Infrastructure stocks are the hot favourites amongst savvy investors today. Within that sector, transportation stocks are absolute red-hot.
Radhakishan Damani gave us a glimpse of why he is regarded as a genius stock picker. He bought a huge truck-load of GATI and TCI stock in January 2014, when infra stocks were in the doldrums and available at throwaway prices.
Today, just 5 months later, the tide has turned and Radhakishan Damani is looking at a profit of 154% (358% YOY) from GATI and 82% (188% YOY) from TCI.
Ashish Chugh of Hidden Gems was quick to jump onto the infra-transportation bandwagon with his stock pick Sical Logistics.
Sankaren Naren is a value investor of considerable reputation. He is a known contrarian investor. As CIO of the behemoth ICICI Mutual Fund, Naren hates taking chances with his stock picks. He doesn’t trust a stock with money if he is not convinced about its fundamentals and valuations.
Naren has now joined the infrastructure – transportation stocks party with a purchase of 10 lakh shares of Gateway Distriparks on 6th June at a price of Rs. 228 each.
Gateway Distriparks Ltd is one the largest container operator in India. It has a high market share at JNPT, India’s largest container port. Gateway Distriparks operates in three business segments: container handling and storage (container freight stations and inland container depots); container rail business; and cold chain logistics.
The best way to understand the prospects of Gateway Distriparks is to read the comprehensive research reports by ICICIDirect and Kotak Securities.
Lets’ see the core points:
ICICIDirect:
“Valuation driven by recovery in rail segment and cold chain growth
With a recovery in the rail segment and a pick-up in the cold chain business, we expect GDL to lessen the impact of slowdown in the CFS segment. As FY14 average P/E at 10x is at a significant discount to three year (FY11, FY12 & FY13) average P/E of 12x, we expect a restoration of P/E multiple for GDL. Consequently, we value GDL at 12x FY16E EPS of Rs. 16.2 to arrive at a target price of Rs. 195 and have a BUY rating on the stock.”
Kotak Securities:
“Rail and Cold Chain Segment to buoy the performance – IPO of Snowman Logistics Ltd expected within the next 2 quarters
We are increasing the target price for Gateway Distriparks Limited (GDL) on the back of; 1) Stable performance of the Container Freight Station (CFS) segment; 2) Improvement in performance of the container rail segment with healthy increase in volumes and 3) Strong performance of the cold chain business (Snowman Logistics Limited) with potential value unlocking from IPO of Snowman Logistics Ltd within the next 2 quarters (Management is targeting July 2014).
Recommend BUY with an increased target price of Rs 196 (earlier Rs 156) at 12x FY16E EPS. Near term outlook has improved coupled with attractive valuation (FY16E 10.3x P/E, 1.6x P/BV and 5% dividend yield) and strong balance sheet. Significant improvement in macro outlook along with GST implementation should facilitate the growth.”
The one significant aspect that you should not miss is that Sharekhan has recently put Gateway Distriparks in its Model Portfolio for June 2014. Let’s see their rationale:
“- GDL continues to struggle due to a slowdown in demand and intense competition in its CFS business (especially at JNPT). However, the expected uptick in Kochi and the commissioning of the Faridabad inland container depot (ICD) facility would aid the recovery in the stand-alone operations.
– The management also expects the improving trend in the rail freight and cold chain subsidiaries to sustain on account the recent efforts to control costs and improve the utilisation.
– We continue to have faith in GDL’s long-term growth story based on the expansion of each of its three business segments, ie CFS, rail transportation and cold storage infrastructure segments. First, we believe the listing of SLL will unlock the inherent value and the potential of the cold chain operations. Second, the coming on stream of the Faridabad facility and the strong operational performance will further enhance the performance of the rail operations. Third, the expected turnaround in the global trade should have a positive impact on the CFS operations.
We maintain our Buy rating with a price target of Rs250.”
So, there you have it. Now you have to carefully ponder over whether you can afford not to have such stellar stocks in your portfolio.
Will any market GURU advise a multibagger from a time horizon of 10 years.
With Many Thanks & Best Regards
If you have ten year view buy HUL, HDFC Bank, HDFC, Infosys, ICICI Bank , and forget
You don’t have to be a guru…you need common sense and the right information to be successful