|
Summary
of Contents
PULSE TRACK
STOCK UPDATE
Gateway
Distriparks
Cluster:
Cannonball
Recommendation: Buy
Price target:
Rs250
Current market price: Rs171
A decent bounce
back
Result
highlight
-
The Q2FY2007
consolidated net profit of Gateway Distriparks Ltd (GDL) at Rs21.7
crore is in line with our expectations.
-
The
consolidated revenues for the quarter stood at Rs38.16 crore,
marking a growth of 6.5%. The realisation per twenty-feet
equivalent unit (TEU) dropped by 11.8% year on year (yoy) due to
stiff competition faced by the company at its Mumbai container
freight station (CFS) and higher volume from the non-Jawaharlal
Nehru Port Trust (JNPT) CFSs. However the throughput handled rose
impressively by 20.7% to 60,497TEUs.
-
The operating
profit margin (OPM) for the quarter declined by 750 basis points
to 57.4%, as the realisation dropped and transportation cost
increased substantially on account of the ban on the overloading
of trucks. Also Q2FY2006 was an exceptional quarter when the
company had earned substantial income on account of higher ground
rent due to floods and water logging at JNPT. The fall in the OPM
caused the operating profit for the quarter to decline by
5.9%.
-
However a
three-fold increase in the other income (on account of the cash
garnered through global depository receipt [GDR] deployed in bank
deposits) help the earnings before interest, depreciation, tax and
amortisation (EBIDTA) to jump up by 12.1% yoy to Rs27.9
crore.
-
The interest
expense declined by 51.6% as the company repaid a substantial part
of its debt. The consolidated net profit for the quarter jumped
22.2% to Rs21.7 crore.
Tata Tea
Cluster:
Apple Green
Recommendation: Buy
Price target:
Rs970
Current market price: Rs750
Profits hit by
high raw material costs
Result
highlight
-
Tata Tea Ltd
(TTL) reported a 32% year-on-year (y-o-y) jump in its consolidated
net profit (adjusted for extraordinary items) for Q2FY2007. The
growth was driven by a higher other income and a lower tax
rate.
-
The
consolidated net sales grew by 25.1% year on year (yoy) to Rs974
crore backed by a healthy growth in the domestic operations and
the consolidation of the accounts of the companies acquired by TTL
over last year. Tetley's sales were stagnant during the quarter
under review.
-
The
consolidated operating profit grew by a mere 11.5% yoy to Rs71.4
crore as the operating profit margin (OPM) dipped by 220 basis
points driven by higher row tea prices and stagnant operations of
Tetley.
-
With the outgo
on interest almost doubling during the quarter, the profit before
tax and extraordinary items grew by a mere 4.4%. Eight O'clock
Coffee (EOC), a company recently-acquired by Tata Coffee and 51%
subsidiary of TTL, was profit accretive.
-
Compared with
a 30% stake in Energy Brands Inc (EBI), as announced earlier, Tata
Tea (GB) Ltd (TTGBL; a 98.7% subsidiary) will hold only a 25%
stake in EBI. The balance 5% will be directly held by Tata Sons
Ltd (TSL). After the equity infusion by TSL, TTL's stake in TTGBL
will reduce to 75%.
-
The ambiguity
prevailing over the recent acquisitions made by the company and
the funding structure of the same will act as a drag on the stock
in the short term. However, over a longer period of time a lot of
value unlocking is likely to happen, as the synergies amongst the
various companies recently acquired materialise and as EBI goes
for its initial public offering (IPO). We maintain our Buy
recommendation on the stock with a price target of
Rs970. |
