Buy Navkar Corporation; target of Rs 205: Axis Direct
Axis Direct’s research report on Navkar Corporation
Panvel volumes improved ~4% QoQ (up ~3% Yo) led by 12% YoY rise in exports though imports declined ~4% YoY. Direct-To-Port Delivery (DPD) led impact was stable QoQ, as CFSs share of overall DPD volumes has been rising steadily (>60% now vs. 39% in Q4FY17). EBITDA margin was largely stable QoQ at Rs 4,525/teu (up ~8% YoY). While management expects final clearance for Vapi’s rail siding shortly (rail survey going on), Q2 vol grew 50% QoQ to 8,696 teus. This was partially led by volumes handled at Hazira (1,800 teus) due to partial shift in marble volumes from JNPT. Vapi’s EBITDA margin was stable QoQ at Rs 3,230/teu, though lower than H2FY17 (Rs 4800/ teu) due to change in cargo mix.
We factor in the same, resulting in ~5% decline in our FY18/19E earnings. Maintain BUY with revised TP of Rs 205 (18x FY19E EPS; Rs 230 earlier) on expected benefits from volume ramp-up at Vapi, given attractive pricing (~25% lower to peers).
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