Gati Ltd has 29% upside: ICICI Direct

Gati Ltd (Gati), a market leader in Indian surface logistics is well positioned to capitalise on the current evolution of transportation in India. With growth in the logistics industry pegged at ~1.2x GDP growth, availability of wide spectrum of services will create high growth opportunities for the company. An extensive reach over 20000 pin codes and a JV with Kintetsu World Express (KWE) enables the company to cater the supply chain requirements of various industries. Gati has embarked on an accelerated growth path driven by asset light ecommerce vertical (36% CAGR in FY15E-20E). Setting up of temperature controlled warehousing capabilities in the lucrative cold chain segment through Gati Kausar would contribute to the revenues by the in H2FY16. With the expected economic recovery and GST implementation, an organised player like Gati would garner higher volumes and improve its operating margin. We expect consolidated EPS to grow from | 2.7 (nine months) in FY14 to | 9.5 in FY17E.

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