Buy This Gujarat-Based Port Stock For A Target Price Of Rs 100: ICICI Direct

ICICI Direct in its recent report on Gujarat Pipavav Port Limited, published on August 4, has suggested buy the stocks of the company at the target price of Rs 100 apiece. Considering the estimated target price, and the current market price the closing price of the stock, it has the potential to gain up to 23% in 12 months.

Gujarat Pipavav is a South-West Gujarat-based port with an MNC promoter (APM Terminals - Maersk Group). It lies at a strategic international maritime location, which connects India with the Far East, on the one side, and Middle East, Africa, Europe and the US, on the other.

The port container capacity is at 1.35 million TeUs, bulk capacity at 4-5 million MT and liquid capacity at 2 million MT. Container segment comprises ~70% of revenues.

Stock Outlook & Returns

Gujarat Pipavav today closed at Rs 81.42 apiece, gaining around 1.17%. It was opened at Rs 80.95 apiece. It is currently trading at Rs 11.60 above the 52-week low of Rs 70.30 apiece. The 52 week high of the stock is Rs 119 apiece. 

The shares of the company this week moved up nearly 4.93% and 9.27% in the past 1 month, respectively. In the last 1-year, the share price has fallen nearly 21.74% and 41.46% in the past 5 years, respectively. However, it has also given a positive return of 6.57% in the past 3 years.

The ROE is 8.79%. TTM EPS is Rs 4.63. PE ratio is 17.69. PB ratio is 1.77. The Dividend yield is 4.88% and its face value is Rs 10. Its market cap is Rs 3,959 crore.

Q1FY23 Results

According to the brokerage QoQ lower bulk volumes impacted EBITDA.

• Net revenues de-grew 6% QoQ to Rs 08 crore.
• EBITDA de-grew 12% to Rs 113 crore with margins at 54.4% (vs. 58.4% in Q4FY22).
• Subsequently, PAT de-grew 20% to Rs 59 crore as a weak operational performance was further impacted by an exceptional loss of Rs 13 crore.

Key triggers for future price performance

With Gujarat Pipavav planning to build capacities in warehousing, its JV PRCL looking at growing CTO business and parent entity Maersk planning to build an end-to-end logistics infra in the country (could benefit GPPL); the company remains a play on growing logistics sector in India. However, extension of agreement with GMB remains a key event to watch.

Addition of three service lines in FY23 expected to boost Exim volumes. DFC commissioning is expected from September onwards (higher market share and time tabled train running). Debt free company with RoIC reaching ~40%+ levels in FY24E.

ICICI Direct Recommends Buy for a target price of Rs 100 apiece

The brokerage said, "While the management expects bulk volumes to stay strong in FY23, container volumes are expected to make a comeback (led by DFC normalisation, lower congestion and freight volatility expected in FY23E). We remain positive on the stock and maintain our BUY recommendation. We value the stock at Rs 100 i.e. 15x P/E on FY24E EPS."

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.