Daljeet Kohli of IndiaNivesh has been having good success with his stock picks like Alembic Pharma, JB Chem & Cadila Healthcare, all of which have given quick-fire gains. The latest to join the illustrious list of winners is GPPL.
GPPL has lived up to the expectation and reported block-buster Q4CY13 results (GPPL follows the Jan-Dec accounting period). The net profit more than doubled to Rs 77 crore as against Rs 36 crore on a YOY basis. This profitability was led by higher container volumes and better realisation. The total revenue grew 22.2 percent to Rs 145.2 crore while the container volume grew 18 percent to 1,93,729 TEUs (20 foot equivalent units) during the Quarter. The EBITDA increased 47.4% YOY to Rs 84 crore while the Operating Profit margin expanded 970 basis points to 57.5%. For the year ended 31.12.2013, GPPL’s net profit rose 159% to Rs 191.8 crore while the revenues grew 24.5% to Rs 517.9 crore.
| Key Financials of Gujarat Pipavav Port Ltd (GPPL) | |||
|---|---|---|---|
| (Rs cr) | Dec 2013 | Dec 2012 | YOY |
| Operating Income | 145.24 | 118.79 | 22.27 |
| Total Expenses | 61.73 | 62.00 | -0.44 |
| Operating Profit | 83.51 | 56.79 | 47.05 |
| Other Income | 19.04 | 2.77 | 587.36 |
| PBDIT | 102.55 | 59.56 | 72.18 |
| PBT | 77.06 | 35.99 | 114.12 |
| Adjusted Net Profit | 60.68 | 35.99 | 68.60 |
Now, let’s take a quick note of the points that attracted Daljeet to GPPL:
Strong parentage:
The AP Moller Group owns 43.01% of GPPL. APMM is also a key anchor client and one can be assured of (1) alignment with international shipping routes, (2) best business and governance practises followed in the industry & (3) access to experienced professional management team.
Geographical advantage:
Pipavav port located in Gujarat benefits from (1) gain in volumes, given its close proximity to JNPT, which is running at peak utilization, and (2) access to North & North-West hinterland.
Low Debt; high earnings:
GPPL has low debt of Rs 2.7 bn which is 0.2x D/E ratio. GPPL is expected to report 69.9% net profit CAGR during CY12-14E, on the back of strong top-line growth and improvement in operating metrics.
Reasonable Valuations: At the CMP of Rs. 70 (then Rs. 62), GPPL is trading at 12.3x CY15E earnings and 1.8x P/B. This is quite reasonable given GPPL’s strong parentage, geographical advantage and scalability potential.
Why is APM terminals not increasing its stake from 43% ?