Navkar Corporation Research Report By SPA

Navkar Corporation Ltd. (Navkar) continued to deliver a decent performance in 3QFY18. Panvel revenue improved ~0.8% YoY while consolidated revenue increased 16.2%. Vapi volumes grew ~20.9% QoQ to 10,571 TEUs led by volumes handled at Hazira due to partial shift in marble volumes from JNPT. Realisation at Panvel were flat while the same in Vapi grew 11% YoY to INR 19,013/TEU. Consolidated EBITDA increased by 13.9% YoY to INR 376 mn. Direct-To-Port Delivery (DPD) led impact was stable QoQ, we expect limited impact from DPD going ahead. Management expects final clearance for Vapi’s rail siding shortly. Ramp-up at Vapi facility is expected to start meaningfully contributing to NCL’s overall sales in subsequent quarters. Hence, we maintain our BUY recommendation with a TP of INR 310, 25x FY19E EPS of INR 12.4 on expected benefits from volume ramp-up at Vapi.

Outlook & Valuation

With expanded capacity, Navkar is likely to continue to gain market share in JN Port region on the back of execution of higher cargo orders and entry into new sectors. FY18 is likely to be a transformational year for Navkar Corp and it is likely to move to higher earning trajectory as it would be the first full year of operations after COP of new capacities. We expect container volumes, revenue and PAT to clock CAGR of 17%, 29.8% and 47.6% respectively between FY17-19E. We maintain our BUY rating on the stock with a target price of INR 310 based on 25x FY19E earnings.