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Allcargo : Bottomline down 29% YoY - Views on News from Equitymaster

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Allcargo : Bottomline down 29% YoY
Feb 26, 2013

Allcargo Logistics Ltd has announced results for the third quarter of financial year 2012-13 (3QFY13). The topline registered a 2.6% year on year (YoY) decline during the quarter while bottomline was down by 28.7% YoY. Here is our analysis of the results.

Performance summary
  • Topline for the quarter declined by 2.6% YoY. For the first nine months (9mFY13), the revenues registered a growth of 11.2% YoY.
  • The operating profit (EBIDTA) for the quarter declined by 23.4% YoY with EBITDA margins at 7.8% (down from 10.0% in corresponding quarter last year /Oct-Dec Qtr 2012). For the first nine months, EBITDA declined by 3.9% YoY with EBIDTA margins at 10.0%, down from 11.6% in 9MFY12.
  • The net profits for the quarter declined by 28.7% YoY with net profit margins at 3.7%, down from 5.0% in Oct-Dec Qtr 2012. For the first nine months, the bottomline declined by 11.6%, with net profit margins at 5.1%, down from 6.4% in 9MFY12.

Consolidated financial summary
(Rs m)  Oct-Dec Qtr 2012 3QFY13 Change 9mFY12 9mFY13 Change
Sales  9,983 9,728 -2.6% 26,640 29,620 11.2%
Expenditure  8,990 8,966 -0.3% 23,558 26,658 13.2%
Operating profit (EBDITA)  993 761 -23.4% 3,081 2,961 -3.9%
EBDITA margin (%)  10.0% 7.8%   11.6% 10.0%  
Other income  178 52 -71.1% 351 451 28.5%
Total revenues  10,161 9,779 -3.8% 26,991 30,071 11.4%
Interest (net)  190 167 -12.2% 457 348 -23.8%
Depreciation  256 375 46.6% 723 1115 54.1%
Profit before tax  726 271 -62.6% 2,252 1,950 -13.4%
Pretax margin (%)  7.1% 2.8%   8.3% 6.5%  
Tax 180 -101 nm 422 313 -25.8%
Profit after tax/(loss)  547 373 -31.8% 1,830 1,637 -10.6%
Net profit margin  5.4% 3.8%   6.8% 5.4%  
Minority interest 40 12 -70.0% 101 108 7.3%
Net profit post minority 506 361 -28.7% 1,729 1,529 -11.6%
Net profit margin for the group 5.0% 3.7%   6.4% 5.1%  
No. of shares (m)          126  
Diluted earnings per share (Rs)*          16.8  
Price to earnings ratio (x)**          7.7  
*On a trailing 12 months basis
^ Change in the financial year from Dec to March

What has driven the performance in 3QFY13?
  • The company registered a 2.6% YoY decline in the revenues mainly due to decline in revenues of the Project and Engineering Solutions/PES (19% YoY decline) business vertical. Segment wise, the total volumes in Container Freight Station services (CFS) in the quarter declined by 23% YoY to about 49,000 TEUs. The volumes in Multimodal transport operator (MTO) segment grew by 3% YoY during the quarter despite a slowdown in the overall global trade. The revenues for MTO segment declined by 1% YoY.

    Segmental financial summary
    CFS (Rs m) Oct-Dec Qtr 2012 3QFY13 YoY (%) 2QFY13 QoQ 9MFY12 9MFY13 YoY (%)
    Revenues 772 759 -1.7% 757 0.3% 2,227 2,327 4.5%
    EBIT 327 275 -15.9% 296 -7.1% 1,052 891 -15.3%
    EBIT Margin 42.4% 36.2%   39.1%   47.2% 38.3%  
    MTO (Rs m) Oct-Dec Qtr 2012 3QFY13 YoY (%) 2QFY13 QoQ (%) 9MFY12 9MFY13 YoY (%)
    Revenues 8,166 8,096 -1% 8,306 -3% 21,406 24,231 13%
    EBIT 341 385 13% 573 -33% 1,016 1,355 33%
    EBIT Margin (%) 4.2% 4.8%   6.9%   4.7% 5.6%  
    PES (Rs m) Oct-Dec Qtr 2012 3QFY13 YoY (%) 2QFY13 QoQ (%) 9MFY12 9MFY13 YoY (%)
    Revenues 1,079 872 -19.0% 1,169 -25.0% 2,948 3,319 13.0%
    EBIT 178 -152 -185.0% 235 -165.0% 596 340 -43.0%
    EBIT Margin (%) 16.5% -17.4%   20.0%   20.2% 10.2%  

    Physical performance parameters
    CFS volumes (TEUs) Oct-Dec Qtr 2012 3QFY13 Y-o-Y (%) 2QFY13 Q-o-Q (%) 9MFY13 9MFY12 Y-o-Y (%)
    Export 9,780 8,012 -18% 9,634 -17% 26,810 29,780 -10%
    Import 53,510 40,549 -24% 47,287 -14% 148,220 158,280 -6%
    Total 63,290 48,561 -23% 56,921 -15% 175,030 188,060 -7%
    MTO volumes (TEUs) Oct-Dec Qtr 2012 3QFY13 Y-o-Y (%) 2QFY13 Q-o-Q (%) 9MFY13 9MFY12 Y-o-Y (%)
    Export 35,071 35,531 1% 36,737 -3% 109,515 105,593 4%
    Import 33,432 34,807 4% 36,770 -5% 107,450 103,546 4%
    Total 68,503 70,338 3% 73,507 -4% 216,965 209,139 4%
    Export Ratio 51% 51%   50%   50% 50%  

    Cost breakup
    (Rs m)  Oct-Dec Qtr 2012 3QFY13 Change 9mFY12 9mFY13 Change
    Operating expenses 6,892 6,648 -3.5% 17,966 20,122 12.0%
    as a % of sales 76.7% 74.1%   76.3% 75.5%  
    Staff expenses 1,346 1,474 9.5% 3,694 4,255 15.2%
    as a % of sales 15.0% 16.4%   15.7% 16.0%  
    Other expenses 697 713 2.4% 1,807 2,000 10.7%
    as a % of sales 7.8% 8.0%   7.7% 7.5%  
    Provision for doubtful debts 55 131 140.3% 91 281 209.0%
    as a % of sales 0.9% 0.8%   0.9% 0.9%  
    Total expenses 8,990 8,966 -0.3% 23,558 26,658 13.2%

  • The 23.4% YoY decline in EBITDA was primarily due to slowdown in the CFS business, asset utilization in PES segment and on account of prudent practice (company has started providing for pending realizations from some of its debtors) .The provision for doubtful debt was up by 140% YoY. For nine months, EBITDA declined by around 4% YoY, mainly due to over 200% increase in provision for doubtful debts. The EBIT for the MTO segment was up by 13% YoY for the quarter. In the PES segment, the revenues for the quarter declined by 19% YoY. The segment witnessed slowdown as some of its customers have pushed the actual implementation of the project into other quarters. The company made losses of Rs 152 m in PES at EBIT level (after providing for doubtful debts) during the quarter. The losses in the PES segment are attributable to the provision of doubtful debts and depreciation that company has provided for the capex added to the equipment division over the previous years. The utilization levels in the PES segment were between 75%-80%. The order book in the equipment hiring segment stood at around Rs 2.4 bn (all unexecuted portion).

  • The bottomline for the quarter declined by around 29% YoY mainly due to poor performance across key segments. The depreciation expenses for the quarter grew by around 47% YoY while interest expenses came down by 12% YoY

What to expect?
The company has reported lower sales in key business verticals on account of overall weakness in the global trade. The management has put capex plans on hold and has guided the performance to remain muted in the coming quarter. However, we believe that the company has strong fundamentals and at a current trailing PE of 7.6x, it is a good long term investment. We suggest our investors to buy the stock.

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