Monday, April 12, 2010

Stock Idea: Allcargo Global Logistics Ltd.

This goods moving company, through its acquisition of ECU has a 50% exposure in Europe and USA. And with these companies being in a ‘recovery’ mode in 2009, the financial performance of Allcargo for year ended 31st Dec 2009 took a slight hit.
Net sales dropped 8% at Rs.2060.93 crore. EBIDTA was down 6%. But it managed to end 2009 with a 5% rise in net profit at Rs.129.95 crore.
During the year, the company sub-divided the face value of equity shares from Rs.10/per share to Rs.2 per share. On an equity of Rs.24.96 crore, its EPS for the year stands at Rs.24.96. Its reserves for the year stood at a healthy 954.48 crore, giving a book value of Rs.78. At the current EPS, the stock, at the current price of Rs.186, is available at a PE of 7 times only.
It has five business verticals - Container Freight Station (CFS), equipment hire, project logistics, less-than-container load (LCL) and warehousing. Full cargo load accounts for 85% of Allcargo’s business and LCL at 15%. In November 2009, it commenced third party logistics solutions (3PL) which now enables Allcargo to offer full service end to end logistics service package comprising in house expertise and facilities for freight forwarding, customs clearance, transport, warehousing and distribution services. With warehouses in Mumbai and Goa already operational and plans afoot for facilities in Indore, Hyderabad, Nagpur and Bangalore, Allcargo is on an aggressive expansion mode.
It has three CFS near JNPT, Chennai Port and Mundra Port. These three ports handle 95% of the container cargo in India and this puts Allcargo in an enviable position. It has also got 5 inland container depots at Dadri, Pithampur, Nagpur, Hyderabad and Bangalore, which is expected to give it around 55% market share soon.
In Sept 2009, Allcargo board approved an investment of 1.5 million warrants of Rs 10 each, convertible into equal number of equity shares of the company, at a price of at least Rs.934/share by Blackstone Group and its affiliates. With this, Blackstone’s total commitment to Allcargo now stands at $75 million. It would continue to have representation on the Allcargo board. Akhil Gupta, CMD of Blackstone Advisors India, is a director on the company’s board. As at 31st Dec 2009, Blackstone has a 14.63% stake in the company.
Source: Internet ( by S P Tulsian)

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