Hold Gujarat Pipavav Port; target of Rs 145: ICICI Securities
ICICI Securities’ research report on Gujarat Pipavav Port
Post-acquisition of Hamburg Sud (2.9% market share) and internal business restructuring, AP Moller Maersk (15.7% market share in container market) further strengthened its market position which remains crucial in providing support to port volumes. Post decline of volumes for four consecutive quarters, container volumes for Q3FY18 reflected signs of revival. Although the container volumes handled for 9MFY18 stood flattish at 500000 TEUs volumes visibility for remaining year (Q4FY18) and FY19 remains strong.
Given its rail connectivity coupled with proximity to India’s most industrialised zone the asset remains unique. Gujarat Maritime Board (GMB) had given GPPL the right to develop and operate port till 2028. The management foresees no issues regarding the extension of the concession agreement. Any unfavorable outcome on the same could impact our DCF based assumptions (till 2028). However, following the change in volume estimates we revise our target price of Rs 145, maintaining HOLD on the stock.
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