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Gateway Distriparks: A mixed year - Views on News from Equitymaster
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Gateway Distriparks: A mixed year
Jun 10, 2009

Performance summary
  • Net sales report a 24% YoY growth during FY09, led by steady growth in volumes at the beginning of the year.
  • Operating profits exceed topline growth as costs grow at a slower pace as compared to the topline. However, net profits grow at a slower pace of 25% YoY.
  • Lower other income and higher depreciation charges arrest growth in net profits. During 4QFY09, net declines by 9% YoY.


Financial performance snapshot
(Rs m) 4QFY08 4QFY09 Change FY08 FY09 Change
Net sales 456 423 -7.2% 1,659 2,053 23.7%
Expenditure 204 176 -13.7% 757 863 14.0%
Operating profit (EBITDA) 252 247 -1.9% 902 1,190 31.9%
EBITDA margin 55.3% 58.4%   54.4% 58.0%  
Other income 14 5 -62.3% 99 40 -60.0%
Interest 0 2 504.6% 1 7 1045.4%
Depreciation 38 39 3.1% 133 150 12.0%
Profit before tax/(loss) 228 211 -7.5% 868 1,074 23.7%
Tax 26 28 4.9% 116 136 17.4%
Profit after tax/(loss) 202 183 -9.2% 752 938 24.7%
Net margin 44.2% 43.3%   45.3% 45.7%  
No of shares (m)       115.6 107.7  
Diluted EPS (Rs)*         8.7  
P/E (times)         10.5  
*trailing twelve month earnings

What has driven performance in FY09?
  • Gateway Distriparks reported a 24% YoY growth in topline during FY09. However, for the quarter ended March 2009, the net sales declined by 7% YoY. The general economic slowdown witnessed during the second half of the fiscal year affected EXIM trade, which in turn impacted throughput volumes of the company. The declining exports during 2HFY09 and lower volumes in 4QFY09 arrested the overall growth of the company. However, realisations were on the higher side. Higher realisations and the steady growth in volumes during the beginning of the year supported the overall growth of the company for the full year.

    Cost break up
    (as a% of sales) 4QFY08 4QFY09 FY08 FY09
    Employee cost 4.9% 6.7% 4.2% 3.6%
    Transportation 10.5% 8.5% 12.7% 10.1%
    Labour Charges 1.8% 4.5% 4.7% 3.9%
    Sub Contract Charges 10.4% 5.6% 6.9% 6.3%
    Auction Charges 1.5% 0.5% 0.6% 0.8%
    Other expenses 15.6% 15.7% 16.5% 17.3%

  • Slower growth in operating costs led to a 3.6% expansion in EBITDA margins. Higher realisations witnessed during the year also supported the 32% YoY growth in operating profits. The ability to pass through costs and higher ground rent charges earned on account of higher dwell time supported growth in profitability.

  • The 24% YoY growth in net profits was lower as compared to growth in operating profits. This was due to the 60% YoY fall in other income and higher depreciation charges. Excluding other income, growth at the PBT levels stood at 35% YoY as against 24% YoY.

    What to expect?
    At the current price of Rs 92, the stock is trading at a price to earnings multiple of 10.5 times its trailing twelve month earnings. Policy makers have lined up huge investment plans on the infrastructural front to support domestic economic growth. Revival in the global economy would support the country’s exports. Restoration of trade and improvement in domestic economic activity would result in increase in demand for Container Fright Stations (CFS). With that the company plans to revive its CFS business plans. The company is also planning to gradually move to a hub and spoke model for its logistics requirement with six-laning of highways being planned. This will entail the need for more Container Freight Stations at strategic locations.

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