You are on page 1of 14

Result Update

April 28, 2016
Rating matrix


Target Period
Potential Upside


Gati Ltd (GATCOR)

| 150
12 months

Subdued 2016; resurgence expected in 2017

What’s changed?

Changed from | 4.8 to | 5.2
Changed from | 5.9 to | 6.3

Quarterly performance
| Crore

Q4FY16 Q4FY15



YoY (%) Q3FY16


64 bps


QoQ (%)
74 bps

Key financials
| Crore





Net Sales
Net Profit
EPS (|)





P/E (x)
Target P/E (x)





P / BV (x)
RONW (%)
ROCE (%)





Valuation summary

Stock data
Market Capitalization (| Crore)
Total Debt (FY16) (| Crore)
Cash (FY16) (| Crore)
EV (| Crore)
52 week H/L
Equity Capital (| Crore)
Face Value (|)

| 120

298 / 98

Peer Comparison




Patel Integrated





Blue Dart Exp.









Transport Corp.





Research Analyst
Bharat Chhoda
Ankit Panchmatia

ICICI Securities Ltd | Retail Equity Research

• Q4FY16 revenue was in line with our expectations but profitability was
above our estimates. Revenues grew 3% YoY (+3% QoQ) to | 428
crore (I-direct estimate: | 430 crore). Revenue from KWE grew mere
1% YoY to | 287 crore. However, standalone revenues grew 11% YoY
to | 127 crore, on the back of growth in e-commerce business. For
FY16, consolidated revenues grew 1% YoY to | 1667 crore
• EBITDA for the quarter grew 11% YoY (+12% QoQ) to | 37.8 crore (Idirect estimate: | 35.7 crore). The resultant EBITDA margins expanded
64 bps YoY (+74 bps QoQ) to 8.8%. For FY16, EBITDA de-grew 6%
YoY to | 131 crore with an margin of 7.8%
• Higher other income and lower interest expense accelerated PAT
growth, which was at the highest quarterly levels in FY16. PAT after
minority interest sequentially doubled (+37% YoY) to | 15.5 crore. In
contrast, for FY16 lower operating performance coupled with higher
depreciation led to PAT de-growth of 11% YoY to | 36.8 crore
KWE - Subdued year; standalone continues to bloom
Consolidated revenues for Gati during the year were adversely impacted
by the subdued performance in its KWE division. KWE that contributes
~70% to consolidated revenues was mainly impacted by absence of rail
service revenues. The approximate annual loss of rail revenues was to the
extent of | 35 crore. The company resumed and upgraded its MumbaiKolkata-Guwahati rail service with an addition of a round-trip that would
lead to recovery of revenues in FY17. Standalone revenues continued
their upward trajectory, with e-commerce revenues now contributing
12% of consolidated revenues vis-à-vis 8% in the earlier year. The current
quarterly run-rate for e-commerce has increased to | 63 crore compared
to | 53 crore in the earlier quarter. Gati is consolidating its fleet size and
pin codes served to achieve better efficiencies. Further, the company has
intentionally changed its strategy to focus on parcels weighing less than 2
kg, compared to earlier focus on carrying bulkier parcels. With these
efforts, we expect margin trajectory to improve to 8.5%, going ahead.
Pan-India network, multimodal capability - answer to start ups
Gati’s wide range of services ranging from freight forwarding,
warehousing, packaging, last mile delivery to reverse logistics caters to a
360° presence in supply chain for customer requirements. Unlike Gati, the
recent start-ups (fuelled by higher funding) that specialise in specific
product or region would be unable to provide the reach and cost
efficiencies. Gati with its fleet size of 4,500 (owned and contracted), 200
reefer trucks and 76 warehouses (including two e-fulfilment centre) is at a
vantage point. With its “multi-modal” and “multi-service” expertise Gati
positions itself as the most favoured player for contract logistics.
GST a matter of time, sector still plagued by unorganised players
The Indian logistics industry is highly fragmented with 67% of vehicle
owners having fleets of less than five vehicles. Of the total express market
is estimated at | 17500 crore with an unorganised share of ~50%. With a
direct correlation to GDP and trade growth, an expected improvement in
the same would buoy revenue growth for logistic players. Goods &
Service Tax (GST) delay has sentimentally impacted the stock
performance. However, hope hinges on attaining the consensus. Gati
being one of the largest organised surface logistics players will benefit
from these changes. In our two phase DCF model we expect revenue to
grow at a CAGR of 18% in 2015-20E and 12% CAGR in 2020-25. We
continue to maintain BUY recommendation on the stock.

com Research Assumptions Current Revenue Growth (%) Present Value FCFE Cost of Equity Earlier Phase 1 15.5 176.180.0 312.3 42.5 250.0 8.9 Q3FY16 QoQ (%) 417.5 349.8 Research ICICI Securities Ltd | Retail Equity Research Page 2 .9 YoY (%) 2.8 10.6 Phase 2 12.1 7.6 Improved operating performance to impact the PAT estimations Source: Company.6 -5.1 18.8 2.9 33.5 55.1 24.0 0.5 Comments Revenues continued to get impacted by loss of rail revenues.8 5.5 156.0 390.1 4.6 2.1 Other Expenditure 36.7 287 12 13 -7.9 35.0 7.1 7.5 258.3 5.9 11.8 34. Minority Int) Key Metrics Standalone KWE Kausar Ship - - Q3FY16 QoQ (%) 120 6.7 2.0 Revenues estimations remain unchanged 130.7 3.8 11.9 Total Tax 4.0 430.8 2.2 4.3 18.2 28 bps 8.1 0.6% over 2016-2020 as compared to earlier 2015-2020 FCFE value Phase 1 (FY15-20) & Phase 2 (FY20-25) Source: Company.2 9.8 45.667.6 Q4FY16 127 Q4FY15 114 YoY (%) 11.6 13.6 0.1 14.2 34.1 74 bps Operating Expenses Total Expense EBITDA EBITDA Margin (%) Depreciation 9.3 287 285 0. ICICIdirect.8 151.4 Other Income PBT 5.7 255.6 45.3 37.1 Q4FY15 415.0 51.9 9.1 11.2 394.1 10.0 4.6 15.3 5.7 -9.3 4.8 8. ICICIdirect.8 41.4 712.9 3.6 3.0 11.0 2.903.4 NA Increase on account of higher investments in network expansion Margins expanded on the back of controlled opex and discontinuance of lower margin routes Higher other income fuelled the PAT growth Though fuel sales de-grew by 2%.3 8.7 737.5 9.1 7.6 37.180.8 53.4 381.903.1 5.2 33. ICICIdirect.1 246.1 43.4 15.2 8.2 -3.1 8.2 383.2 4.Variance analysis | Crore Revenue Q4FY16 Q4FY16E 428.7 11 Adj PAT (excl.8 0.6 Interest 9.5 Phase 2 12.7 4.0 1.2 64 bps 8.4 Phase 1 12.8 8.9 1.5 36.5 35.3 43 bps Margins expected to expand on the back of discontinuance of low margin routes 8.4 18.6 59.4 11.6 12.0 14.4 38.7 1.5 3. standalone revenues continue to grow due to outperformance in E-commerce business -0.6 1.2 -20.7 102.9 Employee Benefit Expenses 43. KWE earnings continue to remain subded.0 -18.4 185.1 - - Source: Company.7 Comments Maintained growth estimates with roll over of a year with a CAGR of 15.6 52.7 34.8 8.8 7. however standalone revenues continue to grow Cost of Sales 54.7 95.6 9.9 6.0 Research Change in estimates FY17E (| Crore) Revenue EBITDA EBITDA Margin (%) PAT EPS (|) FY18E FY16 Old New % Change Old New % Change Comments 1.

BlueDart. While the Indian postal department has the lion’s share in the document segment.75 8.99 5.14 7. express logistics alone is estimated to have a market share of | 17400 crore.70 14 Thailand 6.93 12 Qatar Research Indian is considered to be in top five economies in the emerging markets in logistics index based on size. The industry is highly fragmented. air and water.65 6.21 6. which makes it favourable for organised and recognised players like Gati.38 5.88 8.63 5.29 6.24 4.95 4.76 3 Brazil 8.50 6. Owing to the number of players and advantages of last mile delivery.94 6.99 5. First Flight.93 6.94 4.80 Research “Express industry” shift from unorganised to organised Currently. TNT and UPS constitute the organised express industry in India. higher investments in infrastructure will ignite growth in the logistics industry. etc.93 6. to increase their penetration in the same.82 6.47 6.16 5.63 Country Total Index 7 Russia 7. in collaboration with global majors like KWE. Streamlining of operations.15 Research Source: UB presentation.90 5. ICICIdirect.5x of GDP growth The Indian logistics industry has grown at a CAGR of ~16% over the last five years. Further.Company Analysis Exhibit 1: Logistics cost as percentage of GDP China 18 11 Japan Europe 10 9 US 13 India 0 5 10 15 20 “Logistics story” of India .30 6.53 6. This fragmentation brings in opportunities for organised players like Gati that has the reach and ability to provide an array of services across sectors. DHL. In the organised segment. roads contribute ~60% of industry volumes.62 6.68 6.71 6.39 4. rail. Size and Growth Compatibility Connectedness 1 China 9.80 7. the postal department together with large players constitute the organised portion of the market.52 4.Pegged at 1.36 6. DTDC.30 9 Mexico 7.70 5 India 9.06 4. more than 50% of the | 17500 crore express market is with the unorganised market.66 6 UAE 4. FedEx. ICICIdirect.80 6.46 Source: Transport Intelligence.09 2 Saudi Arabia 7.39 6.58 5.54 5.63 6.58 15 South Africa 5.64 5.87 13 Oman 4.28 5.28 10 Turkey 6. The industry is highly fragmented with ~2500 players but very few integrated players. ICICIdirect. Major domestic players in the organised segments like Gati.06 11 Chile 5. business conditions and attractiveness.69 6. The industry can be largely segregated into various modes like road.04 5.71 4 Indonesia 8.57 8 Malaysia 5.51 4. Exhibit 2: Emerging markets logistics index for countries with GDP more than US$300bn Rank Source: KPMG. ICICI Securities Ltd | Retail Equity Research Page 3 .89 4.48 6. other organised players distinctively command a significant market share in non-document market. with ~53% unorganised market that comprises small and mid-sized players dispersed across multiple geographies offering various form of services.

etc. five of the top seven pharmaceutical companies (Cipla. Through surface logistics. etc. Novartis. Torrent. the former parent’s (TCI) association with majority of auto OEM’s resulted in majority of revenues for the company. temperature controlled solutions. etc. The express distribution derives ~79% of the revenues from surface movement. However.) and three of the top five FMCG companies (HUL. the company claims a reach of 99. The express distribution market is currently valued at | 17. freight forwarding. which further extrapolate to the GDP growth rate. ICICIdirect. Suzuki. Exhibit 4: Mode of transport contribution Exhibit 5: Industry wise contribution 3% 13% 10% 37% 8% 15% 11% 79% Surface Rail Air 5% Others Pharma Textiles 8% IT Hardware FMCG 11% Auto ancillary Others Engineering d Source: ICICIdirect.Exhibit 3: Players and their capabilities in Indian market 35000 33739 30000 25000 21000 20000 17000 15000 10000 8109 10000 7500 3900 5000 5500 6700 879 0 BlueDart Gati Domestic locations Fedex India Work force DTDC First Flight Source: Industry. Canon.). It provides a credit period of ICICI Securities Ltd | Retail Equity Research Page 4 .). Dabur. ICICIdirect. etc. Research Gati caters to the logistics requirements of eight of the top 10 auto companies (Ford. over a period of time with higher market penetration this dependence was derisked followed by a diversified current customer profile. supply chain solutions. top seven of electronic companies (Samsung. It creates a moat around its business model by providing one stop solutions for all logistic requirements from warehousing.000 crore. In the sector per Research Gati to maintain its market leadership in surface express Gati continues to maintain its market leadership in the express distribution industry.3% of the Indian geography.50. With the company catering to the needs of diversified industries the company’s growth rate can be associated with the performance of these Research Source: Company. Gati derives 75% of its business from institution clients and the remaining 25% from the retail segment. the company also carries out transportation of temperature controlled products. Godrej. B2C couriers and fulfilment centres. Having coverage of over 21000 pin codes and 653 districts. Gati remains the market leader in the non documents market with ~19% market share. Tata.). which is further broadly distributed among documents and non-documents segments. Ricoh. Hero.

Gati currently operates a fleet size of ~4500. packaging. which is managed by an assured space across multiple air carriers. Pan India network & multimodal capabilities to place Gati at vantage point Gati’s wide range of services panning through freight forwarding. Research Competitor 1 Competitor 3 Competitor 4 Others Source: Company. respectively. ICICIdirect. ICICIdirect. Research Exhibit 8: “Multi modal” & “Multi-service” offerings of Gati Company Name Transportation Road Air Services Rail Water Gati Limited Yes Yes Blue Dart Yes Yes - TCI Yes Yes - Snowman - Yes - Cold Chain Express - - Yes Yes Yes - Yes 3PL Yes Yes Yes Yes Yes Yes - Source: Industry. Gati’s “multi-modal” and “multi-service” expertise positions it as the most favoured player for Contract Logistics. which commands a market share of 80% and 50% in greater than 10 kg and 5-10 kg weight segment. warehousing. These agreements includes “Diesel surcharge” clause. 200 reefer trucks through 76 We expect Gati to be the market leader in contract logistics. it provides enhanced revenue visibility and lower tonnage volatility. ICICIdirect. However. Exhibit 6: Organised air express market share Exhibit 7: Organised ground express market share 20% 13% 20% 46% 9% 27% 15% 11% 25% 15% Blue Dart Competitor 1 Competitor 2 Competitor 3 Blue Dart Others Source: Company. It also has ~15% market share in air Research On the back of widespread network managed by multi-modal capabilities and leadership in surface and incremental revenues from ramp up of volumes at e-fulfilment centres we expect Gati KWE revenues to grow at a CAGR of 17% in 2015E-20E. We believe that these supply chain activities if managed by a single player across the supply chain tends to bring in value proposition in terms of cost efficiency and superior quality. as it has capabilities in days to institutional clients. We consider the network to be next best after Blue Dart as the latter also has appreciable market share. last mile delivery and reverse logistics caters to a 360° presence in Supply chain for customer requirements. ICICI Securities Ltd | Retail Equity Research Page 5 - . The clause benchmarks “Diesel price hike index” wherein the billing is adjusted with a variation in the same and thus customers pay the additional cost calculated by the specified “Diesel price hike index” As the majority of the business flows from institutions with whom Gati has formal agreements. the same has moderated to 10% CAGR over 2020E-25E. managed transport and value added service all along the supply chain in variety of industries. The current asset base is managed by Gati KWE.

With 500 two wheelers and about 320 four wheelers. Further. Gati e-commerce revenues. however. which has a negative impact on expected revenues. The segment revenue now contributes approximately 19% to the standalone revenue as compared to 13% a year ago. and thus on the valuations.8 mn sq ft. Keeping these investments on track the company was candid to accept that the earlier assumed growth of a triple digit in the segment would be difficult to achieve. it also has warehouses at Hyderabad and Mumbai with a total handling capacity of 25000 packages per day.Gati e-connect revenues to taper down. Apart from last mile delivery. it also provides efulfilment services to e-commerce companies. Following the same. The company has scaled up its delivery capacity to 72000 packages per month in Q3FY16 as compared to 37000 packages in FY15. E-connect have grown at a CAGR of 140%. higher double digit growth is still manageable. we have reduced our earlier estimations for e-commerce segment. The company has consolidated its warehousing units. and reach to 20000 pin codes. going ahead Over the past two years. Two additional centres at Chennai & Jaipur are planned which totals to 1. by closing two warehouses at Delhi and consolidating the same with a large one. These fulfilment centres specially caters to e-commerce players warehouse outsourcing requirements. The tapering discounting available from e-commerce companies would impact volumes. Gati claims to be one of the top 5 e-commerce logistics service provider in India. ICICI Securities Ltd | Retail Equity Research Page 6 .

thereby bringing more efficient tax administration and reduction tax seepages. The product is prone double taxation as the taxes already paid on inputs are not adjusted on the calculation of taxes on the final product. Further. Implementation of GST will overhaul and compress the entire transportation setup.15000 crore and is anticipated to grow at a CAGR of ~15-17% over the next three-five years led by growth in the organized retail segment and maturation of Indian food processing industry. Post GST the demand for warehousing is expected to grow at an annual rate of 9% from current 918 mn sq. With less than 10% of perishable produces utilizing the temperature controlled facility. as they were unable to take advantage of economies of scale from using larger but fewer warehouses. the cold chain industry in India estimated at around 30 million tonnes of warehousing capacity and nearly 7000-8000 reefer vehicles. ICICIdirect. Moreover. and the Government. Implementation of GST will lead to a simplified tax structure with a majority of taxes pooled under one uniform rate. Further complications are in the form of interstate transactions which are taxed separately. produces. tax will be levied on stock transfers and full credit will be given on inter-state transactions. It is estimated that under the GST system. As the organised retail industry in India has low penetration (~8% of the total market). The current supply chain arrangements would be realigned making certain proximity to manufacturing locale or consumption markets. for which no input tax credit is available.ft to 1440 mn sq. India. Gati with its widespread reach and warehousing capabilities is well positioned to seize these opportunities. With a mere 7% of the organized segment in cold chain warehousing and ~15% in temperature controlled Page 7 . it provides significant scope for the organised players to increase their penetration as well as share in the retail industry. The outcome of the same will enable the manufacturer to plan the warehousing and decisions on the basis of operational and logistics efficiency. 16 major hubs and 50 additional warehouses stretched across multiple locations. Due to multiple taxation firms had resorted in setting up multiple warehouses in different states. Cold chain industry in India is nearly Rs.12000 to Rs. falls under the category of low cold chain adaptation countries thereby providing tremendous scope for growth in the segment. the “Food & Grocery” segment forms nearly 60% on the retail industry and is expected to grow at nearly 1415% which is expected to fuel the demand for the cold chain and temperature controlled logistics. Thus. the Indian food processing industry with the total size of |750000 crore is witnessing healthy growth and is expected to grow at ~17% over the next two to three years due to the change in lifestyle and growing nuclear families.ft. More than 140 markets have implemented GST in some or the other form. In terms of volume. resulting into diverse hub and spoke models. Exhibit 9: Industry-wise cold storage industry 120 100 8 12 20 92 88 80 % 80 60 40 20 0 FY12 FY16 Un-organised FY20 Organised Source: KPMG. Implementation of GST will lead to consolidation of widely spread Research ICICI Securities Ltd | Retail Equity Research Gati Kausar –Prolonged growth strategy The Indian retail industry is expected to grow at nearly 13% CAGR to |864000 crore by 2021. This was adding up to the firms costs. introduction of GST remains a much awaited reform which will simplify these complications and would benefit consumers. With numerous benefits at both firm/consumer and economy level GST is expected to add over 1% to the Gross Domestic Product (GDP). on the contrary free movement of goods and services would necessitate tightened logistics networks. Gati provides integrated and seamless transportation and routing of goods through its reach of ~21000 pin codes.Goods and Services Tax (GST) – Impetus for organised players like Gati Indian logistics industry is plagued by multiple levels of state and central taxes.

Retail and Agri-food sectors. Incremental addition of reefer trucks and warehousing capabilities will provide supplementary revenues to Gati Kausar. the growth in the segment is well supported by overall market growth of 15% and 20% growth in the temperature controlled services. Pharmaceuticals. which was structured as |30 crore is in equity and remaining |120 crore in debt. Gati Kausar has raised |150 crore from Mandala Capital Ltd. In Q2FY15. following which we expect Gati Kausar revenues to grow 40% over 2015E-2020E. with moderation to 16% CAGR over 2020E-2025E. We expect the revenues to start contributing from Q4FY16. ICICI Securities Ltd | Retail Equity Research Page 8 .transportation. It caters to variety of industries across Quick Service Restaurants (QSR’s). Gati Kausar is currently into cold storage trucking business through its current fleet size of ~200 refrigerated trucks. comprising a capacity of ~43000 pallets. Leveraging on the demand from the current trucking clientage. Gati Kausar plans to set up 10 cold storage warehouses. for which the land parcels and initial outlay is designed.

2 167. We believe Gati will undergo these two phases of transformation.0 157.2 14.2x of the GDP growth rate. In the next phase.7 13.0% 131. The first phase will be the high growth phase over FY16-20E.Valuation The logistics industry in India grew at a CAGR of ~17% over 2009-14 and the growth is further pegged at 1.306. widespread reach across Indian geographies. where revenues will grow at a CAGR of 16% mainly due to higher volumes from e-tailing segment.5% and beta of 0.7 150.3 170. Finally. we have built in stable growth period (FY20E-25E). additional revenues generated from fulfilment services and cold chain warehousing and improvement in realization on back of value added services. which will transform the company to a matured player in the supply chain mechanism. thereby providing multiple re-rating.0% 142. For FCFF valuation.4 145. With the back of the envelope calculation.2%. with a risk free rate of 7.3 167.5 174.0% 134.0% Research ICICI Securities Ltd | Retail Equity Research Page 9 .4 143.1 177. Gati with its leading market share of ~26%.7 2% 3% 4% 5% 6% 11.0 344.79 615.8 181. thereby improving the cash flow generation.1 (489.8 157. ICICIdirect. we have employed the two phase free cash flow to the firm (FCFF) model over FY16-25E for our discounted cash flow methodology.2 153. ICICIdirect. it will grow at a terminal growth rate of ~4%. we arrive at a target price of |150 and recommend BUY.6 138.9 141. The theme around e-tailing.4 146. cold chain and implementation of GST would accrue in a phased manner and could result a multiplier effect on the sector’s fundamentals.73 150 Source: Company.2 149. Exhibit 10: DCF valuation Valuation PV of High growth period PV of Stable growth period PV of Terminal value Less: Debt Add: Cash & Investment Targeted Market Capitalization No. of shares Target Price (|) | Cr 711.0% Research Exhibit 11: Sensitivity to DCF Valuation Terminal Growth Rate 149. Thereafter.09) 124. we have assumed a post tax WACC of 13%.95 together with a market risk premium of 7.5 WACC 12.5% we arrive at a cost of equity of 13.7 154. As the advantages will be in a phased manner. one-stop logistics service provider with parent (KWE) support. Gati’s standalone revenues grew at 6% CQGR over 10 quarters.9 Source: Company.0 160.6 135. primarily due to increase in E-commerce revenues from | 8 crore to | 63 crore.62 1.5 164. Higher utilization levels and better infrastructure management will bring in improvement in return ratios.37 8. wherein we believe the company will achieve a normalised growth rate of ~12% CAGR. is expected to further expand its market share from the high unorganized market in the industry.9 15.

3 0. FY16 revenue grew by Research Top 10 Shareholders Rank 1 2 3 4 5 6 7 8 9 10 Shareholding Pattern Name TCI Finance Ltd Neera & Childrens Trust Macquarie Investment Management Ltd.01 Shares -0.0 0.51 0.06 Research ICICI Securities Ltd | Retail Equity Research Page 10 .com Research Key events Date Dec-11 Event Issues FCCBs for proceeds amount of $22.0 0.3 5.30 Damani (Gopalkishan S) 0.06 5.5 0.8 0. Standalone grew 12% YoY Source: Company.0 (in %) Promoter FII DII Others Mar-15 41.04 FIL Investment Management (Hong Kong) Limited Emerging Global Advisors.0 0.4 42.04 3.4 11. Parikh (Amal Niranjan) Latest Filing Date 31-Dec-15 31-Dec-15 31-Dec-15 31-Dec-15 31-Dec-15 31-Dec-15 31-Dec-15 31-Dec-15 31-Dec-15 31-Dec-15 % O/S Position (m) Change (m) 0. ICICIdirect.03 2.Company snapshot 500 450 400 350 300 250 Target Price |150 200 150 100 50 Apr-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 Jul-15 Apr-15 Jan-15 Oct-14 Jul-14 Apr-14 Jan-14 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 0 Source: Bloomberg. ICICIdirect. Agarwal (Mahendra Kumar) HUF Kintetsu World Express Inc Manish Agarwal Benefit Trust Agarwal (Mahendra Kumar) Dhruv Agarwal Benefit Trust Mahendra Investment Advisors Pvt.05 -0.5 48.09 8.07 Sells Shares Investor name 0.8 0.07 -0. Margins at 8. Raju (Satyanarayana V) Value 0.9 Sep-15 41.0 0.4 Source: Reuters.71 -0.0 Dec-15 41.0 0.0 0. stock hits 52-week high Dec-14 E-commerce revenues grow 79% QoQ to |42 crore Jul-15 Repots Q1FY16 results with 5% growth in revenues & E-commerce revenues at | 45 crore Oct-15 Reports Q2FY16 results lower than estimates.03 -0.3 49.0 8.69 -0. E-commerce revenues at | 53 crore.1% Apr-16 Reports Q4FY16 results higher than estimates.4 9.05 4.2 Mar-16 Research Recent Activity Buys Investor name Dimensional Fund Advisors.3 8.1 0.0 0. Standalone grew 16% YoY Jan-16 Reports Q3FY16 results with 1% de-growth in revenues.3 0.05 4.04 3.3 9.3 0.05 4.0 0. LLC TCI Finance Ltd Van Eck Associates Corporation Value -1. ICICIdirect. ICICIdirect.6 0.1 0. Company.04 3.3 49.P.1 5.01 Source: Reuters.07 -0.4 Jun-15 41.3 0. L.09 -0.7 0.0 0.0 0.8 0. Ltd.3 45.18 million Feb-12 Kintetsu World Express (KWE) acquires Gati's EDSC Business Feb-12 Sells partial stake in Gati Ship to Bernhard Schulte GmbH & Co KG May-13 Sells complete stake in Gati Ship to Riba Constructions Pvt Ltd Sep-13 Starts reporting e-commerce revenues with | 4 crore quarterly run rate Oct-14 Sale of minority stake in Gati Kausar to Mandala Capital.11 -0.

9) 78.2 3.0 1.0 337.8 10.3 112.0 17.0 20.3 77.0 144.7 22.3 0.5 81.3 60.1 9.9 203.2 262.1 1.4) 8.2 (18. Expenditure EBITDA Growth (%) Depreciation EBIT Interest Other Income PBT Growth (%) Tax Reported PAT Exceptional Items Minority Interest Reported PAT (adjusted MI) Growth (%) EPS | Crore FY 15 1.9 14.0 240.2) (123.0 (45.2 1.2 (12. Cap.0 1. Depreciation Net Block Capital WIP Total Fixed Assets Goodwill Investments Inventories Debtors Cash Loan & Advance.4 2.9 88.2 169.6 1.7 90.4 (8.0 25.7 3.648.7 1.6 7.5 293.0 68.3 41.9 64.9 23.1 (50.7 17.2 45.8 (15.1) 4.4 156.6 1.7 7.7 494.2) 45.5 446.8 10.4 Research Balance sheet (Year-end March) Source of Funds Equity Capital Reserves & Surplus Shareholder's Fund Secured Loan Unsecured Loan Total Loan Funds Deferred Tax Liability Minority Interest Source of Funds Application of Funds Gross Block Less: Acc. FY 15 56.9 4.6 1.6 156.248.6 644.5 9.0 6.4 1. ICICIdirect.0 1.3 1248. ICICIdirect.5 6.8 44.3 598.8 5.9 8.2 548.5 1.3 120.8 2.4 76.5 546.0 73.7 8.9 71. Other CA Total Current assets Creditors Other Current Liabilities Provisions Total CL and Provisions Net Working Capital Miscellaneous expense Application of Funds | Crore Source: Company.9) 15.2 106.0 380.8 186.3 179.7 Source: Company.1 3.2 10.0 1.8 327.9 FY 16P 49.9 45.9 67.9 1.4 0.3 44.3 11.0 388.2 48.4 1.0 30.6 61.6 137.5 48.8 13.7 534.667.5 1.8 33.2 59.1 415.238.6 286.8 2.7 2.3 6. Cl.9 5.5 Research Source: Company.8 (82.8 4.2 2.3) (308.9 59.7 19.3 4.6 316.0 6.0 45.Financial summary Profit and loss statement (Year-end March) Revenue Growth (%) Cost of Sales Employee Costs Operating Expenses Op.7 1.7 5.0 507. ICICIdirect.2 10.0 15.8 312.7 FY 18E 2.8 0.4) 36.5) 59.5 (7.3 11.0 175.4 557.0 563.0 185.8 64.8 218.1 232.6 1.9 1.9 9.2 124.5 9.5) (301.4 0.2 86.6 0.7 92.7 259.7 7.0 16.6 152.4 0.8 275.4 0.5 0.176.4) 5.1 6.2) (54.0 1.7 1.0 8.3 5. Page 11 .8 64.5 48.6 8.7 996.2 229.2) 16.3 94.5 42.3 (120.5 19. & Res.5 0.2 156.6 67.2 130.9 10.8 4.8 4.8 (6.1 338.4 1109. Cash and cash Eq.1 446.1 437.1 104.6 (54.2 286.4 80. Cash and cash Eq.4 105.2 1.2 369.7 296.7 88.8 9.2 217.2 FY 15 FY 16P FY 17E FY 18E (Year-end March) Per share data (|) FY 15 FY 16P FY 17E FY 18E 17.9 139.0 389.4 472.7 339.2 291.8 18.2 2.5 2.2 1.8 18.4 7.1 (11.1 17.6 136.4 341.2 32.3 48.3 2.9 4.8 33.5 446.5 979.9 11.4 17.7 Book Value EPS Cash EPS DPS Profitability & Operating Ratios EBITDA Margin (%) PAT Margin (%) Fixed Asset Turnover (x) Inventory Turnover (Days) Debtor (Days) Current Liabilities (Days) Return Ratios (%) RoE RoCE RoIC Valuation Ratios (x) PE Price to Book Value EV/EBITDA EV/Sales Leverage & Solvency Ratios Debt to equity (x) Interest Coverage (x) Debt to EBITDA (x) Current Ratio Quick ratio 8.0 80.1 (8.8 31.5) (0.6 211.3 105.7 62.1 (14.9 129.193.5 46.8 489.8 85.7 2.6 23.8 (Year-end March) Profit after Tax Less: Dividend Paid Add: Depreciation Add: Others Cash Profit Increase/(Decrease) in CL (Increase)/Decrease in CA CF from Operating Activities (Add) / Dec in Fixed Assets Goodwill (Inc)/Dec in Investments CF from Investing Activities Inc/(Dec) in Loan Funds Inc/(Dec) in Sh.4 260.4 262.0 55.3 Cash flow statement | Crore FY 16P 1.6 11.0 3.3 198.7 94.8 74.8 196.2 10.7 105.4 182.0 14.3 1.5 626.3 41.2 10. Op.7 265.5 1.8 Research .2) 38.2 274.9 61.8 (17.8 (11.0 55.5 2.2 204.6) 55.5 50.4 290.903.1 216.3 59.7 1151.6 112.1 50.4) 51.0 53.9 301.7 (3.6 49.8 1.6 156.7 56.3 186.2 270.3) 41.6 178.180.2 Research ICICI Securities Ltd | Retail Equity Research Key ratios Source: Company.4 FY 18E 74.0 175.2 0.7 25.0 601.6 233.5 502.3) 34.4 446.2 79.3 38. ICICIdirect. Others CF from financing activities Change in cash Eq.2 FY 17E 1.9 64.5 1193.0) (15.2 10.3 92.9 28.5 266.109.6 659.5 290.4 151.4 FY 17E 60.7 138.9 4.6 78.5) (3.8) 29.0 (9.7 30.2 756.0) (3.6 14.9 96.4 25.1 139.8 48.4 9.0) (3.2) 5.5 581.089.2) 105.6 106.1) 60.5 531.0 328.1 47.4) (53.2 8.5 0.

0 38.4 53.ICICIdirect.3 35.1 70.4 9.9 30.2 16.6 17.4 Page 12 .1 14.6 14.0 19.4 23.2 14.7 4.1 5.9 15.8 21.3 22.8 62.318 1.6 Research EPS (|) P/E (x) FY15 FY16E FY17E FY15 FY16E FY17E 53.636 BlueDart 120 150 BUY 1.9 28.2 19.6 112.1 8.1 8. Source: Company.7 45.1 12.0 18.2 25.0 21.4 22.1 6.9 12.8 17.5 28.7 10.7 46.1 4.750 7.8 23.3 6.3 14.1 26.6 23.2 10.8 42.047 Gati Ltd.831 Gujarat Pipavav (GPPL) 396 500 BUY coverage universe (Logistics) CMP M Cap Sector / Company (|) TP(|) Rating (| Cr) 1.3 19.6 11.0 10.1 10. ICICIdirect.106 Dredging Corp Ltd.3 10.3 19.2 92.2 16.0 40.1 33.0 5.700 BUY 26.3 28.8 20.1 13.5 11.0 4.6 12.6 12.6 13.2 5.7 10.2 11.5 19.2 13.5 32. 168 195 BUY 7.711 Container Corporation 270 280 BUY 1.778 Transport Corp (TRACOR) 5.6 7.4 56.8 7.0 10.7 22.8 9.0 13.300 BUY 14.3 RoCE (%) FY15 FY16E FY17E 12.5 81.8 6.2 6.0 42.1 RoE (%) FY15 FY16E FY17E 13.0 64.8 12.7 11.1 ICICI Securities Ltd | Retail Equity Research EV/EBITDA (x) FY15 FY16E FY17E 17.8 13.3 4.

with high conviction.RATING RATIONALE ICICIdirect. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Pankaj Pandey Head – Research Research Desk. Hold and ICICIdirect. Strong Buy: >15%/20% for large caps/midcaps. Hold: Up to +/-10%. MIDC. Akruti Trade Centre. 1st endeavours to provide objective opinions and recommendations. ICICIdirect. Andheri (East) Mumbai – 400 093 research@icicidirect. Buy. respectively. Sell: -10% or ICICI Securities Ltd | Retail Equity Research Page 13 . respectively. ICICI Securities assigns ratings to its stocks according to their notional target price vs. Road No 7. Buy: >10%/15% for large caps/midcaps. current market price and then categorises them as Strong Buy.

This may not be taken in substitution for the exercise of independent judgment by any recipient. engaged in the business of stock brokering and distribution of financial products. based on their own investment objectives. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. This report is based on information obtained from public sources and sources believed to be reliable. The recipient should independently evaluate the investment risks. the details in respect of which are available on www. ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. authors and the names subscribed to this report. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way. corporate finance. where such distribution. or use by. publication. life insurance. MBA and Ankit Panchmatia. It is confirmed that Abhishek Bharat Chhoda. Nothing in this report constitutes investment. It is confirmed that Bharat Chhoda. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. inter alia. While we would endeavour to update the information herein on a reasonable basis. but no independent verification has been made nor is its accuracy or completeness guaranteed. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. financial positions and needs of specific recipient. ICICI Securities Limited (ICICI Securities) is a full-service. INH000000990. persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Though disseminated to all the customers simultaneously. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. brokerage services or other advisory service in a merger or specific transaction. Terms & conditions and other disclosures: ICICI Securities Limited is a Sebi registered Research Analyst having registration no. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Research Analysts do not serve as an officer. MBA and Ankit foreign exchange rates or any other reason. transmitted to. compliance or other reasons that may prevent ICICI Securities from doing so. integrated investment banking and is. investment banking or merchant banking. Actual results may differ materially from those set forth in projections. MBA and Ankit Panchmatia. Also. Research Analysts. in part or in whole. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. availability or use would be contrary to law. We also certify that no part of our compensation was. legal. copied or distributed. ICICI Securities generally prohibits its analysts. in circumstances where ICICI Securities might be acting in an advisory capacity to this company. or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. country or other jurisdiction. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. investment banking or brokerage service transactions. Bharat Chhoda. Compensation of our Research Analysts is not based on any specific merchant banking. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. any person or entity who is a citizen or resident of or located in any locality. Past performance is not necessarily a guide to future performance. ICICI Securitiesis is under no obligation to update or keep the information current. ICICI Securities Ltd | Retail Equity Research Page 14 . MBA. who must make their own investment decisions. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. is. to any other person or to the media or reproduced in any form. venture capital fund management. hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. there may be regulatory. general insurance. director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. (“associates”). asset management. The value and return on investment may vary because of changes in interest rates. Forward-looking statements are not predictions and may be subject to change without notice. without prior written consent of ICICI Securities. This report is not directed or intended for distribution to. Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. MBA. Since associates of ICICI Securities are engaged in various financial service businesses. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. or in certain other circumstances. state. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.icicibank. MBA. not all customers may receive this report at the same time.ANALYST CERTIFICATION We /I. neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. Accordingly. etc. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings. The securities discussed and opinions expressed in this report may not be suitable for all investors.