ICICI Direct's research report on Gujarat Pipavav
Gujarat Pipavav Port’s (GPPL) container volumes grew a mere 7% YoY, which reflected lower transhipment volumes (management indicated the impact was mainly due to Chinese new year). Bulk and liquid volumes grew 58% and 14%, respectively, mainly due to higher growth in fertiliser and LPG volumes, respectively, while Ro-Ro volumes remained weak, leading to overall revenue growth of 9% YoY. Subsequently, EBITDA margins fell 95 bps due to higher fertiliser handling costs. Hence, PAT grew 5% YoY. The management expects FY20 to remain strong on container volume growth.
Outlook
However, an unfavourable product mix, rising competition with other ports and continuance of subdued margins in the short to medium term has led us to revise our target price to Rs 90 (at FY21E P/E multiple of 14) with a HOLD rating on the stock.
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