Buy Gujarat Pipavav Port; target of Rs 90: ICICI Direct

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ICICI Direct's research report on Gujarat Pipavav Port

Gujarat Pipavav’s Q1FY21 consolidated revenues de-grew 11% YoY to Rs 159 crore. Container volume (makes up 70% of revenues) de-grew 16% but, as per the management, outperformed other ports on western coast. Revenues saw positive traction from an improved product mix (container mix better YoY, due to sharper fall in transhipment volumes) and 5% movement in exchange rate. Subsequently, gross margins, EBITDA margins expanded 186 bps, 241 bps to 84.4%, 60.1% respectively. The EBITDA margin expansion also reflects the management’s focus on lowering cost and improving operational efficiency. Absolute EBITDA de-grew 7% to Rs 96 crore. However, due to higher depreciation, lower other income and lower profit from Pipavav Rail Corp, PAT de-grew 13% to Rs 48 crore.

Outlook

We revise our target price to Rs 90 (at FY22E P/E multiple of 14) and maintain our BUY recommendation on the stock.

For all recommendations report, click here

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