Allcargo Global Logistics Limited Jaypee Research Desk

25 February 2011 www.jaypeeindia.com

www.jaypeeusa.com

Company Visit Note CMP: ` 142 TARGET: ` 229 BUY

As on Feb 24, 2011 Allcargo Global – Strong growth expectations…

Market Cap. ( `mn ) 18030
52 Week High/Low (`) 201 / 125 We met the management of Allcargo Global Logistics, key takeaways from the
Book Value (CY10E) 89 meeting are as follows:
Face Value (`) 2.0
• CFS / ICD - Allcargo has three CFS under its ambit – JNPT,Chennai, and
Mundra, with utilization levels of 100%, 90% and above 80% respectively.
Codes
BSE Code 532749 With JNPT utilization at 100%, management plans for expansion which
NSE Code ALLCARGO will increase its capacity by almost 100%. Company expects the capacity
Bloomberg Code AGLL IN
to be operational by Q1CY12. Capex committed for CFS / ICD expansion is
Reuters Code ALGL.BO
of ~`1000mn.
Shareholding Pattern • Project Engineering – Management indicated synergy in operations by
Dec2010 Sep2010 Jun 2010 merging of Project logistics and Equipment hiring division, and also
Promoters 69.83 69.83 69.83
FII 8.81 9.56 9.43 stressed on the potential of the division in undertaking engineering
DII 3.00 3.69 4.16 projects. Capex for the segment was ~`2000mn for CY10, and plans for
Others 18.36 16.92 16.58 another ~`800mn in CY11E.
Divisional break-up of revenue sources for the division is as follows:
 Windmills – 25%
Share Price Performance
 Oil & Gas – 20%
140
120  Engineering solutions – 20%
100  Cement Industry – 5%
80
60  Others – 30%
40
• ECU line – MTO subsidiary is on steady growth track with immense
20
0 potential for growth in US and Asia region. The division contributes ~70%
of the company’s net revenues has an operating margin of 5.8-6.2%.
5-May-10

5-Jan-11
5-Oct-10
5-Nov-10
5-Dec-10
5-Jul-10
5-Apr-10

5-Jun-10
5-Feb-10

5-Aug-10
5-Sep-10
5-Mar-10

Company has been very active in expansion in the segment with every
possible opportunity and had acquired Hong Kong based entity in pursuit
Allcargo Sensex
of the same.
• Other Capex plans include expansion in warehousing facilities at Goa,
Hosur & Nagpur, and ICD development at Hyderabad to be expensed
Share Price Returns (%)
1M 6M 12M from the remaining of the total capex commitment of ~`2500mn.
Absolute 0% -14% -22% Valuation:
Relative 11% -13% -36%
At Current market price, Allcargo is trading at 9.3x and 8.4x its CY11E and CY12E
EPS. With strong Indian Infrastructure growth, demand for Project Engineering
segment is expected to grow, also CFS/ICD demand pull is generated from the
growth of Indian container traffic estimated at ~12% YoY. Private ports are playing
major role in the EXIM trade growth in India. We retain our BUY recommendation
Jyotsna Sawdekar with a multiple of 13.5x its CY12E EPS to arrive at a 12 month target price of `229.
jsawdekar@jaypeeindia.com Financials:
Particulars ` mn CY09 CY10 CY11E CY12E
Prasun Kumar Net Sales 20,609 26,329 30,538 33,857
prasunkumar@jaypeeindia.com
Total Expenditure 18,424 23,538 27,076 30,008
EBIDTA 2,185 2,790 3,462 3,848
Contact No: +91-22-43542017
EBIDTA margin (%) 10.6% 10.6% 11.3% 11.4%
Adj. PAT 1,299 1,710 1,991 2,218
PAT (margin) 6.3% 6.5% 6.5% 6.6%
EPS (`) 10.0 13.1 15.3 17.0
P/E (x) 14.3 10.9 9.3 8.4

• Our reports are available on Bloomberg < JAYP >

• Please refer to the disclaimer at the end of the report

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Allcargo Global Logistics Limited Jaypee Research Desk
25 February 2011 www.jaypeeindia.com
www.jaypeeusa.com

CFS Volumes
(in TEUs) Q4CY10 Q4CY09 YoY (%) Q3CY10 QoQ (%)
JNPT CFS 33372 28257 18% 31607 6%
Chennai CFS 20954 14090 49% 19360 8%
Mundra CFS 7311 5809 26% 4197 74%

CFS Operations Performance

(` mn) Q4CY10 Q4CY09 YoY (%) Q3CY10 QoQ (%)
Revenues 615 448 37% 489 26%
EBIDTA 279 230 21% 217 29%
EBIDTA margin (%) 45% 51% 44%

ECU Line Performance

(` mn) Q4CY10 Q4CY09 YoY (%) Q3CY10 QoQ (%)
Revenues 5134 4029 27% 4828 6%
EBIDTA 303 186 63% 298 2%
EBIDTA margin (%) 5.9% 4.6% 6.2%
PAT (after Minority Interest) 172 55 213% 145 19%

Hindustan Cargo Performance

(` mn) Q4CY10 Q4CY09 YoY (%) Q3CY10 QoQ (%)
Revenues 427 348 23% 573 -25%
EBIDTA 3.9 2.9 34% 46 -92%
EBIDTA margin (%) 0.9% 0.8% 8%

Project and Engineering Solutions Performance

(` mn) Q4CY10 Q4CY09 YoY (%) Q3CY10 QoQ (%)
Revenues 663 498 33% 879 -25%
EBIDTA 94 89 6% 273 -66%
EBIDTA margin (%) 14% 18% 31%

Source – Company, Jaypee Research

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 Allcargo Global Logistics Limited Jaypee Research Desk
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Sensitivity table
Sensitivity to 10% reduction in revenues At par Sensitivity at 10% appreciation in revenues

on CY11E EPS 15.21 15.25 15.30

on CY12E EPS 16.95 16.99 17.04
Source – Company, Jaypee Research

Quarterly performance
` mn Q4CY10 Q4CY09 YoY (%) Q3CY10 QoQ (%)
Net Sales 7,037 5,592 26 7,039 (0)
Other Income 59 4 83
Total Income 7,097 5,596 27 7,121 (0)
Operating Expenses 4,663 3,607 29 4,927 (5)
Staff cost 1,101 920 20 963 14
Other Expenditure 504 642 (22) 367 37
TOTAL EXPENDITURE 6,267 5,169 21 6,257 0
EBIDTA(without other income) 770 423 82 781 (1)
EBIDTA 829 427 94 864 (4)
Interest 64 12 433 50 28
EBDT 766 415 84 815 (6)
Depreciation 183 152 21 31 483
PBT 583 263 121 783 (26)
Exceptional item 5 (35) (4)
PBT after Exceptional Item 588 228 157 780 (25)
Current Tax (131) (64) (180)
FBT (81) (2) -
MAT Entitlement Credit 70 57 107
Reported Profit After Tax 447 213 110 607 (26)
Extraordinary items - - -
Minority Interest (27) (34) (40)
Adjusted PAT 419 180 134 567 (26)
Equity 261 261 261
Old Equity 261 250 261
EPS (Adj. Profit) 3 1 123 4 (26)
Margin (%)
OPM 11.8 7.6 12.3
OPM (without other income) 10.9 7.6 11.1
NPM (Adj.) 6.0 3.2 8.1

Source – Company, Jaypee Research

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Annual Performance
Particulars ` mn CY08 CY09 CY10 CY11E CY12E

Net Sales 23,141 20,609 26,329 30,538 33,857

Total Expenditure 20,943 18,424 23,538 27,076 30,008

EBIDTA 2,198 2,185 2,790 3,462 3,848

EBIDTA margin (%) 9.5% 10.6% 10.6% 11.3% 11.4%

Other income 106 286 259 175 183

Depreciation 447 545 545 724 813

Interest 249 232 220 244 245

PBT 1,609 1,667 2,282 2,669 2,973

PBT margin (%) 7.0% 8.1% 8.7% 8.7% 8.8%

Tax (362) (260) (475) (561) (624)

Adj. PAT 1,077 1,299 1,710 1,991 2,218

PAT (margin) 4.7% 6.3% 6.5% 6.5% 6.6%

EPS (`) 8.3 10.0 13.1 15.3 17.0

Source – Company, Jaypee Research

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