrowth&profitability
Distance
Haulagein2006(Rs)
%RiseinHaulage(200610)
2026MT >26MT
<20MT
2026MT >26MT
Distance
(Kms)
CementStone
otherthan
marble(Rs)
Iron&Steel
(Rs)
POL
(Rs)
(kms)
<20MT
10011050
9,734
12,222
13,556
11
14
15
9511000
23,174
27,809
30,897
15011550
13,796
17,267
19,236
14
16
17
14511500
34,209
41,050
45,612
20012050
18,089
22,304
24,908
14
18
19
19512000
42,923
51,510
57,232
25012550
22,405
27,362
30,600
14
19
20
29513000
54,912
65,894
73,217
30013050
26,720
32,391
36,265
13
20
20
34513500
60,706
72,848
80,942
Source:IIMAResearchPaper,IndustryData,KarvyInstitutionalResearch
4.5 Haulage charge hike impacted domestic handling for rail

operators
The hikes in commodity specific haulage charge by the IR severely impacted the
demandforcontainerrailsinthedomesticsegment.TheIRlostitsmarketshareto
thetruckoperatorsoverthenextfewquarters.
Exhibit53: Container Corporations domestic container handling growth got impacted
after Indian Railways increased commodity specific haulage charges in
Dec2010
200
40
152
150
127
132
145
30
139
111
143
113
120 20
100
10
50
(10)
DomesticThroughput(000TEUs)
Dec11
Sep11
Jun11
Mar11
Dec10
Sep10
Jun10
Mar10
(20)
Dec09
YoYGrowth(%)RHS
Source:ContainerCorporationofIndia,KarvyInstitutionalResearch
However,inthelongrun,therailwayswillcontinuetobethepreferredmodefor
long haul cargo movements as it costs ~one third (Rs. 1.25 per KM per MT)
comparedtoroadtransportation.

26
March22,2012
LogisticsThematic
Additional railway surcharge, rising empty rake parking charges, restricting
commodity basket for CTOs have further compounded the cost pressure on the
CTOs.
Other issues which need to be handled include better and efficient maintenance
facilitybyIRtoCTOs,betterclarityondevelopmentanduseofprivatesidingsto
increasepenetration.Further,whiletheIRhasleasedoutlandtoContainerCorp
atlowrates,theprivateCTOshavetoincurhighcoststosetupitsICD/CFS.This
contradictsthelevelplayingfieldsuggestedbythepolicy.
5. FDI Policy related to Logistics Sector has Encouraged

ForeignPlayers/PEstoinvestintheSector
In India, 100% FDI is allowed in the logistics sector. Almost all major global
logisticsplayershavetheirpresenceinIndia.
100% FDI under the automatic route is permitted for all logistics services
exceptinservicesmentionedinpointsIIandIII
FDIupto100%subjecttoFIPBapprovalispermittedforcourierservices
FDI up to 49% under the automatic route is permitted for air transport
services,includingaircargoservices.
Exhibit54: M&AdealshavebeenapopularrouteofentryinIndia
Segment
Acquirer/Investor
Target
Year
Expresscargo
BrekmanGrp
CourcanCargo
2006
FreightFwddg
CHRobinson
TriuneFreight
2006
Expresscargo
FedEx
PrakashAirFreight
2006
Transportation
TNT
AssociatedRoadCarriers
2006
FreightFwddg
KerryLogisitcs
ReliableFreightForwarders
2006
FreightFwddg
PhoenixInternationalFreightServices
EasternLogisitcs
2006
Ports
SembcorpMarine
GujaratPipavavPort
2007
Ports
TropicalDimension
KakinadaSeaports
2007
Ports
DPWorld
ChennaiContainerTerminal
2008
Shipping
OxbowCorporation
UnitedShippers
2009
BulkCargoHandling
LouisDreyfusArmateurs
ABGLDABulkHandling
2009
Transportation
TollGroup
BICLogistics
2009
Transportation
Blackstone
GatewayRailFreight
2009
FreightFwddg
Blackstone
AllcargoLogistics
2009
Ports
PSAInternational
ChennaiContainerTerminal
2010
Transportation
HitachiTransportationSystem
Flyjac
2010
Transportation
NYKLine
TataMartradeInternationalLogisitcs
2010
Warehousing
WarburgPincusIndia
ContinentalWarehousingCorporation
2011
FreghtFwddg
FidelityGrowthPartnersIndia
TranspoleGroup
2011
Transportation
CoffeeDayResorts
SicalLogistics
2010
Expresscargo
FedEx
AFL
2010
Expresscargo
KintetsuWorldExpress
Gati
2012
Source:KPMG,Industry,KarvyInstitutionalResearch

27
March22,2012
LogisticsThematic
Exhibit55: PEinvestorsinterestinIndiaslogisticshasrisenby Exhibit56: PE Investment profile during Mar06 Oct10
asharpdropin2009
periods
1000
Railway CFS
Logistics 10%
4%
35
30
800
25
600
20
400
15
Others
1%
Shipyard
11%
Logisitcs
Services
47%
10
200
Aviation
8%
0
2007
2008
(US$mn)
2009
2010
No.ofDeals
Source:VentureIntelligence,KarvyInstitutionalResearch(2010dataisforJan
Oct2010period)
Warehousin
g
7%
Port
12%
Source:VentureIntelligence,KarvyInstitutionalResearch(DataisforJan07to
Oct10period)
6. ImpendingGSTAnotherBoosterfortheIndustry
In the absence of a unified tax structure, the companies have to invest in
warehousingoperationsineverystatetoavoidmultipletaxations.Thisraisesthe
total fixed costs for the operators, while preventing the implantation of latest
technologiesasfragmentationprohibitseconomiesofscale.
The recent move by the Government to implement GST in FY13 would address
thisissuetoalargeextent.Unifiedtaxationshouldreduceambiguityandcostsfor
variousserviceproviders.Thisinturnwillboostthemodernwarehouseindustry
andalsohelpincreasepenetrationofintegratedlogisticsconceptsof3PL,4PLand
7PL.
ModernwarehousingsegmenttobealargebeneficiaryofGST
The Indian warehousing industry is highly fragmented with only ~10% with
organised players. Again, the size of the warehouses is mostly less than 10,000
square feet and these warehouses lack modern infrastructure capabilities. As per
industry estimates, the warehousing segment (including CFS, ICD, cold storage,
modernwarehousing,etc)comprises20%ofthelogisticsindustryandisvaluedat
~US$30bninFY10.GSTimplementationwouldleadtosignificantreorganization
of warehousing in India, as the companies move towards unified and large
warehouses at centralized locations coupled with modern infrastructure. The
demandformodernwarehousingwouldincrease,asthesearecriticalelementsin
evolutionofthelogisticsupplychain.

28
March22,2012
LogisticsThematic
7. ValueAddedServices3PL&abovetoProvidethe
NextLevelofGrowthforLogisticsIndustry
Asdiscussedearlierinthereport,logisticsinIndiaisatthenascentstages.Market
shareof3PLlogisticsinIndiais~10%vs.40%inEurope,~60%intheUSAand80%
in Japan. Hence, there remains strong growth potential for logistics service
providersinthesegment.
Exhibit57: Variousclassesoflogisticsserviceproviders
As the companies increasingly focus on their operational efficiencies through

bettercostcontrolsandonassetreturns,themanagementfocuswouldshifttocore
business.Hence,noncorebusinessofhandlinglogisticssupplychainwouldmove
to 3PL (and above) service providers. However, the success of these providers
wouldrequirelongtermrelationshipswithcustomersaswellasassetproviders,
customizedindustryspecificsolutions,highlyqualifiedmanpowerandenhanced
usageoftechnologyetc.
Third Party logistics (3PL) is an outsourcing concept in which a company

outsourcesitslogisticsneedstosomethirdpartyplayerwhotakescaresofall
their logistics needs. The general functions which are outsourced under the
concept are transportation, warehousing, crossdocking, inventory
management,packagingandfreightforwarding.
Fourth Party Logistics (4PL) can be defined as a service of designing supply

chain solutions for its clients. The service providers under the category are
basicallynonassetbased,whoorganizethelogisticsneedsoftheirclients.The
main distinguishing factor between a 3PL and 4PL is the ability of 4PL to
generate revenues from nonasset base. 4PL player is a consultant, whereas
3PL is the actual operator, who executes the logistics functions. 4PL in some
casesalsocoordinatesthefunctionsof3PL.
Seven Party Logistics (7PL = 4PL + 3PL) is a recent concept and it combines
theconsultingandcocoordinatingfunctionsof4PLwithoperationalfunctions
of3PL,thusofferingatotaloutsourcingoflogisticsdivision.7PLconceptisyet
totakeitsgroundsinIndia.

29
March22,2012
LogisticsThematic
KeyRisks
Asdiscussed,thegrowthofIndianlogisticssectorisverymuchdependanton
government willingness to relax logistics infrastructure constraints. There
have been inadvertent delays in developing rail, road, ports and coastal
shipping capabilities. Whilst we expect things to move in the positive
directions, further delays will distract serious investors in the segment, who
have been investing in transportation assets and in developing high end
logisticsservices.
Delayinstreamliningtaxationpolicyisanotherkeyriskthatwillimpactthe
sectorsprofitabilityandthefuturecapexcapability.
LandacquisitioninIndiahasbecomecomplexrecentlyduetovarioussocio
politicalissues.Anydelayinstreamliningthelandacquisitionprocesswould
severely impact the profitability of the incumbent as well as the and new
entrants.

30
March22,2012
LogisticsThematic
CompaniesSection
ALLCARGOGLOBAL
ARSHIYAINTERNATIONAL
CONCOR
GATEWAYDISTRIPARKS

31
IndiaResearch
INITIATIONREPORT
Logistics
March22,2012
AllcargoLogistics
Bloomberg:AGLLIN
Reuters:ALGL.BO
BUY
AGlobalPlayeronGrowthPath
Recommendation
CMP:
Rs138
MTO segment buoyed by ECU Line growth: Globally, AGLL is the 2nd
largestLCLconsolidator(MultimodalTransportOperations)postacquisition
of ECU Line. This segment accounts for 80% of total revenues. With ECU
LinesincreasingpresenceinthehighgrowthAsiancountries,weexpectthe
MTOrevenuestogrowat14%CAGRinFY1214Eperiod.
TargetPrice:
Rs213
Rising presence in another niche business Project logistics and

Equipment hiring: AGLL has increased its fleet of cranes and engineering
equipment to capitalise on strong demand related to infrastructure
developmentactivities.WithastrongcapexofRs.4bnduringFY1213E,we
expectrevenuestogrowat18%CAGRduringFY1214E.
Capex results in doubling of gross debt but within control: The ongoing
expansionshavedoubledAGLLsgrossdebtinFY12EtoRs.7.9bnandwe
expectthesametoincreasefurthertoRs.8.6bnbyFY14E.However,inour
view AGLLs balance sheet does not appear stretched as net DER stands in
therangeof0.260.37xduringFY1214E.
InitiatecoveragewithBUYrecommendation:WeexpectAGLLnetprofits
togrowby20%CAGRduringFY1214Eperiodledbyexpansionsacrossall
thethreebusinesssegmentsAGLLispresentinMTO,CFS/ICDandProject
& Engineering. We value AGLL at 10.5x (25% discount to five year median
P/E 13.8x) its mid FY13FY14E EPS of Rs. 20.2. We initiate coverage on the
stockwithBUYrecommendationwithatargetpriceofRs.213pershare.
54%
StockInformation
MarketCap.(Rsbn/US$mn)
18/350
52weekHigh/Low(Rs)
190/115
3mADV(Rsmn/US$mn)
02/0.0
Beta
0.8
Sensex/Nifty
17,316/5,275
Shareoutstanding(mn)
131
StockPerformance(%)
Absolute
1M
(5)
3M
9.7
12M
(14)
YTD
5.1
Rel.toSensex
0.3
(3.9)
(11.2)
(6.2)
Performance
200
180
160
140
120
21,500
19,500
17,500
15,500
Mar11
May11
Jun11
Jul11
Aug11
Oct11
Nov11
Dec11
Feb12
Mar12
ExpandingCFS/ICDCapacitiestoBoostProfitability:AGLLhasthreeCFS
atthreemajorEXIMhubsJNPT,MundraandChennai.Itisthenumberone
operator at Chennai and Mundra ports with major concentration towards
high realisation import cargo handling. Currently, this segment contributes
~7%toAGLLtotalsalesand~30%ofconsolidatedEBITasthisisthehighest
margin segment for AGLL (~4857% OPM during the last eight quarters).
AGLL is incurring capex of Rs. 1.3 bn to double its JNPT capacity to 288K
TEUsandChennaicapacityby~10%inFY13E.Further,AGLLisaugmenting
itsICDsandWarehousescapacitiesbyincurringacapexofRs.0.7bn.
Upside(%)
Sensex(LHS)
AllcargoLogistics(RHS)
1YearForwardEV/EBITDA
25
20
15
10
5
0
Jun06
Dec06
Jul07
Jan08
Jul08
Jan09
Jul09
Feb10
Aug10
Feb11
Aug11
Mar12
KeyFinancials
YeartoDec/Mar(Rsmn)
CY09
CY10
FY12E
FY13E
FY14E
20,609
28,613
43,325
40,391
43,169
2,185
2,698
4,927
4,667
5,320
10.6
9.4
11.4
11.6
12.3
1,327
1,656
2,765
2,446
2,845
EPS(Rs)
10.6
12.7
16.9
18.7
21.8
RoE(%)
16.4
15.1
16.6
15.5
15.6
RoCE(%)
14.8
13.4
14.2
12.9
12.9
P/E(x)
EV/EBITDA(x)
12.7
10.7
8.0
7.2
6.2
8.1
7.1
5.7
4.7
4.1
NetSales
EBITDA
EBITDA(%)
PAT
AnalystsContact
RajeshKumarRavi
02261844313
PrasunKumar
02261844325
Source:Company,KarvyInstitutionalResearch*FY12EPSisannualized,Changeofaccountingyear

March22,2012
AllcargoLogistics
CompanyFinancialSnapshot
CompanyBackground
Profit&loss
Rsmn
FY12E
Netsales
EBIDTA
Depreciation
FY13E
FY14E
Allcargo Logistics (AGLL) is the second largest LCL (Less

than Container Load) consolidator globally. Its business
segmentsincludeMultimodalTransportOperations(MTO),
Container Freight Stations, Project Logistics, Equipment
Hiring&,CoastalShipping.
43,325
40,391
43,169
4,927
1,160
4,667
1,015
5,320
1,223
InterestExpense
PBT
740
3,637
705
3,246
673
3,755
Tax
Adj.PAT
727
2,765
16.9
1.0
649
2,446
18.7
1.9
751
2,845
21.8
2.2
Incorporated on August 18, 1993 as a private limited

companyundertheleadershipofShashiKiranShetty,AGLL
has taken a long stride growing organically as well as
inorganicallysincethen.
11.4
6.4
11.6
6.1
12.3
6.6
P/E(X)
EV/EBIDTA(X)
8.0
5.7
7.2
4.7
6.2
4.1
In 2006, it acquired the Belgiumbased ECU Hold NV

thereby becoming the 2nd largest LCL operator globally. Its
CFSsarelocatedatmajorcargohubssuchasJNPT,Chennai
&MundraandhasICDsatPithampurandIndore.
P/BV(X)
1.2
1.0
0.9
Rsmn
FY12E
FY13E
FY14E
TotalAssets
NetFixedAssets
27,755
16,413
31,496
18,897
35,360
20,675
CurrentAssets
OtherAssets
TotalLiabilities
Networth
10,786
557
27,755
14,384
12,042
557
31,496
16,543
14,129
557
35,360
19,055
7,817
4,646
8,208
5,586
8,618
6,269
OtherLiabilities
BalanceSheetRatios
908
1,159
1,418
RoE%
16.6
15.5
15.6
ChangeinDebt
RoCE%
14.2
12.9
12.9
0.3
1.4
0.3
1.4
0.2
1.3
EPS(Rs)*
DPS(Rs)
ProfitandLossRatios
EBIDTAMargin%
AdjNetMargin%
ValuationMultiples
*FY12EPSisannualized
BalanceSheet
CashFlow
Debt
CurrentLiabilities
NetDER(x)
AssetTurnover(x)
Rsmn
FY12E
FY13E
FY14E
PBT
Depreciation
3,637
1,160
3,246
1,015
3,755
1,223
Interest
Tax
740
(727)
705
(649)
673
(751)
ChangeinWkgCap
CFfromOperations
(1,470)
3,339
327
4,644
(755)
4,144
Capex
Investments
CFfromInvesting
(5,100)
177
(4,923)
(3,500)
(7)
(3,507)
(3,000)
(7)
(3,007)
ChangeinEquity
4,040
391
410
Dividends&others
(840)
(892)
(906)
CFfromFinancing
ChangeinCash
3,199
1,615
(501)
636
(496)
641
Shareholdingpattern(%)
ConsolidatedRevenuebreakup(%)
Public&
Others,
18.23
Others
9%
Project&
Engg.
9%
FII,11.15
DII,0.81
CFS/ICD
7%
Promoters,
69.81
ECULine
69%
Domestic
MTO
6%
33
March22,2012
AllcargoLogistics
Valuation&Recommendation
WeexpectAGLLnetprofitstogrowat20%CAGRduringFY1214Eperiodledby
expansions across all the three business segments AGLL is present in MTO,
CFS/ICD and Project & Engineering. While debt levels will increase to fund this
growth, AGLL balance sheet remainsfairlystable in our view (Net DER of~0.3x
duringFY1314E).WevalueAGLLat10.5x(25%discounttoitsfiveyearmedian
P/E 13.8x) its mid FY13FY14E EPS of Rs20.2 per share. The 25% discount to its
long term average factors in risks to earnings growth that may emanate from
delays in infrastructure commissioning which in turn will impact growth for all
the logistics providers. We initiate coverage on the stock with BUY
recommendationwithatargetpriceofRs.213pershare.
Exhibit1: AGLL is trading at the lower end of its long AGLLslongtermmedianEV/EBITDA(1yrfwd)of8x(1
term1yrfwdP/Emedianof13.8x(1SD7x)
SD2.9x)
40.0
25
35.0
20
30.0
25.0
15
20.0
10
15.0
10.0
5.0
Mar12
Feb11
Aug11
Aug10
Feb10
Jul09
Jan09
Jul08
Jan08
Jul07
Jun06
Mar12
Aug11
Feb11
Aug10
Feb10
Jul09
Jan09
Jul08
Jan08
Jul07
Dec06
Jun06
Dec06
0.0
Exhibit2: LongtermP/Bmedianat1.9x(1SD1.1x)
Exhibit3: ReturnRatiostostabiliseduringFY1314E
7.0
24
6.0
22
5.0
23.5
20.2
20
4.0
18
3.0
Mar12
Aug11
Feb11
Aug10
Feb10
Jul09
Jan09
12
Jul08
0.0
Jan08
14
Jul07
1.0
Dec06
16
Jun06
2.0
16.4 15.1
17.3
14.8
13.4
15.5
14.2
15.6
12.9
12.9
10
CY06
16.6
17.0
18.2
CY07 CY08
RoCE
CY09
CY10 FY12E FY13E FY14E

RoE
RoIC
34
March22,2012
AllcargoLogistics
InvestmentRationale
Ourinvestmentthesisisbasedonfollowingpremises:
1.
2.
3.
4.
5.
6.
7.
LCL/MTOsegmentbuoyedbyECULinesgrowth
CFScapacityexpansiontoboostprofitability
ICDsandWarehouseswouldfurtherboostearningsinlongrun
ProjectLogisticsandEquipmenthiringtogainfromgrowingdemandfrom
infrastructurespace
Weexpect15%revenueCAGRduringFY1214E
ExpectEBITDACAGRof26%duringFY1214Easmarginsexpand
PATCAGRtomoderateto20%onaccountofhighinterestcosts
1.LCL/MTOsegmentbuoyedbyECULinesgrowth
AGLLbecamethe2ndlargestLCLconsolidatorgloballyafteritacquiredECULine.
This subsidiary along with Indian MTO operations contributes ~80% of
consolidatedrevenuesofAGLL(India~10%).Withitsstrongpresenceacrossthe
globe,ECULineMTOvolumethroughputhasbeengrowingby18%CAGRover
thelasttwoyears.ECULinehasslowlydiversifiedintononEuropeancountries
into the Far East nations to continue its growth momentum. It recently acquired
companies in Hong Kong and China to mark its presence in growing Asian
economies.Additionally,ascontainertradeincreasesamongsttheAsiancountries,
AGLL should benefit from its rising presence in Asia. Going forward, we expect
totalMTOrevenuestogrowby13%CAGRduringFY1214Eperiods.
Exhibit4: ECU Line volume has grown at 18% CAGR Exhibit5: ECU Lines revenue trend during the last two
duringthelasttwoyears
years
ECULineVolumes(KTEUs)
20
0
20
GrowthYoY(%)RHS
Revenue(Rsmn)
GrowthYoY(%)RHS
Dec11
40
Mar10
Dec11
Sep11
Jun11
Mar11
Dec10
Sep10
Jun10
Mar10
20
Dec09
0
Sep09
10
Jun09
10
40
Sep11
20
60
Jun11
10
30
80
Mar11
20
40
100
Dec10
30
50
8000
7000
6000
5000
4000
3000
2000
1000
0
Sep10
40
60
Jun10
70
2.CFScapacityexpansiontoboostprofitability
AGLLhasthreeCFSatthreemajorEXIMhubsJNPT,MundraandChennai.Itis
thenumberoneoperatoratChennaiandMundraportswithmajorconcentration
towards high realisation import cargo handling. Currently, this segment
contributes~7%toAGLLtotalsalesand~30%ofconsolidatedEBITasthisisthe
highestmarginsegmentforAGLL(~4857%OPMduringthelasteightquarters).
Going forward, the CFS contribution to topline and EBIT should increase as
AGLLisabouttodoubleitsCFScapacityatJNPTby1HFY12to288KTEUs.This
will be a major revenue driver as currently, JNPT CFS is operating at >90%
utilisation. The management plans to increase its export handling on the
incremental capacities in its bid to gain overall EXIM market share at JNPT.
Similarly, to maintain its leadership position at Chennai where utilisation has
35
March22,2012
AllcargoLogistics
moved up to 80% levels, AGLL is planning to augment its capacity through
introductionofbetterstackingfacilitiesusingRubberTyreGantryCranes(RTGs).
Goingforward,weexpectmoderatefallinEBIDTAmarginsasnewcapacitiesin
JNPTpickupmainlyonaccountofchangeinEXIMmix.However,weexpectthe
additionalrevenuegeneratedfromaddedcapacitiestomorethancompensatefor
themargindecline.TotalcapexofRs.1.3bnisbeingspenttowardsCFSsegment
duringFY1213Eperiod.
Exhibit7: Whileitcontinuestogrow Exhibit8:
atitsChennaiCFS
Exhibit6: AGLLsJNPTCFSvolumes
havedeclinedrecently
40,000
60%
30,000
40%
20%
20,000
100%
15,000
20,000
50%
10,000
10,000
0%
5,000
20%
GrowthYoY%
0%
50%
50%
Mar09
Jun09
Sep09
Dec09
Mar10
Jun10
Sep10
Dec10
Mar11
Jun11
Sep11
Dec11
Mar09
Jun09
Sep09
Dec09
Mar10
Jun10
Sep10
Dec10
Mar11
Jun11
Sep11
Dec11
JNPTVol
100%
Mar09
Jun09
Sep09
Dec09
Mar10
Jun10
Sep10
Dec10
Mar11
Jun11
Sep11
Dec11
40%
150%
50%
0%
10,000
30,000
andatitsMundraCFS
ChennaiVol.
MundraVol.
GrowthYoY%
GrowthYoY%
3.ICDsandWarehouseswouldfurtherboostearningsinlongrun
It also has two ICDs operational at Dadri and Pithampura. Currently, these are
small units and AGLL is infusing capex to increase throughput at these units as
well as is investing in another ICD at Hyderabad. Additionally, AGLL is also
investingintowarehousingcapacityatGoaandHosur.AGLLisspending~Rs.0.7
bntowardstheseexpansions.
4. Project Logistics and Equipment hiring to gain from growing

demandfromInfrastructurespace
AGLL offers project integrated projects, engineering and equipment logistics
solutions. The growth in this business is closely related with infrastructure
development activities in India. The industry is currently facing acute demand
supplygapforavailabilityofequipmentsaswellasonestopsolutionproviderto
meettheindustrydemand.
Exhibit9: AGLLsCranesfleetgrowth
Exhibit10: AGLLsTrailersfleetgrowth Exhibit11: Segmentwise deployment of
trends
trends
200
AGLLscranes
600
145
150
500
400
101
100 74
Port&
CFS,
2%
Oil&
Gas,
8%
488
423
365
300
200
50
100
Cement
Steel,
2% Power,
Dec11
Sep11
Jun11
Mar11
Dec10
Sep10
Jun10
Mar10
Dec11
Sep11
Jun11
Mar11
Dec10
Sep10
Jun10
Mar10
Engg&
Infra.,
30%
20%
Ship
buildin
g,3%
Logistic
s,3%
Wind
Energy
,33%
AGLLcurrentlyhasastrongfleetof62forklifts,36reachstackers,488trailersand
145cranes.Itadded44cranes(~40%increaseYoY)duringCY11whichisthemain
36
March22,2012
AllcargoLogistics
revenue driver for the equipment hiring division. With strong EBIT margins of
~25%, growth in the segment should boost PAT growth. Current project order
bookstandsatRs2.3bn,outofwhichcompanyexpectstoexecuteRs~1.31.4bnin
FY13E, which should help the segmental revenue growth 20% in FY13. The
management is incurring capex of Rs 4 bn during FY1213E to augment fleet
strengthinthesegment.
5.Weexpect15%revenueCAGRduringFY1214E
We have factored in 14%, 26% 18% revenue CAGR in the MTO division, CFS
divisionandProject&EquipmentdivisionrespectivelyduringFY1214Eperiods.
Thisshouldleadto15%revenueCAGRduringFY1214Eperiod.
Exhibit12: Keyvolumesandrealisationassumptions
ECULineMTOVol(TEUs)
CY09
CY10
FY12E
FY13E
FY14E
175,051
211,678
306,221
259,179
267,590
20.9
15.7
5.8
3.2
97,459
97,743
102,619
103,853
12.4
0.3
5.0
1.2
24,882
25,875
35,261
30,047
32,187
(16.7)
4.0
9.0
6.5
7.1
95,003
86,232
84,807
86,462
87,429
(14.2)
(9.2)
(1.7)
2.0
1.1
173,851
226,797
314,431
286,283
325,459
(2.7)
30.5
10.9
13.8
13.7
8,717
8,609
11,149
11,671
11,984
5.0
(1.2)
35.6
4.7
2.7
YoYGrowth(%)
ECULineMTORealisation(Rs/TEU)
86,717
YoYGrowth(%)
IndianMTOVol(TEUs)
YoYGrowth(%)
IndianMTORealisation(Rs/TEU)
YoYGrowth(%)
CFSVolumes(TEUs)
YoYGrowth(%)
Realisation(Rs/TEU)
YoYGrowth(%)
Exhibit13: Revenue share increasing from the high margins Exhibit14:
WeexpectAGLLtodeliver15%revenueCAGR
duringFY1214E
CFSandProject&Engineeringdivisions
100%
50,000
80%
40,000
60%
30,000
20
40%
20,000
10
20%
10,000
0%
50
40
30
0
10
20
CFS
ProjectEngg.
MTO
Revenues(Rsmn)
FY14E
FY13E
FY12E
CY10
CY09
CY08
FY14E
FY13E
FY12E
CY10
CY09
CY08
YoYgrowth(%)
6. Expect EBITDA CAGR of 26% during FY1214E as margins

expand
Aidedbyhigherrealisationandincreasedoperationalefficiencies,weexpectOPM
toexpandby>200bpsYoYduringFY12Eandtofurtherimproveby90bpsduring
FY1314E.ThisshouldresultinEBITDACAGRof26%duringFY1214Eperiod.
37
March22,2012
AllcargoLogistics
Exhibit15: We expect OPM to expand by 300bps over FY1214 Exhibit16:
Thereby boosting EBITDA CAGR to 26%

duringFY1214E
periods
14
6,000
60
12
5,000
50
10
4,000
3,000
40
30
20
2,000
10
1,000
0
10
OPM(%)
EBIDTA(Rsmn)
NPM(%)
FY14E
FY13E
FY12E
CY10
CY08
FY14E
FY13E
FY12E
CY10
CY09
CY08
CY09
YoYGrowth(%)
7.PATCAGRtomoderateto20%onaccountofhighinterestcosts
TheongoingexpansionshavedoubledAGLLsgrossdebtinFY12EtoRs.7.9bn
and we expect the same to increase further to Rs. 8.6 bn by FY14E. These will
increaseinterestoutgoinsubsequentyearstherebymoderatingPATCAGRto20%
during FY1214E. However, in our view AGLLs balance sheet does not appear
stretchedasnetDERstandsintherangeof0.260.37xduringFY1214E.
Exhibit17: HighercapitalchargestomoderatePATCAGR Exhibit18: Weexpectreturnratiostostabilise byFY14E
to20%duringFY1214E
3,000
60
24
2,500
50
22
2,000
40
20
1,500
30
1,000
20
500
10
16
16.4 15.1
17.3
14.8
12
15.5
15.6
13.4
14.2
12.9
12.9
10
CY06
YoYGrowth(%)
16.6
17.0
18.2
14
FY14E
FY13E
FY12E
CY10
CY09
CY08
AdjPAT(Rsmn)
20.2
18
23.5
CY07 CY08
RoCE
CY09
CY10 FY12E FY13E FY14E

RoE
RoIC
KeyRisks
ECU Line revenues: ECU Line growth assumes its continued penetration in the
farEastAsiancountriesandintheUSA.Hence,revenuegrowthandprofitability
cangetimpactediftheseexpansionsdonotgoasperplans.
DelaysinJNPTCFSexpansion:AGLLsCFScapacityexpansionby144KTEUsat
JNPT is scheduled to be commissioned in Q2FY13. If the same gets delayed
significantly,overallprofitabilitywillgetimpacted.
38
March22,2012
AllcargoLogistics
SensitivityAnalysis
Exhibit19: AGLL Impactof changes in volumes & realization acrossCFS and
NVOCC(ECULine)verticalsontheearningsmetricsandtargetprice
estimates(FY14E)
EPS(%)
RoE(bps) RoCE(bps)
TP(%)
(11)
(160)
(108)
(6)
(5)
(74)
(50)
(3)
1%lowerECULinerealization
(10)
(142)
(96)
(5)
10%lowerECULinevolumes
(6)
(90)
(60)
(3)
10%lowerCFSvolumes
Karvyvs.Consensus
InFeb12,AGLLannouncedandmovedtoMarchending(FY)accountingfromits
current practice of December ending (CY), our FY12E estimates include five
quarters of financials. Hence, our estimates are not comparable to consensus
estimateswhichareyettoadoptit.
39
March22,2012
AllcargoLogistics
Financials
Exhibit20: ProfitandLoss(Consolidated)
YeartoDecember/March(Rsmn)
CY09
CY10
FY12E
FY13E
FY14E
NetSales
20,609
28,613
43,325
40,391
43,169
%growth
(11)
39
21
17
18,424
25,915
38,398
35,724
37,849
2,185
2,698
4,927
4,667
5,320
Operatingexpenditure
EBITDA
%growth
(1)
23
46
18
14
Depreciation
545
550
1,160
1,015
1,223
EBIT
286
286
610
300
330
1,926
2,434
4,377
3,951
4,428
Interestexpenditure
Exceptionalitems
232
194
740
705
673
PBT
1,695
2,240
3,637
3,246
3,755
Tax
260
484
727
649
751
MinorityInterest
108
100
144
151
159
PAT/Netprofitreported
1,327
1,656
2,765
2,446
2,845
AdjustedPAT/Netprofit
1,327
1,656
2,765
2,446
2,845
19
25
34
11
16
%growth
Exhibit21: BalanceSheet(Consolidated)
CY09
CY10
FY12E
FY13E
FY14E
Cash&liquidinvestments
2,075
2,192
3,183
3,827
4,475
Debtors
2,354
2,528
3,571
3,231
3,454
Inventory
Loans&advances
OtherCurrentAssets
Longterminvestments
2,164
3,172
3,891
4,914
6,130
29
72
140
70
70
510
557
557
557
557
Grossblock
9,241
13,871
18,971
22,471
25,471
Netblock
7,189
11,483
15,423
17,907
19,685
750
543
990
990
990
15,070
20,546
27,755
31,496
35,360
Currentliabilities&provisions
2,900
4,308
4,646
5,586
6,269
Debt
2,044
3,778
7,817
8,208
8,618
Otherliabilities
179
408
652
752
852
Totalliabilities
5,124
8,494
13,115
14,546
15,739
MinorityInterest
135
262
256
408
566
Shareholdersequity
250
261
261
261
261
9,561
11,528
14,122
16,282
18,794
9,811
11,789
14,384
16,543
19,055
15,070
20,546
27,755
31,496
35,360
CWIP
Totalassets
Reserves&surpluses
Totalnetworth
Totalequityandliabilities
40
March22,2012
AllcargoLogistics
Exhibit22: CashFlowStatement(Consolidated)
CY09
CY10
FY12E
FY13E
FY14E
PBT
1,695
2,240
3,637
3,246
3,755
Depreciation
545
550
1,160
1,015
1,223
Interest
193
117
740
705
673
(424)
(653)
(727)
(649)
(751)
10
291
(1,470)
327
(755)
Tax
(Incr)/decrinnetworkingcapital
Others
(144)
123
(0)
CashFlowfromOperations
1,874
2,668
3,339
4,644
4,144
(1,707)
(4,913)
(5,100)
(3,500)
(3,000)
(636)
380
177
(7)
(7)
47
85
(0)
(0)
(2,296)
(4,448)
(4,923)
(3,507)
(3,007)
410
(Incr)/decrincapitalexpenditure
(Incr)/decrininvestments
Others
CashFlowfromInvestments
Incr/(decr)inborrowings
(386)
1,707
4,040
391
Issuanceofequity
1,120
1,047
(56)
(62)
(194)
(286)
(333)
Dividendpaid
Others
(332)
(331)
(646)
(605)
(573)
CashFlowfromFinancing
346
2,361
3,199
(501)
(496)
NetchangeinCash
(76)
581
1,615
636
641
Exhibit23: RatioAnalysis
YeartoDecember/March(%)
CY09
CY10
FY12E
FY13E
FY14E
10.6
9.4
11.4
11.6
12.3
EBITmargin
9.3
8.5
10.1
9.8
10.3
Netprofitmargin
6.4
5.8
6.4
6.1
6.6
EBITDAmargin
Dividendpayoutratio
11.0 27.7
7.0 11.7 11.7
Netdebt:equity(x)
0.0
0.2
0.37
0.31
0.26
Workingcapitalturnover(x)
0.1
0.1
0.1
0.1
0.1
RoCE
14.8
13.4
14.2
12.9
12.9
RoIC
18.6
16.5
17.1
15.5
15.5
RoE
16.4
15.1
16.6
15.5
15.6
CY09
CY10
FY12E
FY13E
FY14E
AdjustedEPS(Rs)Annulised
10.6
12.7
16.9
18.7
21.8
NonAnnulisedEPS(Rs)
10.6
12.7
21.2
18.7
21.8
1.0
3.0
1.0
1.9
2.2
Bookvaluepershare(Rs)
79.6
92.2
111.9
129.6
150.1
P/E(x)
Exhibit24: ValuationParameters
YeartoDecember/March
DPS(Rs)
12.7
10.7
8.0
7.2
6.2
P/BV(x)
1.7
1.5
1.2
1.0
0.9
EV/EBITDA(x)
8.1
7.1
5.7
4.7
4.1
EV/Sales(x)
0.9
0.7
0.6
0.5
0.5
41
Logistics
Bloomberg:ARSTIN
Reuters:ARST.BO
Recommendation
Rs140
TargetPrice:
Rs227
Upside(%)
StockInformation
234/115
3mADV(Rsmn/US$mn)
34/0.7
Beta
0.8
Sensex/Nifty
17,316/5,275
59
StockPerformance(%)
Absolute
Rel.toSensex
1M
(12.7)
3M
17.9
12M
(33.1)
YTD
11.5
(7.8)
3.3
(31)
(0.5)
Performance
250
19,500
200
17,500
150
15,500
100
Mar11
May11
Jun11
Jul11
Aug11
Oct11
Nov11
Dec11
Feb12
Mar12
21,500
Sensex(LHS)
ArshiyaInternational(RHS)
30
20
InitiatecoveragewithBUYrecommendation:WevalueARSTat7x(35%
discount to five year median EV/EBITDA of 11x) its FY1314E average
EBITDA of Rs. 4.87 bn. We initiate coverage on the stock with BUY
recommendation with a target price of Rs. 227 per share. Our fair value
multiple is at 40% discount to ARST five year average P/E of 10x and 10%
discounttoitsfiveyearaverageP/Bof1.38x.
10
Sep11
Sep10
(10)
Sep09
KeyFinancials
YeartoMar(Rsmn)
FY10
FY11
FY12E
FY13E
FY14E
NetSales
5,259
8,215
10,326
13,886
19,404
EBITDA
861
1,592
2,497
3,686
6,045
EBITDA(%)
16.4
19.4
24.2
26.5
31.2
PAT
980
815
1,079
1,378
2,988
EPS(Rs)
16.7
13.8
18.3
23.4
50.8
RoE(%)
15.4
11.7
14.0
15.7
27.8
RoCE(%)
10.7
7.1
7.7
9.0
13.3
15.4
13.3
9.9
7.7
4.9
EV/EBITDA(x)
08/165
52weekHigh/Low(Rs)
3PL Businesss revenue share to decline: ARST specializes in providing

integrated logistics solutions. It offers supply chain management solutions,
projectlogisticsandfreightforwardingunderits3PLbusiness.InFY12E,the
segmentalrevenuewoulddeclineby3.5%YoYafterthesaleoftheQatarand
OmanunitstoincreasefocusonIndiafocus.However,weexpectthesameto
growat6%CAGRduringFY1314E.
Highdebttostretchbalancesheetinnearterm;returnratiostoimprovein
longterm: The ongoing expansion plan across FTWZ and rail divisions
wouldrequireacapexofRs.32.5bnwithaDERof70%.Thiswouldstretch
ARSTs net DER to 2.1 in FY13E vs. 0.7 in FY10. However, as these
expansionsgetcommissionedandrampup,returnratiosshouldexpandby
>700bpsduringFY1114E.
62%
Mar10
RailBusiness(Thirdlargestoperator)onexpansionspree:ARSTisthethird
largestcontainertrainoperatorinIndiawith16operationalrakesandplans
toaddanothereightrakesduringFY1314E.Ithasmajorconcentrationinthe
domestic segment where it works on longterm contract basis. We expect
theseadditionstoboostthesegmentalrevenuesby38%CAGRandEBITDA
CAGRof28%duringFY1214E.
CMP:
Sep08
FTWZ expansion boost earnings growth in FY1214E period: Arshiya

International (ARST) is the pioneer of Free Trade Warehousing Zones
(FTWZ) concept in India. Currently, it has an operational FTWZ at Panvel
MumbaianditsKhurja(UP)FTWZisexpectedtobeoperationalinQ4FY12.
Further,ARSTplanstorampupitswarehousesatboththeFTWZbytenfold
to35warehousesbyFY14E.Basedontheseexpansions,weexpectrevenues
of this high margin (EBIT margins of >55%) segment to grow by >100%
CAGRduringFY1214E.
Mar09
Sep07
FTWZExpansiontoLeadGrowth
BUY
Mar08
INITIATIONREPORT
AnalystsContact
RajeshKumarRavi
02261844313
PrasunKumar
02261844325

Mar12
Apr07
IndiaResearch
Mar11
March22,2012
March22,2012
Profit&loss
Rsmn
FY12E
FY13E
FY14E
Netsales
EBIDTA
Depreciation
10,326
2,497
332
13,886
3,686
668
19,404
6,045
989
InterestExpense
PBT
1,001
1,306
1,514
1,660
1,626
3,600
Tax
Adj.PAT
227
1,079
18.3
1.5
282
1,378
23.4
2.0
612
2,988
50.8
5.0
24.2
10.4
26.5
9.9
31.2
15.4
P/E(X)
EV/EBIDTA(X)
7.7
9.9
6.0
7.7
2.8
4.9
P/BV(X)
1.0
0.9
0.7
EPS(Rs)
DPS(Rs)
ProfitandLossRatios
EBIDTAMargin%
AdjNetMargin%
ValuationMultiples
CompanyBackground
Arshiya International (ARST) was incorporated in the year
1981asIIDForgings,andinSept07,itchangesitsnameto
ArshiyaInternational.
ARSThasbeenthepioneerinintroducingconceptofFTWZ
withitsPanvelFTWZspanning165acres.Itisinprocessof
commissioninganotheratKhurjainUP.
ARSTcurrentlyoperatesinFreeTradeWarehousingZones,
Container rail, 3PL, 4PL, Trucking, Warehousing & IT
enablingservices.Ithasafleetof16containerrakesserving
primarilyinthedomesticsegment
ARST has been adding several value added services (VAS)
in the FTWZ segment, which should be amongst the key
driversforARSTsprofitability.
CashFlow
BalanceSheet
Rsmn
FY12E
FY13E
FY14E
(Rsmn)
FY12E
FY13E
FY14E
1,306
1,660
3,600
332
668
989
TotalAssets
NetFixedAssets
30,157
23,138
34,253
27,471
39,365
31,482
PBT
CurrentAssets
OtherAssets
TotalLiabilities
Networth
6,868
150
30,157
8,167
6,633
150
34,253
9,409
7,734
150
39,365
12,055
Tax
(231)
(280)
(598)
ChangeinWkgCap
(452)
(530)
(241)
Interestcost
(141)
(155)
(171)
Debt
CurrentLiabilities
19,421
2,522
21,421
3,377
22,421
4,842
Others
1,001
1,514
1,626
1,814
2,877
5,206
47
47
47
Capex
(4,440)
(5,000)
(5,000)
Others
136
155
171
(4,304)
(4,845)
(4,829)
OtherLiabilities
BalanceSheetRatios
RoE%
RoCE%
NetDER(x)
AssetTurnover(x)
14.0
7.7
2.0
0.4
15.7
9.0
2.1
0.4
27.8
13.3
1.8
0.5
Shareholdingpattern
Public&
Others,
38.37
Depreciation
CFfromOperations
CFfromInvesting
ChangeinDebt
5,000
2,000
1,000
Dividends&others
(1,086)
(1,621)
(1,791)
CFfromFinancing
3,914
379
(791)
ChangeinCash
1,424
(1,589)
(415)
ConsolidatedRevenuebreakup(%)
Others/
Software,
0.2
Promoters,
43.23
FII,16.17
DII,2.23
Source:Company
Logistics
andrelated
Services,
59.3
Rail
Transport
Operations
,25.2
CFS/FTW
Operation,
15.3
Source:Company

43
March22,2012
ARSTs expansion in the high margin FTWZ business along with increased
penetration in the container rail operations should drive ARSTs 56% EBITDA
CAGRand59%PATCAGRduringFY1214Eperiod.
We value ARST at 7x (35% discount to five year median EV/EBITDA of 11x) its
FY1314E average EBITDA of Rs 4.87 bn. We initiate coverage on the stock with
BUY recommendation with a target price of Rs. 227 per share. Our fair value
multipleisat40%discounttoARSTfiveyearaverageP/Eof10xand10%discount
toitsfiveyearaverageP/Bof1.38x.
The valuation discount of 35% to its long term EV/EBITDA and 40% to its long
termP/Emultiplesistofactorintheriskstoearningsemanatingfromthedelaysin
infrastructurecommissioningtherebyimpactoverallrevenuegrowthforlogistics
operators. The 40% valuation discount to ARST is higher compared to 25%
discount we have ascribed to AGLL and GDPL. This is account for takeoff risks
associated with the FTWZ business. Despite these discounts, the stock looks
attractive and is poised for further rererating as execution picks up in this
segment.
Exhibit1: 1YrfwdP/Etrendtradingatthelowerendof Exhibit2: 1YrFwdEV/EBITDAtrendfiveyearmedian
itsfiveyearmedianof11x(1SD7.1x)
of11x(1SD6x)
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
25.0
20.0
15.0
10.0
5.0
Mar12
Sep11
Mar11
Sep10
Mar10
Sep09
Mar09
Sep08
Mar08
Sep07
Apr07
Mar12
Aug11
Feb11
Aug10
Feb10
Aug09
Feb09
Aug08
Feb08
Aug07
Jan07
Jul06
Jan06
0.0
Exhibit3: 1YrFwdP/BtrendFiveyearmedianof1.38x
(1SD0.7x)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Exhibit4: ReturnratiostobenefitasFTWZearningsgrow
duringFY1214E
30.0
25.0
20.0
15.0
10.0
Mar12
Aug11
Feb11
Aug10
Feb10
Aug09
Feb09
Aug08
Feb08
Aug07
Jan07
Jul06
Jan06
5.0
FY08
FY09
RoE(%)
FY10
FY11
RoIC(%)
FY12E
FY13E
FY14E
RoCE(%)

44
March22,2012
InvestmentRationale
1.
FTWZexpansiontoboostearningsgrowthinFY1214Eperiod
2.
FTWZrevenues&EBITtogrow>100%CAGRduringFY1214E
3.
RailBusiness(Thirdlargestoperator)onexpansionspree
4.
3PL Business should continue to deliver strong margins even though we

expectitssharetoprofitstodecline
5.
Ongoingcapexwillstrainbalancesheetinnearterm
6.
ReturnRatiostosurgeoncommissioningofongoingcapex
7.
RevenueCAGRof~39%duringFY1114EasARSTexpandsinFTWZandRail
Businesses
8.
HigherEBITDACAGRof56%ledbyhighmarginFTWZbusinessexpansion
1.FTWZexpansiontoboostearningsgrowthinFY1214Eperiod
ARST is thepioneer ofFree TradeWarehousing Zones (FTWZ) concept in India.
AnFTWZ(treatedasforeignland)helpsreduceworkingcapitalrequirementsfor
theimporterasthecargocanbekeptatFTWZandthedutyispayableonlywhen
the cargo moves out of the FTWZ. Additionally, lot of Value Added Services
(VAS) can be accomplished at an FTWZ thereby adding to the normal rental
earnings.
ARSTsfirstFTWZbecameoperationalatPanvel,Mumbai(PhaseI)inQ3FY11.It
started off with three warehouses and subsequently added one more warehouse
duringQ2FY12.ItalsolaunchedanotherFTWZatKhurjainUttarPradesh,which
is expected to be operational in Q4FY12 with one warehouse each for its Khurja
FTWZandKhurjaDomesticDistripark.
SofarithasachievedfinancialclosurestoaddfourwarehouseseachatPanveland
KhurjaduringFY13Easpartofitsexpansionplans.InFY14E,ARSTexpectstoadd
fiveFTWZatPanvel.Subsequently,itisawaitingfinancialclosuresforadditional
14 warehouses at Khurja facility. These expansions will increase its total
warehousing capacity tenfold to 35 units by the end of FY14E, as against 3
warehousesbyendofFY11.
Exhibit5: ARSTscumulativewarehousesatMumbaiand Exhibit6: The FTWZ share in total profitability has
Khurjaasplanned
swelledduringFY12
45
60.0
40
35
14
30
40.0
11
25
20
6
15
10
5
0
1
0
0
1
3
FY11
FY12E
MumbaiFTWZ
10
30.0
14
FY13E
KhurjaFTWZ
15.3
20.0
9.8
5
9
50.0
50.0
14
10.0
14
FY14E
(10.0)
FY15E
KhurjaDistriparks
(0.4)
3.1
FY10
RevenueShare
FY11
9MFY12
EBITShare

45
March22,2012
2.FTWZrevenues&EBITtogrow>100%CAGRduringFY1214E
We have factored in expansion delays in the warehouse capacities as financial
closures for most of the expansions have not been achieved. Nonetheless, we
expectsegmentalrevenuestogrowby>100%CAGRduringFY1213E.
Exhibit7: KeyassumptionsfortheFTWZsegment
(Rsmn)
FY12E
FY13E
FY14E
AvgWarehouseavailable(Nos.)
4.7
11.0
20.0
VASRatio(x)
1.2
1.5
2.0
1,582
3,853
8,190
514.8
143.5
112.6
4,595
FTWZRevenues
FY11
257
%YoYGrowth
FTWZEBIT
140
%YoYGrowth
EBITmargins(%)
54.5%
998
2,236
610.6
124.1
105.5
63.0%
58.0%
56.1%
3.RailBusiness(Thirdlargestoperator)onexpansionspree
ARST holds CategoryI license to operate container rails in India. It is the third
largestContainerTrainOperator(CTO)with16rakesinoperationsafterContainer
CorpandGatewayDistriparks.ARSTgenerallyoperatesinthedomesticsegment
withonlyonerakeoperationalintheEXIMroute(ChennaiBangalore).Itplansto
furtherexpanditspresenceinthesegmentasitplanstoaddanothereightrakes
during FY1314E. ARST operates mostly on longterm contract basis with clients
andhenceitsrevenuesandmarginsarefairlyinsulated,astheCompanydoesnot
havetoscoutforcargoonitsown.Wehavefactoredinrisingcompetitionsinthe
segment and have also accounted for further haulage charges hikes by Indian
Railways.
Exhibit8: KeyassumptionsfortheRailsegment
FY11
FY12E
FY13E
FY14E
NoofRakes
16
20
24
Nos.ofloadingspermonth
3.5
3.4
3.4
Totaltripsperannum
672
816
979.2
Revenueperloadingpermonth(Rsmn)
4.5
4.5
RailRevenues(Rsmn)
1,692
2,688
3,672
4,406
%YoY
250.4
58.8
36.6
20
EBITDAmargins(%)
23%
21%
18%
18%
RailEBITDA(Rsmn)
382
564
661
793
220.8
47.8
17.1
20
%YoY
4. 3PL Business should continue to deliver strong margins even

thoughweexpectitssharetoprofitstodecline
ARST specializes in providing integrated logistics solutions. It has strong
relationship with many international logistics companies, which help ARST to
deliver 3PL solutions to its customers. It offers supply chain management
solutions,projectlogisticsandfreightforwardingunderits3PLbusiness.During
FY0711, the 3PL revenues grew by ~38% CAGR. During these periods, the
segmenthascontributed7590%ofARSTstoplineand>70%ofitsEBITprofits.At
the end of FY11, ARST sold off its 3PL overseas segment at Qatar and Oman to
increasethemanagementsfocusontheIndias3PLoperations.Intheabsenceof

46
March22,2012
business from Qatar and Oman, the 3PL revenues should decline by 3% YoY in
ourview.Goingforward,weexpectthesegmentsrevenuestogrowat6%CAGR
duringFY1314E.
Exhibit9: While revenue growth has slowed down, 3PLs EBIT margins have
stabilizedathigherlevels
25.0
6,207
4,603
4,598
20.0
4,411
3,642
15.0
1,694
643
387
175
10.0
1,385
825
929
5.0
Revenues(Rsmn)
9MFY12
FY11
FY10
FY09
FY08
FY07
7,000
6,000
5,000
4,000
3,000
2,000
1,000
EBIT(Rsmn)
EBITmargins(%)
5.Ongoingcapexwillstrainbalancesheetinnearterm
ARST has a capex target of Rs. 32.5 bn to be achieved until FY13E to raise its
capacityacrossboththeFTWZsegmentandrailbusiness.~80%ofthetotalcapex
istobedeployedintheFTWZsegment.OutofthetotalcapexofRs.32.5bn,~70%
wouldbefundedthroughdebtandtheremainingwouldbefrominternalaccruals.
Highdebtlevelswouldstrainthebalancesheetoverthenexttwoyearsandasthe
capacities gets commissioned, interest costs should increase thereby moderating
the profitability. Timely commissioning of these projects would however reduce
thebalancesheetstraininthelongrun.
6.Returnratiostosurgeoncommissioningoftheongoingcapex
WiththecommissioningoftheFTWZwarehouses(highmarginbusiness)andof
thenewrakesintheraildivision,weexpectreturnratiosshouldimprovefurther.
Exhibit10: OPMgrowthledbyincreasingshareofFTWZ; Exhibit11: Subsequently, we expect profitability metrics
NPMgrowthmoderatedbyrisingdebtlevels
toexpand
35.0
24.2
25.0
20.0
15.0
30.0
31.2
30.0
14.7
12.9
13.1
11.4
26.5
20.0
18.6 19.4
16.4
9.9
25.0
15.4
10.4
15.0
9.9
10.0
10.0
5.0
5.0
FY08
FY09
FY10
OPM(%)
FY11
FY12E
FY13E
FY14E
FY08
NPM(%)
FY09
RoE(%)
FY10
FY11
RoIC(%)
FY12E
FY13E
RoCE(%)
FY14E

47
March22,2012
7.RevenueCAGRof~39%duringFY1114EasARSTexpandsinFTWZ
andrailbusinesses
Weestimaterevenuestogrowata39%CAGRduringFY1114Eledbyexpansion
of the FTWZ business and the rail business during FY1214E periods. Going
forward, the FTWZ business share will expand, while the 3PL business share
shouldshrink.
Exhibit12: ARSTsNetsalesBreakup(Rsmn)trend
100%
370
80%
405
21
186
482
63
42
46
51
1,692
2,688
3,672
4,406
25,000
1,582
3,642
4,608
4,591
3,853
140
19,404 120
20,000
256
60%
40%
Exhibit13: RevenueCAGRof~39%duringFY1114E
8,190
6,315
5,000
6,757
60
8,215
10,000
6,014
80
10,326
6,203
20%
100
13,886
15,000
4,012
5,034 5,259
40
20
0
0%
FY08
FY09
3PLLogisticsServices
FY10
FY11
FY12E
FTWZOperations
FY13E
FY08
FY14E
RailBusiness
FY09
FY10
FY11 FY12E FY13E FY14E
NetSales
Others
YoYGrowth(%)
8. Higher EBITDA CAGR of 56% led by high margin FTWZ

businessexpansion
WeexpectEBITDAandPATtogrowat56%and59%,respectivelyduringFY12
14E period. The profitability growth leads revenue growth on account of rising
share of FTWZ business which should boost OPM expansion by >1,000 bps and
NPMexpansionby>550bpsduringFY1214Eperiod.
Exhibit14: EBITDACAGRof56%duringFY1214E
Exhibit15: PATCAGRof59%duringFY1214E
160
3,500
6,000
140
3,000
5,000
120
2,500
100
2,000
7,000
6,045
3,686
4,000
2,497
3,000
1,592
2,000
1,000
517
740
80
1,000
500
20
FY08
FY09
FY10
FY11
660
455
980
815
1,079
0
50
PAT(Rsmn)
GrowthYoY(%)
GrowthYoY(%)
50
FY08 FY09 FY10 FY11 FY12E FY13E FY14E
FY12E FY13E FY14E
EBITDA(Rsmn)
100
1,378
200
150
1,500
60
40
861
2,988
KeyRisks
Delays in commissioning of the FTWZs: The aggressive expansion in FTWZ
segment would get impacted if ARST is not able to achieve financial closures as
perschedule.Wehavealreadyfactoredin20%lowercapacitiesinthewarehouse
expansionforFY14Etherebyminimizingimpactontopline.
VASmultipleexpansion:WehavefactoredinVASmultipleof1.5xand2.0xfor
FY1314E,respectively.Whilethesearesignificantlylowerthanglobalaverageof
89x, ARSTsmultiple expansion can remainlower than these ifits customersdo

48
March22,2012
not subscribe for these services in additions to the normal rental usage at the
FTWZ.
Railbusinessexpansion:Delaysinrampinguprakescapacitybyanother8rakes
duringFY1314Ecanreducetheprofitgrowthsubsequently.
SensitivityAnalysis
Exhibit16: Impact of changes in VAS multiple (FTWZ), volumes & realisation
across FTWZ and Rail verticals on the earnings metrics and target
priceestimates(FY14E)
EPS(%)
10%lowerVASmultiple(FTWZ)
RoE(bps) RoCE(bps)
(6)
(148)
10%lowerFTWZvolumes
(11)
(279)
(98)
(12)
10%lowerFTWZrealisation
(17)
(427)
(150)
(18)
(2)
(40)
(14)
(2)
(12)
(285)
(100)
(12)
Karvy
Consensus
Diff(%)
FY12E
10,326
10,209
1.2
FY13E
13,886
14,751
(5.9)
FY12E
2,497
2,664
(6.3)
FY13E
3,686
4,499
(18.1)
FY12E
1,079
1,209
(10.8)
FY13E
1,378
1,616
(14.7)
10%lowerRailvolumes
10%lowerRailrealisation
(53)
TP(%)
(6)
Karvyvs.Consensus
Exhibit17: Ourestimatesv/sconsensusestimates
(Rsmn)
Revenue
EBITDA
NetProfit
Source:Bloomberg,KarvyInstitutionalResearch

49
March22,2012
Financials
YeartoMarch(Rsmn)
FY10
FY11
FY12E
FY13E
FY14E
NetSales
5,259
8,215
10,326
13,886
19,404
%growth
56
26
34
40
4,398
6,623
7,829
10,199
13,360
EBITDA
861
1,592
2,497
3,686
6,045
%growth
16
85
57
48
64
Depreciation
96
180
332
668
989
1,184
1,441
2,307
3,174
5,226
Interestexpenditure
131
474
1,001
1,514
1,626
Exceptionalitems
367
(6)
1,053
967
1,306
1,660
3,600
EBIT
PBT
Tax
74
152
227
282
612
612
821
1,079
1,378
2,988
980
815
1,079
1,378
2,988
48
(17)
32
28
117
FY10
FY11
FY12E
FY13E
FY14E
718
1,518
2,943
1,354
939
2,714
2,291
2,891
3,888
4,851
%growth
YeartoMarch(Rsmn)
Debtors
Inventory
547
708
1,033
1,389
1,940
150
150
150
150
Grossblock
2,657
6,757
18,757
25,757
30,757
Netblock
2,532
6,470
18,138
24,471
28,482
CWIP
7,292
12,560
5,000
3,000
3,000
28
Loans&advances
Longterminvestments
OtherCurrentAssets
Totalassets
13,780 23,699 30,157 34,253 39,365
1,378
2,035
2,522
3,377
4,842
Debt
5,715
14,421
19,421
21,421
22,421
12
47
47
47
47
Otherliabilities
Totalliabilities
7,081 16,503 21,990 24,845 27,310
Shareholdersequity
Reserves&surpluses
118
118
118
118
118
6,582
7,078
8,049
9,291
11,937
Totalnetworth
6,699 7,196 8,167 9,409 12,055
13,780 23,699 30,157 34,253 39,365

50
March22,2012
Exhibit20: CashFlowStatement(Consolidated)
YeartoMarch(Rsmn)
FY10
FY11
FY12E
FY13E
FY14E
PBT
1,053
962
1,306
1,660
3,600
108
176
332
668
989
Depreciation
Interest
121
451
(141)
(155)
(171)
Tax
(111)
(81)
(231)
(280)
(598)
(774)
868
(452)
(530)
(241)
Others
(185)
11
1,001
1,514
1,626
CFfromoperatingactivities
213
2,387
1,814
2,877
5,206
(4,399)
(9,387)
(4,440)
(5,000)
(5,000)
(5)
(145)
Others
19
21
136
155
171
(4,385)
(9,511)
(4,304)
(4,845)
(4,829)
4,405
8,720
5,000
2,000
1,000
16
(55)
(69)
(85)
(107)
(165)
CFfrominvestingactivities
Issuanceofequity
Dividendpaid
Others
(118)
(743)
(1,001)
(1,514)
(1,626)
CFfromfinancingactivities
4,232
7,924
3,914
379
(791)
61
800
1,424
(1,589)
(415)
FY10
FY11
FY12E
FY13E
FY14E
EBITDAmargin
16.4
19.4
24.2
26.5
31.2
EBITmargin
22.5
17.5
22.3
22.9
26.9
Netprofitmargin
Netchangeincash
YeartoMarch(%)
18.6
9.9
10.4
9.9
15.4
Dividendpayoutratio
7.0
10.1
9.5
9.9
11.4
Netdebt:equity
0.7
1.8
2.0
2.1
1.8
Workingcapitalturnover
0.4
0.1
0.1
0.1
0.1
RoCE
10.7
7.1
7.7
9.0
13.3
RoIC
11.5
7.7
8.6
9.8
13.8
RoE
15.4
11.7
14.0
15.7
27.8
FY10
FY11
FY12E
FY13E
FY14E
EPS(Rs)
16.7
13.8
18.3
23.4
50.8
DPS(Rs)
1.0
1.2
1.5
2.0
5.0
115
122
139
160
205
YeartoMarch
P/E(x)
8.5 10.2 7.7 6.0 2.8
P/BV(x)
1.2 1.2 1.0 0.9 0.7
EV/EBITDA(x)
15.4 13.3 9.9 7.7 4.9
EV/Sales(x)
2.5 2.6 2.4 2.0 1.5

51
Bloomberg:CCRIIN
Reuters:CCRI.BO
BUY
27%
StockInformation
113/2,251
52weekHigh/Low(Rs)
1,332/801
3mADV(Rsmn/US$mn)
73/1.5
Beta
0.7
Sensex/Nifty
17,316/5,275
130
StockPerformance(%)
Absolute
Rel.toSensex
1M
(10.6)
3M
5.6
12M
(26.5)
YTD
4.0
(5.6)
(7.5)
(24.1)
(7.2)
Performance
1,400
1,300
1,200
1,100
1,000
900
800
21,500
19,500
17,500
15,500
Sensex(LHS)
ContainerCorp.(RHS)
20
15
10
5
Jan11
Jul10
KeyFinancials
YeartoDec(Rsmn)
NetSales
EBITDA
EBITDA(%)
PAT
EPS(Rs)
RoE(%)
RoCE(%)
P/E(x)
EV/EBITDA(x)
Upside(%)
Dec09
Initiate coverage with BUY recommendation: While CCRI has been the
pioneerincontainerrailoperationsinIndia,amidstrisingcompetitionfrom
privateoperators,weexpectCCRIsPATtogrowatmodest11%CAGR.We
valueCCRIat13.2xitsFY1314EaverageEPSofRs.84.6.Ourtargetmultiple
isat15%discounttoitslongtermmedianP/Eof15.5x.Weinitiatecoverage
onthestockwithBUYrecommendationwithatargetpriceofRs.1,115per
share.OurfairvalueestimateforCCRIimplies25%discounttoCCRIslong
termEV/EBITDAmedianmultipleof10.6x.
Rs1,115
Jun09
Greater focus on increasing VAS to insulate margin pressure: CCRI is

increasingVASinadditiontorailtransportationtoattractcustomersaswell
as to protect its margins against competition and haulage charge increases.
ThemanagementexpectsitsVAStosalesratiotoincreaseby200bpsto27%
duringFY1314Eafterincreasingitby200bpsduringFY12E.Theseinitiatives
shouldleadtoPATCAGRof11%duringFY1214Eperiod.
Rs879
TargetPrice:
Nov08
Depreciatedassetbookandnodebtprovidespricingpower:CCRIbeingin
operations since 1988 has assets that were acquired at significantly lower
costs compared to its competitors and most of these assets are fully
depreciated. Further, with a net cash of Rs. 28 bn (22% of its market cap)
CCRIenjoyshigherpricingpowerincaseofaggressivecompetitionfromthe
privatecounterparts.
CMP:
Mar11
May11
Jun11
Jul11
Aug11
Oct11
Nov11
Dec11
Feb12
Mar12
Strategic tieups with competitors and customers to support revenue

growth: CCRI has formed various JVs across India partnering with its
customersaswellascompetingCTOstosupportitsrevenuegrowth.Thisis
astrategicmoveasexpansionsbyprivateCTOshaveimpactedCCRIsEXIM
volume growth. In the domestic train handling, CCRIs FY1112E volume
growth got impact after the IR announced hike in commodityspecific
haulage charges in Dec10 for domestic cargoes. However, the quarterly
volume trends suggest a bottomout situation in FY12E. Subsequently, we
expectrevenuestogrowat12%CAGRduringFY1214E.
Recommendation
May08
Largest container train operator in India: Container Corporation of India

(CCRI)isIndiaslargestContainerTrainOperator(CTO)withcontainertrain
fleet strength of 240 container trains and 61 terminals spread across India.
Currently,CCRIhas~68%oftotalcontainerfleetoperationalinIndia.
Oct07
Strongpricingpowertooutsmartcompetition
Apr07
INITIATIONREPORT
Mar12
IndiaResearch
March22,2012
Aug11
Logistics
FY10
37,057
9,616
26.0
7,872
60.6
19.4
18.5
14.4
9.8
FY11
38,281
10,014
26.2
8,785
67.6
18.9
18.0
12.9
9.1
FY12E
41,471
10,821
26.1
8,878
68.3
16.6
16.0
12.8
7.8
FY13E
47,374
12,321
26.0
10,185
78.4
16.6
16.0
11.2
6.3
FY14E
54,129
14,077
26.0
11,813
90.9
16.8
16.2
9.6
5.0
AnalystsContact
RajeshKumarRavi
02261844313
PrasunKumar
02261844325

March22,2012
Profit&loss
Rsmn
FY12E
Netsales
EBIDTA
Depreciation
41,471
10,821
1,597
47,374
12,321
1,750
54,129
14,077
1,903
PBT
Tax
Adj.PAT
EPS(Rs)
11,759
2,881
8,878
68.3
13,580
3,395
10,185
78.4
15,751
3,938
11,813
90.9
10.0
10.0
10.0
26.1
21.4
26.0
21.5
26.0
21.8
12.8
7.8
11.2
6.3
9.6
5.0
2.0
1.7
1.5
DPS(Rs)
ProfitandLossRatios
EBIDTAMargin%
AdjNetMargin%
ValuationMultiples
P/E(X)
EV/EBIDTA(X)
P/BV(X)
FY13E
FY14E
CompanyBackground
CCRI commenced operations after it acquired seven ICDs
fromtheIndianRailwaysin1988.Overtheyears,CCRIhas
emergedasleaderintheCTOspacewithitsvastnetworkof
61ICDs/CFSconnectedbyitsrailwaynetworkenrichedby
itsfleetof240rakes.
CCRI is accredited with introducing mass containerization
in India, and has been the on the forefront for promoting
containertradeinIndia.CCRIintroducedAsiasbiggestICD
at Dadri in 2003. Through its numerous JVs and strategic
alliancesithasbeenenrichingthelogisticssectorinIndia.
While privatization of container haulage by rail since 2006
has exposed it to competition, CCRI maintains its market
dominance by way of its vast network of CFS/ICDs and
extensiverailinfrastructure.
BalanceSheet
CashFlow
Rsmn
FY12E
TotalAssets
NetFixedAssets
CurrentAssets
OtherAssets
TotalLiabilities
Networth
Debt
CurrentLiabilities
OtherLiabilities
BalanceSheetRatios
FY13E
FY14E
Rsmn
FY12E
FY13E
FY14E
PBT
Depreciation
11,759
1,597
13,580
1,750
15,751
1,903
InterestIncome
Tax
(2,535)
(2,843)
(3,010)
(3,395)
(3,576)
(3,938)
ChangeinWkgCap
200
(416)
(486)
CFfromOperations
Capex
8,178
(2,109)
8,509
(3,300)
9,654
(3,300)
Investments
IntIncome&Others
(500)
2,535
(500)
3,010
(500)
3,576
65,710
74,647
85,269
26,973
35,001
3,736
65,710
28,522
41,775
4,349
74,647
29,920
50,370
4,979
85,269
56,943
6,481
2,286
65,415
6,946
2,286
75,515
7,468
2,286
16.6
16.0
(0.5)
16.6
16.0
(0.5)
16.8
16.2
(0.6)
0.7
0.7
0.7
RoE%
RoCE%
NetDER(x)
AssetTurnover(x)
CFfromInvesting
Dividends&others
CFfromFinancing
ChangeinCash
Public&
Others,
3.43
(73)
(790)
(224)
(1,453)
(1,453)
6,652
(1,713)
(1,713)
6,006
(1,713)
(1,713)
7,717
SegmentalRevenue(%)
Others,
1.7
Promoters,
63.09
Exim,76.9
Domestic,
21.5
FII,26.31
DII,7.17
Source:BSE,KarvyInstitutionalResearch
53
March22,2012
CCRI has been the pioneer in container rail operations in India. However, with
rising competition from private operators, we expect CCRIs PAT CAGR at a
modest 11%. We value CCRI at 13.2x its FY1314E average EPS of Rs. 84.6. Our
targetmultipleisat15%discounttoitslongtermmedianP/Eof15.5x.Weinitiate
coverageonthestockwithBUYrecommendationwithatargetpriceofRs.1,115
pershare.
The15%valuationdiscounttoitslongtermaverageP/Eistofactorintherisksto
earnings emanating from the delays in infrastructure commissioning thereby
impacting overall revenue growth for the logistics operators. However, we have
factored in lower discount compared to other companies (AGLL & GDPL 25%
discount, ARST 40% discount), as CCRI is better positioned due to its panIndia
presenceanditsstrongbalancesheet.
Exhibit1: CCRIs 1 yr Fwd P/E trends long term median Exhibit2: CCRIs 1 yr Fwd EV/EBITDA trends long
P/Eof15.5xwitha+/2.9xonestddeviation
term median of 10.6x with a +/ 2.6x one std
deviation
Mar12
Aug11
Feb11
Aug10
Jan10
Jul09
Dec08
Jun08
Apr05
Mar12
Aug11
Feb11
Aug10
Jan10
Jul09
Dec08
Jun08
Dec07
May07
Nov06
Apr06
Oct05
Apr05
0.0
Dec07
5.0
May07
10.0
Nov06
15.0
Apr06
20.0
Oct05
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
25.0
Exhibit3: CCRIs1yrFwdP/Btrendslongtermmedian
P/Bof3.2xwitha+/0.7xonestddeviation
Exhibit4: ReturnRatiostrends
6.0
35.0
5.0
30.0
4.0
25.0
3.0
2.0
(%)
50.0
40.0
20.0
30.0
15.0
20.0
10.0
10.0
RoCE
RoE
FY14
FY13
FY12
FY11
FY10
FY09
FY08
FY07
FY06
Mar12
Aug11
Feb11
Aug10
Jan10
Jul09
Dec08
Jun08
Dec07
May07
Nov06
Apr06
0.0
Oct05
5.0
Apr05
1.0
RoIC(RHS)
54
March22,2012
InvestmentRationale
1.
LargestcontainertrainoperatorinIndia
2.
LossinEXIMmarketshareascompetitionintensifies
3.
DomesticvolumegrowthdeclineinFY12Eonhaulageincrease
4.
Strategictieupswithcompetitorsandcustomerssupportrevenuegrowth
5.
RevenueCAGRof12%duringFY1214E
6.
Depreciatedassetbookandnodebtprovidespricingpower
7.
GreaterfocusonincreasingVAStoinsulatemarginpressure
8.
EBITDACAGRof12%ledbystablemarginsandrevenuegrowth
9.
PATCAGRof11%duringFY1214E
1.LargestcontainertrainoperatorinIndia
CCRI is Indias first and the largest Container Train Operator (CTO). The
governmentownedPSUstartedoperationsin1988andtodayhasafleetstrength
of 240 container trains and 61 terminals (spread across India out of which 18
handle EXIM cargoes and 13 domestic cargoes and remaining 30 handle both
EXIM and domestic cargoes. Until 2006, it was the only container train operator
andhadcompletemonopolyinthecontainerizedcargorailmovement.Evensince
thegovernmentopenedupthesegmentforprivateplayers,CCRIsmarketshare
hasreduced.Currently,itowns~68%oftotalcontainerfleetoperationalinIndia.
Exhibit6: 80%ofitsrailhandlingisdedicatedtoEXIM
trade
Exhibit5: LargestCTOinIndiaitownsandoperated
~68%oftotalcontainertraininIndia
16
GatewayDistriparks
21
544
343
1,377
1,557
1,716
1,977
1,855
1,882
2,019
1,600
60%
40%
20%
0%
Concor(CCRI)
240
0
539
9MFY12
Arshiyainternational
453
FY11
15
470
FY10
Inlogistics(B2B)
390
FY09
12
374
FY08
HindTerminals
351
FY07
80%
FY06
100%
FY05
IndiaInfraLogistics(APL)
100
200
300
2.LossinEXIMmarketshareascompetitionintensifies
WiththearrivalofprivatetrainoperatorsaftertheIRopenedupthesegmentfor
private players, CCRI has faced competition and its EXIM market share has
declined. Even on the domestic container handling, it is facing competition from
theprivateplayers,asArshiyaoperates15outofits16rakesinthedomesticroute
andotherCTOsalsooperatesomeoftheirrakesinthedomesticsegment.
55
March22,2012
Exhibit7: CCRIEXIMgrowthhasbeenlaggingIndustrygrowthsincethesector
openedupforprivateoperatorstherebyintensifyingcompetition
30.0
20.0
10.0
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
(10.0)
CCRIEximGrowth(%)
EXIMTrafficGrowth(%)
Source:Company,IPA,KarvyInstitutionalResearch
Goingforward,wehavefactoredin6%EXIMthroughputCAGRforCCRIduring
FY1214E.TheCCRImanagementexpectstradevolumesshouldpickupinFY13E,
asagainst~4%EXIMthroughputgrowthexpectedinFY12E.
3. Domestic volume growth decline in FY12E on haulage increase;

quarterlydatasuggestithasbottomedout
Inthedomestictrainhandling,volumegrowthgotimpactaftertheIRannounced
commodityspecific haulage charges hike for domestic cargoes in Dec10, which
impacted cargo volumes of all train operators both CCRI and others. This
resultedinCCRIsdomesticvolumetodeclineby~917%YoYduringthelastfour
quarters.ThisledtohigheravailabilityofrakesintheEXIMtradetherebymuting
EXIMrealisationgrowthYoYduringthelastfourquarters.
However, the domestic handling has improved sequentially over the last two
quartersandweexpecta10%volumegrowthtokickinduringFY1314Ethereby
restoring domestic throughput closer to FY11 levels. Domestic growth in turn
shouldreducecompetitionontheEXIMroute.
Exhibit8: DomesticthroughputgrowthimpactedafterIR Exhibit9: Wehavefactoredin6%&10%volumegrowth
hikedcommodityspecifichaulagecharges
intheEXIM&domesticsegmentrespectively
200
150
40
25
30
20
DomesticThroughput(MnTEUs)
10
6
(10)
(5)
(20)
(10)
Dec11
Sep11
Jun11
Mar11
Dec10
Sep10
Jun10
Mar10
Dec09
10
10
10
50
19
15
15
20
100
21
(4)
(6)
(15)
FY08
FY09
FY10
EXIMGrowthYoY(%)
YoYGrowth(%)RHS
FY11
11
FY12E
FY13E
FY14E
DomesticGrowthYoY(%)
56
March22,2012
4.Strategictieupswithcompetitors,customerssupportrevenuegrowth
CCRIhasformedJVsintheCFSandICDssegmentswithitscompetitorsaswell
as its customers in the shipping line to ensure steady volumes. Further, it has
terminals across India and it has allowed its competitors to use its facilities for
their rakes operations. This helps CCRI increase utilisation for its infrastructure
assets.
Exhibit10: CCRIhasformedvariousJVswithitscompetitorsaswellasitscustomers
JVcompanies
JVPartners
Operations
StarTrackTerminalsPvt.Ltd
MaerskIndia
CFSatDadriUP
CCRIStake
49%
TridentTerminalsPvt.Ltd.
Transworldgroup
CFSatDadriUP
49%
AlbatrossCFSPvt.Ltd.
Transworldgroup
CFSatDadriUP
49%
GatewayTerminalsIndiaPvt.Ltd.
MaerskA/S
JNPort,Mumbai
26%
CMACGMLogisticsPark(Dadri)Pvt.Ltd AmeyaLogisticsPvt.Ltd
CFSatDadri,UP
49%
IndiaGatewayTerminalPvt.Ltd.
DubaiPortInternational
ContainerTerminalsatCochin
15%
IntegratedInfraLogPvt.Ltd.
IL&FSInfrastructureDevelopmentCorporation LogisticInfrastructure
HindCONCORTerminals(Dadri)Pvt.Ltd. HindTerminalsPvt.Ltd
InfiniteLogisticsSolutionsPvt.Ltd.
TCI,India
ContainerGatewayLtd.
GatewayRailFreightPvt.Ltd
AllcargoLogisticsParkPvt.Ltd.
AllcargoGlobalLogisticsLtd.
50%
CFSatDadriUP
Logisticsfreightterminals&
integratedlogistics
ContainerterminalatGarhi
Harsaru,Gurgaon
CFSatDadriUP
49%
49%
49%
49%
5.RevenuesCAGRof12%duringFY1214E
Based on a 5% total throughput CAGR and net realisation CAGR of 7% during
FY1214E,weexpectnetrevenuestogrowat12%CAGR.
Exhibit11: Realisation growth (YoY) trends across EXIM Exhibit12: We estimate revenue CAGR of 12% during
andDomesticsegments(%)
FY1214Eperiods
15
60,000
10
10
6.9 6
5
5
7 7
14
50,000
7 7
12
40,000
16
10
30,000
(5)
(10)
8
6
20,000
(2)
(3)
10,000
(4)
(7)
FY08
FY09
FY10
EXIMGrowthYoY(%)
FY11
FY12E
FY13E
0
FY08
FY14E
DomesticGrowth(%)
FY09
FY10
FY11
Revenue(Rsmn)
FY12E
FY13E
YoYGrowth(%)
Exhibit13: Keyassumptionsacrossvariousbusinessverticals
EximVolumes(TEUs)
Growth(%)
Realisation/TEU(Rs)
Growth(%)
DomesticVolumes(TEUs)
Growth(%)
Realisation/TEU(Rs)
Growth(%)
FY10
FY11
FY12E
FY13E
FY14E
1,882,277
2,018,551
2,119,479
2,246,647
2,381,446
1.5
15,399
4.8
538,970
18.9
14,977
(1.8)
7.2
14,820
(3.8)
543,746
0.9
15,387
2.7
5.0
15,842
6.9
483,934
(11.0)
16,310
6.0
6.0
16,951
7.0
532,327
10.0
17,452
7.0
6.0
18,138
7.0
585,560
10.0
18,674
7.0
57
March22,2012
6.Depreciatedassetbookandnodebtprovidespricingpower
CCRIisinoperationssince1988.Hence,mostoftheassetsareownedbyCCRIare
at significantly lower costs and are fully depreciated. These positions CCRI at
strongadvantagecomparedtoitsnewcompetitorswhohavetoacquireassetsat
significantlyhighercosts.Further,CCRIissittingonnetcashpositionof~Rs.28bn
(~Rs. 215 per share,22% of its market cap) which provides the Company pricing
power(intermsofvolumediscounts)incaseofaggressivecompetitionfromthe
privateoperators.
Exhibit14: CCRI enjoys extremely lower capital charges compared to its

competitors, thereby reducing its PAT margin volatility to
realisation
CCRI
2.8
6.0
GatewayDistriparks
2.4
8.3
3.1
2.0
4.0
6.0
Int(%ofSales)
8.0
10.0
12.0
Dep(%ofSales)
7.GreaterfocusonincreasingVAStoinsulatemarginpressure
In its bid to attract customers and also insulate operating cost pressure (mainly
haulagechargeincreases)onitsEBITDAmargins,CCRIisfocusingonincreasing
VASsharetototalrevenuesthroughhigherrentalincomeandthroughincreased
integrated services offerings. During the 9MFY12, rail handling share to total
revenueshascomedownby~200bpsto75%.ThemanagementexpectsVASshare
tofurtherincreaseby200bpsoverthenexttwoyearsto27%.Inthisregard,CCRI
isinvestinginlogisticsparksinAndhraPradeshandGujarat.
8.EBITDACAGRof12%ledbystablemargins,revenuegrowth
Subsequently,weestimatestableOPMat26%duringFY1214Etherebyleadingto
12%EBITDACAGR.
Exhibit15: We expect stable OPM & NPM during FY12 Exhibit16: TherebyresultinginEBITDACAGRof12%
duringFY1214E
14E
29
27
26.6
25
23
22.4
27.2
26.0
23.2
26.2
26.1
26.0
22.9
21.5
21.4
21.2
15,000
15
10,000
10
5,000
26.0
21.8
21
19
17
15
FY08
FY09
FY10
FY11
NPM(%)
FY12E
FY13E
FY14E
OPM(%)
0
FY08
FY09
FY10
FY11
EBIDTA(Rsmn)
FY12E FY13E FY14E

YoYGrowth(%)
58
March22,2012
9.PATCAGRof11%duringFY1214E
WebelievethatlowerdepreciationandnointerestcostsshouldhelpPATtogrow
at 11% CAGR (inline with EBITDA growth) during FY1214E period.
Subsequently,thereturnratiosshouldalsoimprovegoingforward.
Exhibit18: Returnratiostoremainhealthy
Exhibit17: PATCAGRof11%duringFY1214E
30.0
20
14,000
12,000
(%)
50.0
25.0
15
10,000
40.0
20.0
8,000
10
6,000
10.0
5.0
4,000
2,000
FY08
FY09
FY10
FY11
PAT(Rsmn)
10.0
FY08
FY12E FY13E FY14E

GrowthYoY(%)RHS
20.0
30.0
15.0
FY09
FY10
RoCE
FY11
FY12
RoE
FY13
FY14
RoIC(RHS)
KeyRisks
Increasing competition can impact revenue growth: Faster pace of rakes
additionsbyprivateCTOscanfurtherreduceCCRIsmarketsharefrom68%and
henceitsvolumegrowthacrossbothEXIManddomesticroutes.ThesenewCTOs
can also compete with CCRI on pricing front to gain market share, thereby
impactingCCRIsrevenueandPATgrowth.
VASimprovement:CCRIhasbeenincreasingitsVAStototalsalesratioinitsbid
to protect revenues and margins. This strategy would require sustained capex in
developinglogisticsparksandofferingintegratedsolutionstoitscustomers.Even
though it is sitting with enough cash on hand, capex can be delayed in case the
governmentdoesnotclearitsprojectsontime.
SensitivityAnalysis
Exhibit19: Impact of changes in realization and volumes on the earnings
metricsandtargetpriceestimates(FY14E)
10%lowervolume
10%lowerrealization
EPS(%)
(7)
(34)
RoE(bps) RoCE(bps)
(110)
(566)
TP(%)
(107)
(549)
(4)
(18)
Karvy
41,471
47,374
Consensus
41,107
44,557
Diff(%)
0.9
6.3
10,821
12,321
10,806
11,489
0.1
7.2
8,878
10,185
9,199
9,824
(3.5)
3.7
Karvyvs.Consensus
Exhibit20: Ourestimatesv/sBloombergconsensusdata
(Rsmn)
Revenue
FY12E
FY13E
EBITDA
FY12E
FY13E
NetProfit
FY12E
FY13E
59
March22,2012
Financials
Exhibit21: ProfitandLoss(Standalone)
YeartoMarch(Rsmn)
FY10
FY11
FY12E
FY13E
FY14E
NetSales
37,057
38,281
41,471
47,374
54,129
%growth
14
14
27,440
28,267
30,649
35,053
40,052
EBITDA
9,616
10,014
10,821
12,321
14,077
%growth
14
14
1,351
1,452
1,597
1,750
1,903
10,066
10,583
11,759
13,580
15,751
Depreciation
EBIT
Interestexpenditure
Exceptionalitems
26
PBT
10,066
10,583
11,759
13,580
15,751
Tax
2,194
1,798
2,881
3,395
3,938
7,867
8,760
8,878
10,185
11,813
7,872
8,785
8,878
10,185
11,813
(1)
12
15
16
FY10
FY11
FY12E
FY13E
FY14E
19,895
22,957
29,609
35,615
43,332
176
173
187
214
244
%growth
Exhibit22: BalanceSheet(Standalone)
YeartoMarch(Rsmn)
Debtors
Inventory
70
63
68
77
89
Loans&advances
4,798
4,743
5,138
5,869
6,706
Longterminvestments
2,405
2,440
2,940
3,440
3,940
Grossblock
29,889
32,862
36,162
39,462
42,762
Netblock
21,639
23,270
24,973
26,522
27,920
2,064
3,191
2,000
2,000
2,000
784
735
796
909
1,039
51,832
57,571
65,710
74,647
85,269
6,359
5,507
6,481
6,946
7,468
Otherliabilities
2,109
2,286
2,286
2,286
2,286
Totalliabilities
8,468
7,793
8,767
9,231
9,753
Shareholdersequity
1,300
1,300
1,300
1,300
1,300
Reserves&surpluses
42,064
48,478
55,643
64,116
74,216
Totalnetworth
43,364
49,778
56,943
65,415
75,515
CWIP
Othersassets
Totalassets
Debt
51,832 57,571 65,710 74,647 85,269
60
March22,2012
Exhibit23: CashFlowStatement(Standalone)
YeartoMarch(Rsmn)
FY10
FY11
FY12E
FY13E
FY14E
10,066
10,583
11,759
13,580
15,751
1,351
1,452
1,597
1,750
1,903
Interest
(1,484)
(1,527)
(2,535)
(3,010)
(3,576)
Tax
(3,685)
(2,225)
(2,843)
(3,395)
(3,938)
170
(216)
200
(416)
(486)
16
PBT
Depreciation
Others
CFfromoperatingactivities
6,425
8,083
8,178
8,509
9,654
(3,111)
(4,262)
(2,109)
(3,300)
(3,300)
(375)
(34)
(500)
(500)
(500)
Others
1,428
1,624
2,535
3,010
3,576
CFfrominvestingactivities
(2,058)
(2,672)
(73)
(790)
(224)
Issuanceofequity
Dividendpaid
(2,129)
(2,349)
(1,453)
(1,713)
(1,713)
CFfromfinancingactivities
(2,129)
(2,349)
(1,453)
(1,713)
(1,713)
2,238
3,062
6,652
6,006
7,717
FY10
FY11
FY12E
FY13E
FY14E
EBITDAmargin
26.0
26.2
26.1
26.0
26.0
EBITmargin
27.2
27.6
28.4
28.7
29.1
Netprofitmargin
21.2
22.9
21.4
21.5
21.8
Netchangeincash
YeartoMarch(%)
Dividendpayoutratio
17.1
15.6
19.3
16.8
14.5
Netdebt:equity(x)
(0.5)
(0.5)
(0.5)
(0.5)
(0.6)
RoCE
18.5
18.0
16.0
16.0
16.2
RoIC
36.6
35.2
33.3
36.8
39.9
RoE
19.4
18.9
16.6
16.6
16.8
FY10
FY11
FY12E
FY13E
FY14E
60.6
67.6
68.3
78.4
90.9
YeartoMarch
EPS(Rs)
DPS(Rs)
8.0
8.0
10.0
10.0
10.0
334
383
438
503
581
P/E(x)
14.4 12.9 12.8 11.29.6
P/BV(x)
2.6 2.3 2.0 1.71.5
EV/EBITDA(x)
9.8 9.1 7.8 6.35.0
EV/Sales(x)
2.5 2.4 2.0 1.61.3
61
Logistics
Bloomberg:GDPLIN
Reuters:GATE.BO
Recommendation
Rs204
Upside(%)
StockInformation
YeartoMar(Rsmn)
FY10
FY11
FY12E
FY13E
157/108
3mADV(Rsmn/US$mn)
29/0.6
Beta
0.7
Sensex/Nifty
17,316/5,275
108
StockPerformance(%)
Absolute
Rel.toSensex
1M
4.5
3M
22.1
12M
40.5
YTD
14.4
10.4
7.0
45.1
2.1
Performance
170
150
130
110
90
21,500
19,500
17,500
15,500
Sensex(LHS)
GatewayDistriparks(RHS)
30
20
10
Feb10
May09
0
Apr05
KeyFinancials
16/325
52weekHigh/Low(Rs)
CapexofRs.2.6bninFY1213E:WeexpecttheCompanytomeetitscapex
requirement of Rs. 2.6 bn mostly through its internal accruals and hence
remainanetcashflowCompany.
InitiatecoveragewithBUYrecommendation:GDPLsreturnratiosshould
expand during FY1114E period by ~800 bps led by revenue growth and
higher utilisation. We estimate PAT CAGR of29%during FY1214E period.
WevalueGDPLat12x(25%discounttoitssixyearmedianP/E16x)itsFY13
14E average EPS of Rs. 17. We believe that, as the return ratios expand
towardthepreviouslevelsseenduringFY0508,thevaluationmultiplewill
followsuitashasbeenthecaseinthepast.Weinitiatecoverageonthestock
withBUYrecommendationwithatargetpriceofRs.204pershare.
37%
Jan08
Cold chain business small but niche play: This segment currently
contributes 8% to net revenues and the management plans to increase its
palletstrengthby~150%to46KpalletsduringFY1314E.
Rs149
TargetPrice:
Sep08
Leadership position in the container train business: GDPL currently

operates21rakes(2ndlargestafterContainerCorp)with>85%ofitscapacity
beingdeployedintheEXIMcontainertransportation.Itplanstoaddanother
68rakesduringFY13E.WeexpectGDPLsrailvolumestogrowby15%and
10% during FY13E and FY14E, respectively. With its rising penetration and
higherutilisation,railmarginsshouldexpandgoingforwardandweexpect
thissegmenttopostEBITDACAGRof>25%duringFY1314Eperiod.
CMP:
Apr07
CFS business is the cash cow; expanding capacities to fuel growth: We

expect Gateway Distriparks (GDPL) CFS volumes to grow at 3% and 7%
during FY1314E vs.3% during FY12E, as new capacitiesget commissioned
atJNPTandKochi.Strongrelationshipwithshippinglinesshouldboostthe
growthasittheshippinglines,whichnotifywhichCFStodobusinesswith
(andnotthecargoowners).Further,CFSisacashcowfortheCompanyasit
hasveryhighOPMof~54%andthesegmentgenerates>80%oftotalPAT.
Mar11
May11
Jun11
Jul11
Aug11
Oct11
Nov11
Dec11
Feb12
Mar12
Aug06
FiringonAllCylinders
BUY
Dec05
INITIATIONREPORT
Mar12
GatewayDistriparks
Jun11
IndiaResearch
Oct10
March22,2012
FY14E
NetSales
5,166
5,991
7,712
8,813
10,103
EBITDA
1,249
1,597
2,593
3,051
3,590
EBITDA(%)
24.2
26.7
33.6
34.6
35.5
PAT
791
968
1,423
1,652
2,029
EPS(Rs)
7.3
9.0
13.2
15.3
18.8
RoE(%)
11.2
10.9
13.0
13.6
14.9
RoCE(%)
10.7
10.6
12.3
12.7
14.0
P/E(x)
20.6
16.9
11.5
9.9
8.0
EV/EBITDA(x)
14.0
9.9
6.0
5.0
3.9
AnalystsContact
RajeshKumarRavi
02261844313
PrasunKumar
02261844325

March22,2012
GatewayDistriparks
Profit&loss
FY12E
FY13E
FY14E
Netsales
7,712
8,813
10,103
EBIDTA
2,593
3,051
3,590
Depreciation
585
686
705
InterestExpense
200
215
218
PBT
1,951
2,282
2,812
Tax
488
571
703
Adj.PAT
1,423
1,652
2,029
EPS(Rs)
13.2
15.3
18.8
DPS(Rs)
3.5
3.5
3.5
EBIDTAMargin%
33.6
34.6
35.5
AdjNetMargin%
18.5
18.7
20.1
P/E(X)
11.5
9.9
8.0
EV/EBIDTA(X)
6.0
5.0
3.9
P/BV(X)
1.4
1.3
1.1
ProfitandLossRatios
ValuationMultiples
BalanceSheet
CompanyBackground
Gateway Distriparks (GDPL) was incorporated on April 6,
1994.
Presently, GDPL operates in three segments CFS/ICDs,
ContainertrainoperationsandColdchainlogistics.
In the CFS space, GDPL has a JV with Punjab Conware to
operate one of their CFS at Nhava Sheva. In its rail
subsidiaryGatewayRail,BlackstonehasinvestedRs3bn
throughissueofCCPSin2009.
In the Cold chain business (Snowman Frozen Foods),
InternationalFinanceCorpbought20%stakein2009forRs
250 mn while Mitsubishi Logistics and Nichirei Logistics
owns~26%stakeandGDPLremaining53%.
CashFlow
PBT
FY12E
FY13E
FY14E
1,951
2,282
2,812
585
686
705
FY12E
FY13E
FY14E
Depreciation
TotalAssets
14,585
16,356
18,047
Interest
200
215
218
NetFixedAssets
10,048
11,162
11,457
Tax
(488)
(571)
(703)
ChangeinWkgCap
(504)
171
(93)
4,537
5,194
6,590
14,585
16,356
18,047
Others
(182)
(192)
(226)
7,875
9,099
10,701
CFfromOperations
1,562
2,591
2,714
CurrentAssets
TotalLiabilities
Networth
Debt
1,900
2,050
2,080
Capex
(801)
(1,800)
(1,000)
CurrentLiabilities
1,063
1,399
1,378
Investments
(100)
3,748
3,808
3,888
OtherLiabilities
BalanceSheetRatios
Others
CFfromInvesting
142
132
146
(760)
(1,668)
(854)
746
150
30
(566)
RoE%
13.0
13.6
14.9
ChangeinDebt
RoCE%
12.3
12.7
14.0
Dividends&others
(587)
(583)
NetDER(x)
(0.1)
(0.1)
(0.2)
CFfromFinancing
159
(433)
(536)
AssetTurnover(x)
0.5
0.6
0.6
ChangeinCash
961
491
1,324
SegmentalRevenuebreakup(%)
Public&
Others,
16.37
FII,27.73
GDL&
CFS
Subsidiari
es,42.6
Promoters,
40.45
Snowman
Frozen
Foods,
7.7
DII,15.45
Gateway
Rail
Segment,
49.6
63
March22,2012
GatewayDistriparks
WeexpectGDPLprofitabilitytoexpandacrossallthethreebusinesssegmentsitis
present in. As GDPL is capable to meeting its capex requirements through its
internal accruals (a net cash flow company), we do not see any major delay in
expansion plans across the three businesses. As these expansions get
commissioned over the next two years, GDPLs return ratios should remain
buoyant.
We value GDPL at 12x (25% discount to six year median P/E 16x) its FY1314E
averageEPSofRs17.Webelieveasthereturnratiosexpandtowardtheprevious
levelsseenduringFY0508,thevaluationmultiplewillfollowsuitashasbeenthe
case in the past. We initiate coverage on the stock with BUY recommendation
withatargetpriceofRs.204pershare.
The25%valuationdiscounttoitslongtermP/Eistofactorintheriskstoearnings
emanatingfromthedelaysininfrastructurecommissioningtherebyimpactoverall
revenuegrowthforlogisticsoperators.
GDPListradingat~33%discounttoitssixyear Exhibit2: ...and at ~47% discount to its six year median
medianfwd(1Yr)P/Eof16x,(+1SD6.8x)
fwd(1Yr)EV/EBITDAof9x,(+1SD5.8x)
Exhibit1:
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
30.0
25.0
20.0
15.0
10.0
5.0
Mar12
Aug11
Feb11
Aug10
Jan10
Jul09
Dec08
Jun08
Dec07
May07
Nov06
Apr06
Oct05
Apr05
Mar12
Aug11
Feb11
Aug10
Jan10
Jul09
Dec08
Jun08
Dec07
May07
Nov06
Apr06
Oct05
Apr05
0.0
and Trading at ~7% discount to its six year Exhibit4: While return ratios continue to be on an
medianfwd(OneYr)P/Bof1.8x,(+1SD0.7x)
uptrend,closertoFY07levels
Exhibit3:
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
30.0
26.0
22.0
18.0
14.0
Mar12
Aug11
Feb11
Aug10
Jan10
Jul09
Dec08
Jun08
Dec07
May07
Nov06
Apr06
Oct05
Apr05
10.0
FY07
FY08
FY09
FY10
FY11 FY12E FY13E FY14E
RoE(%)
RoIC(%)
64
March22,2012
GatewayDistriparks
InvestmentRationale
1.
CFSBusinessisthecashcow;expandingcapacitiestofuelgrowth
2.
Leadership position amongst private CTOs will further improve growth

prospects
3.
ThefourthICDFaridabadtobeoperationalinFY13E
4.
ColdChainbusinessasmallbutnicheplay
5.
SalesCAGRof19%ledbytractionacrossallthethreebusinesssegments
6.
ExpectEBITDACAGRof33%duringFY1214E
7.
Returnratiostoimprovesignificantlygoingforward
1.CFSBizisthecashcow;expandingcapacitiestofuelgrowth
GDPL has CFS presence at the leading container ports of India Mumbai and
Chennai.Thisisahighmarginbusiness,asGDPLrecorded>50%OPMinthelast
four quarters. Currently, this segment accounts for ~40% of topline and 80% of
PAT. Recently, with a decline in container volumes at JNPT, GDPLs overall
volume growth has been impacted. However, container volume handled at its
other CFS i.e. Chennai & Vizag has remained stable thereby moderating the
impactofvolumedeclineatitsJNPTCFS.
Further, we expect GDPLs EXIM volume to pick up, as its Kochi CFS becomes
operational in Q4FY12 as well as additional capacity of 60K TEUs gets
commissionedatitsJNPTCFSinFY13E.WehavefactoredinCFSvolumegrowth
of2.8%,3%and7%,respectivelyduringFY1214Eperiod.
Exhibit5: CFSpresenceatallthemajorEXIMcontainerhubs
CFS
Land
(acres)
CurrentCapacity
CapexDetails
(TEUs)
Adding60,000TEUsby
300,000
endofFY13E
90,000
Mumbai
62
Chennai
20
Vizag
20
50,000
Kochi
6.5
50,000
Activities/OtherDetails
2CFS,AdjacenttoJNPT,WarehousingforExports,Imports(LCL)
&BondedWarehousing;Hasafleetof140+trailers
WarehousingforExports,Imports(LCL)&BondedWarehousing
WarehousingforExports,Imports(LCL)&BondedWarehousing,
12kmfromport
TobeoperationalinQ4FY12,WarehousingforExports&Imports,
0.5kmfromport
Exhibit6: NeartermvolumegrowthimpactedduetodecliningthroughputatJNPT
100
20%
15%
10%
5%
0%
5%
10%
15%
20%
25%
80
60
40
20
JNPT
Chennai
Vizag
Dec11
Sep11
Jun11
Mar11
Dec10
Sep10
Jun10
Mar10
Dec09
Sep09
Jun09
Mar09
Dec08
Sep08
Jun08
YoYgrowth(%)
65
March22,2012
GatewayDistriparks
Despitelowervolumes,theCFSsegmentsprofitabilityhasremainedstable.This
is led by higher realisation on account of higher dwell time resulting in higher
rentalincome.Also,theoperationalefficiencyhasimprovedwhichhaveresulted
inhigherEBITDAperTEU.
Exhibit7: Profitability has improved despite lower volumes led by operational
efficiency
12,000
500
10,000
400
8,000
300
6,000
200
4,000
100
2,000
CFSEBITDA(Rsmn)RHS
Realisation(Rs/TEU)
Dec11
Sep11
Jun11
Mar11
Dec10
Sep10
Jun10
Mar10
Dec09
Sep09
Jun09
Mar09
Dec08
Sep08
Jun08
EBITDA(Rs/TEU)
2.LeadershippositionamongstprivateCTOswillfurtherimprove
growthprospects
GDPLs subsidiary Gateway Rail has CategoryI rail license to operate container
trains. It is the second largest Container Train Operator (CTO) in India after the
largestCTOContainerCorporationofIndia(ownedbyGovtofIndia)andhence
is the largest private CTO in India. In 2009, Blackstone invested Rs. 3 bn in the
subsidiary through cumulative Convertible Preference Shares (CCPS), which
helped the rail division in reducing its debt levels thereby helping the division
report profits (of Rs. 38 mn) in Q4FY11 for the first time in three years of its
operations. GDPL currently operates 21 rakes with >85% of its capacity being
deployedintheEXIMcontainertransportation.Itplanstoaddanother68rakesin
FY13E.WeexpectGDPLsrailvolumestogrowby28%,15%&10%,respectively
duringFY1214Eperiod.
Exhibit8: Railvolumesgrowthtrend
Exhibit9: StablerealisationboostEBITDAgrowth
160%
140%
120%
100%
80%
60%
40%
20%
0%
RailVolumes(000TEUs)
YoYgrowth(%)
Dec11
RailEBITDA(Rs/TEU)RHS
Sep11
Jun11
Mar11
Dec10
Jun10
RailRealisation(Rs/TEU)
Sep10
Mar10
Sep09
Jun08
Sep11
1,000
Dec11
Jun11
Mar11
Dec10
Jun10
Sep10
Dec09
Mar10
Jun09
Sep09
Dec08
Mar09
Jun08
Sep08
2,000
10,000
Dec09
10
3,000
20,000
Jun09
20
4,000
30,000
Dec08
30
5,000
Mar09
40
40,000
Sep08
50
As GDPL has been able to improve its asset sweating in the rail business, its
EBITDA per TEU has increased despite rise in haulage charges by the Indian
Railways. While the rail business comprises ~50% of total revenues, its PAT
contribution is ~15% of total PAT. This is on account of lower OPM of ~17% v/s
66
March22,2012
GatewayDistriparks
~55%OPMintheCFSbusiness.Additionally,railbusinessiscapitalintensivedue
toacquisitionofrakes,licensefeeandICDs.However,withitsrisingpenetration
andhigherutilisation,GDPLsrailmarginsshouldexpandgoingforwardandwe
expectthissegmenttopostEBITDACAGRof>25%duringFY1314Eperiods.
3.ThefourthICDFaridabadtobeoperationalinFY13E
GDPL has three rail linked ICDs at Kalamboli (Mumbai), Garhi (Gurgaon) and
Ludhiana.TheseICDshavehelpedGDPLconnecttheNorthWesthinterlandand
henceGDPLhasbeenabletogatherhighEXIMrailhandling.Goingforward,the
Asaoti(Faridabad)ICDisexpectedtobeconnectedbyroadinQ4FY12andbyrail
in Q2FY13, which will help GDPL to further increase its services on the EXIM
route.
4.Coldchainbusinessasmallbutnicheplay
GDPL currently owns 53.1% stake in Snowman Frozen Foods, which has ~18K
palletswithcoldwarehousingfacilitiesacrossIndia.Thisisanichesegmentwith
strong growth potential. Currently the cold chain business accounts for 8% of
GDPLstotalsalesand3%oftotalPAT.Salesgrewbymorethan50%YoYduring
the last four quarters and the management plans to raise its pallet capacity by
~150%duringFY1314Eto46Kpallets.
KeyAssumptions&Estimates
Exhibit10: KeyAssumptionsandEstimatesacrossthethreebusinessverticals
FY10
304.0
(5.7)
6,645
(12.5)
112
69.0
25,797
(6.6)
356
2.3
CFSVolumes(KTEUs)
YoYgrowth(%)
CFSRealisation(Rs/TEU)
YoYgrowth(%)
RailVolumes(KTEUs)
YoYgrowth(%)
RailRealisation(Rs/TEU)
YoYgrowth(%)
ColdChainSales(Rsmn)
YoYgrowth(%)
FY11
333.4
9.7
7,232
8.8
131
16.8
23,689
(8.2)
470
32.0
FY12E
342.9
2.8
9,606
32.8
168
27.9
22,646
(4.4)
614
30.7
FY13E
353.2
3.0
10,567
10.0
193
15.0
22,646
706
15.0
FY14E
377.9
7.0
11,306
7.0
213
10.0
23,779
5.0
777
10.0
Exhibit11:
PlannedcapexofRs3.2bnduringFY1213E
9MFY12 4QFY12FY13E Comments
CFSBusiness
80
RailBusiness
330
1,300 68Newrakesadditions,FaridabadICD
ColdChainLogistics
200
800 Raisingpalletcapacityfrom18Kto46K
Totalcapex
610
500 KochandJNPTcapacityexpansions
2,600
Mostofthecapextobemetthrough
internalaccruals
5.SalesCAGRof19%ledbytractionacrossallthethreebusiness
segments
We expect GDPL revenues to grow at ~19% CAGR during FY1214E periods vs.
15%CAGRduringFY10&FY11.Allthethreebusinessesareongrowthtracksled
byrisingcapacityadditionsandincreasedutilisation.
67
March22,2012
GatewayDistriparks
Exhibit12:
Revenues(Rsmn)expandacrossallthethree
segments
Exhibit13: thereby boosting revenue CAGR of 19% during

FY1214E
12,000
10,000
706
614
8,000
2,000
70.0
10,000
60.0
50.0
40.0
6,000
30.0
4,000
3,111
2,900
5,053
4,375
3,804
4,000
12,000
8,000
470
356
6,000
777
2,020
2,411
3,294
FY10
FY11
FY12E
3,732
4,272
FY13E
FY14E
20.0
2,000
10.0
CFSDivision
RailDivision
FY09
ColdChain
FY10
FY11
FY12E
Revenues(Rsmn)
FY13E
FY14E
YoYgrowth(%)
6.ExpectEBITDACAGRof33%duringFY1214E
GDPLs operating margins bottomed out during FY10 and has been expanding
thereafterledbyimprovedperformanceacrossallthethreesegments.Weexpect
OPM to expand from 26.7% in FY11 to ~35% in FY134E, and subsequently its
EBITDAshouldgrowat~33%CAGRduringFY1214E.
Exhibit14:
Exhibit15: and PAT CAGR of 29% during FY1214E periods
Higheroperationalefficiencytofurtherboost
EBITDACAGRto30%...
4,000
3,000
40.0
2,500
50.0
35.0
2,000
40.0
30.0
1,500
25.0
1,000
20.0
500
15.0
30.0
2,000
20.0
1,000
FY09
FY10
FY11
FY12E
FY13E
EBITDA(Rsmn)
FY14E
10.0
(10.0)
FY09
OPM(%)RHS
FY10
FY11
FY12E
PAT(Rsmn)
FY13E
FY14E
YoYgrowth(%)
7.Returnratiostoimprovesignificantlygoingforward
Exhibit17:
Strongsalesgrowth,increasedoperational
efficienciestoreflectinrisingprofitabilityratios
25.0
21.3
10.7
15.4
12.8 12.1 12.5
11.4
11.2
14.9
13.0
10.9
13.6
1,000
500
(0.10)
(0.20)
FY09
FY14E
FY13E
FY12E
FY11
FY10
FY09
FY08
FY07
5.0
RoE(%)
0.10
Capex(RsMn)
RoIC(%)
FY14E
10.0
1,500
16.6
FY13E
12.5
0.20
FY12E
15.0
13.0
19.0
2,000
FY11
20.0
Net cash flow position as internal accruals

sufficienttofundongoingcapex
FY10
Exhibit16:
NetD:E(x)RHS
68
March22,2012
GatewayDistriparks
KeyRisks
CFSrevenuegrowthlargelydependentonJNPTexpansion:JNPTCFScurrently
accounts for ~66% total CFS handled by GDPL during the last four quarters. As
GDPL has strong client relationship at JNPT, timely expansion of 60K TEUs will
result in faster volume growth as against ramping of business at Kochi (lower
EXIM trade currently), where GDPL is adding 50K TEUs capacity in Q4FY12.
Hence, our volume growth assumptions of 3% and 7% during FY1314E can be
impacteddownwardsincasetheexpansionisdelayed.
Haulage charge increase by Indian Railways: GDPLs rail business is in growth
phaseandistryingtogathernewbusiness.Hence,GDPLmaynotbeabletofully
pass on the rising haulage charges to its customers thereby impacting its margin
expansionandprofitgrowth.
SensitivityAnalysis
Exhibit18:
Impact of changes in realisation and volumes across CFS and Rail

verticalsontheearningsmetricsandtargetpriceestimates(FY14E)
10%lowerCFSvolumes
10%lowerRailrealization
10%lowerRailvolumes
EPS(%)
RoE(bps)
RoCE(bps)
TP(%)
(16)
(221)
(185)
(9)
(9)
(121)
(102)
(5)
(19)
(261)
(219)
(10)
(4)
(53)
(44)
(2)
Karvyvs.Consensus
Exhibit19:
Ourestimatesv/sconsensusestimates
(Rsmn)
Karvy
Consensus
Diff(%)
FY12E
7,712
7643.6
0.9
FY13E
8,813
8805
0.1
FY12E
2,593
2,423
7.0
FY13E
3,051
2,757
10.7
FY12E
1,423
1296.7
9.7
FY13E
1,652
1476
11.9
Revenue
EBITDA
NetProfit
69
March22,2012
GatewayDistriparks
Financials
YeartoMarch(Rsmn)
FY10
FY11
FY12E
FY13E
FY14E
NetSales
5,166
5,991
7,712
8,813
10,103
%growth
14
16
29
14
15
3,917
4,394
5,119
5,762
6,513
EBITDA
1,249
1,597
2,593
3,051
3,590
%growth
(15)
28
62
18
18
Depreciation
455
502
585
686
705
OtherIncome
125
129
142
132
146
EBIT
919
1,223
2,150
2,498
3,031
Interestexpenditure
195
182
200
215
218
PBT
724
1,041
1,951
2,282
2,812
Tax
(79)
44
488
571
703
12
30
40
60
80
791
968
1,423
1,652
2,029
(1)
22
47
16
23
FY10
FY11
FY12E
FY13E
FY14E
945
1,636
2,697
3,188
4,512
Debtors
682
624
925
925
925
503
706
865
1,026
1,092
23
45
50
55
61
10,036
11,540
12,543
14,443
15,443
8,186
9,329
9,748
10,962
11,257
MinorityInterest
%growth
YeartoMarch(Rsmn)
Inventory
Loans&advances
OtherCurrentAssets
Longterminvestments
Grossblock
Netblock
CWIP
517
503
300
200
200
10,855
12,843
14,585
16,356
18,047
1,307
1,105
1,063
1,399
1,378
Debt
2,099
1,154
1,900
2,050
2,080
Totalliabilities
3,406
2,259
2,963
3,449
3,458
DeferredTaxliability
187
140
140
140
140
MinorityInterest
625
3,568
3,608
3,668
3,748
Shareholdersequity
1,079
1,080
1,080
1,080
1,080
Reserves&surpluses
5,558
5,797
6,795
8,019
9,621
Totalnetworth
6,637
6,877
7,875
9,099
10,701
10,856
12,843
14,585
16,356
18,047
Totalassets
70
March22,2012
GatewayDistriparks
Exhibit22: Cashflowstatement(Consolidated)
YeartoMarch(Rsmn)
FY10
FY11
FY12E
FY13E
FY14E
PBT
724
1,041
1,951 2,282 2,812
Depreciation
444
360
585 686 705
Interest
195
182
200 215 218
Tax
(164)
(230)
(488) (571) (703)
396
(409)
(504)
Others
34
147
(182) (192) (226)
171 (93)
Cashflowfromoperatingactivities
1,628
1,091
1,562 2,591 2,714
(987)
(1,639)
(801) (1,800) (1,000)
69
(28)
(100)
Others
35
65
142 132 146
Cashflowfrominvestingactivities
(883)
(1,602)
(760) (1,668) (854)
61
(947)
746 150 30
Issuanceofequity
36
2,980
Dividendpaid
(439)
(629)
Others
(428) (428) (428)
(200)
(182)
Cashflowfromfinancingactivities
(543)
1,222
159 (433) (536)
(160)
(155)
(138)
Netchangeincash
202
711
961 491 1,324
YeartoMarch(%)
FY10
FY11
FY12E
FY13E
FY14E
EBITDAmargin
24.2
26.7
33.6 34.6 35.5
EBITmargin
17.8
20.4
27.9 28.3 30.0
Netprofitmargin
15.3
16.2
18.5 18.7 20.1
Netdebt:equity(x)
0.2
(0.0)
(0.1) (0.1) (0.2)
Workingcapitalturnover(x)
(0.0)
0.0
0.1 0.1 0.1
RoCE
10.7
10.6
12.3 12.7 14.0
RoIC
12.1
12.5
15.4 16.6 19.0
RoE
11.2
10.9
13.0 13.6 14.9
FY10
FY11
FY12E
FY13E
FY14E
EPS(Rs)
7.3
9.0
13.2
15.3
18.8
DPS(Rs)
2.0
3.0
3.5
3.5
3.5
106
118
134
YeartoMarch
67
97
P/E(x)
20.6
16.9
11.5 9.9 8.0
P/BV(x)
2.2
1.6
1.4 1.3 1.1
EV/EBITDA(x)
14.0
9.9
6.0 5.0 3.9
EV/Sales(x)
3.4
2.6
2.0 1.7 1.4
71
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March 22, 2012

Wake Up & Smell The Future

Rajesh Kumar Ravi

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

Capacity issues to get addressed going forward: Indian logistics sector

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ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

GST Implementation to Accelerate Indias Growth on Logistics

FY12E FY13E FY14E

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3mreturn 1yrreturn 2yrCAGR

Improved fundamentals to boost stock performance of stocks

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FTWZ expansion boosts earnings growth in FY1214E periods: Arshiya

Largest container train operator in India: Container Corporation of India

Strategic tieups with competitors &customers to support revenue growth:

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ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

Exhibit7: ASRST ImpactofchangesinVASmultiple(FTWZ),volumes&realisation

ARSTs earnings have higher sensitivity to FTWZ business compared to the

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

Road Transport FTL

Current Market Size

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EXIM trade to double to US$ 1 trillion by

Ensuing inefficiency in logistics

5. FDI policy related to logistics sector has

Private CTOs reduce Container Corps

6. Impending GST another booster the

Modern warehousing segment to be a large

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

1. Growing Indian economy, rising government spends

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Exhibit24: Infrastructure investment share of GDP has risen Exhibit25: Transportationspend(%ofGDP)hasalsogrownby

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1.4 Rising FDI in Indian companies should increase demand for

1.5 Increased container penetration provides opportunities for

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

2.2 Hinterland connectivity has been a bottleneck for logistics

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

3. Government Initiatives to Address the Infrastructure

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

3.2 Dedicated Freight Corridors (railways) to augment track

The Western Corridor would connect JNPT to Dadri via VadodaraAhmedabadPalanpur

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

3.4 New Maritime Agenda 20102020 will boost port capacity

projects are expected to increase major ports capacity by ~30% over

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

3.6 Container ports new expansions at major ports key to EXIM

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3.7 Growth of minor ports & private ports brightens up sectoral

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ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

4.1 Private CTOs reduce Container Corps monopoly while

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ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

4.5 Haulage charge hike impacted domestic handling for rail

ISIEmergingMarketsPDF intellinet from 203.201.231.35 on 2012-03-22 01:19:33 EDT. DownloadPDF.

5. FDI Policy related to Logistics Sector has Encouraged