Thursday, April 15, 2010

Stock Idea: Gati Ltd.

Well on the track of recovery, the company continued to forge ahead. For the third quarter ended 31 March 2010, the company posted its highest ever revenue for a quarter at Rs.189.19 crore, up 4% (QoQ) and 22% (YoY). Dry docking expenses are being accounted in equated installments spread over the current financial year and the amount absorbed in this quarter is Rs.1.45 crore. Net profit, sequentially was up 7% at Rs.4.11 crore compared to a net loss of Rs.17.06 crore in Q3FY09.

The most impressive part about its performance has been the improvement in the NPM – it was up at 2.17% as against 2.11% in Q2 of current fiscal.

The express distribution and supply chain division did well. For the quarter, it showed a 33.7% (YoY) rise in topline, EBIDTA margins rose over 2.8 times and net profit of this division was up by a whopping 281%. Its other division, known as the coast to coast, which contributes around 15% to the total revenue of the company and is mainly to do with shipping, continues to remain the main drag. This unit showed a 14% drop in topline, EBIDTA margins were down from 11.2% to 4.4% and net profit fell 66%. But QoQ, there has been an improvement with a 22% rise in revenue and 30% rise in EBIDTA margins. This division also seems to be getting slowly but surely out of the woods. It recently increased its fleet size by chartering vessels and also by adding new routes to the shipping network.
The company is in the final phase of its internal restructuring. It continued to further sell off its assets in shipping division. During the quarter two old vessels were sold resulting in the net loss of Rs 31 lakhs.
During the previous year, the company was constrained to discontinue the freighter business and terminated the arrangement with National Aviation Company of India Ltd (NACIL) resulting in Arbitral dispute and NACIL invoked the Bank Guarantee of Rs.30 crore. This is one case which continues to be fought and one risk which has to be factored in.
For 9MFY10, its net revenue stands at Rs.543 crore and net profit is at Rs.10.22 crore. For the current year, the company expects to post a revenue of around Rs.800 crore and net profit of Rs.15 to 18 crore.
It looks like it has left the past behind and is sailing high into the future.
Source: Internet ( by S P Tulsian)

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