Allcargo Logistics
BSE SENSEX
27,990
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
S&P CNX
8,633
AGLL IN
252.1
47.9 / 0.7
222 / 128
-1/7/20
52
30.1
23 August 2016
1QFY17 Results Update | Sector: Logistics
CMP: INR190
TP: INR229(+21%)
Buy
IndAS impacts earnings; volume growth steady amidst macro headwinds
AGLL reported below estimate EBITDA at INR1.3b (vs est. of INR1.4b; -5% YoY).
While reported EBIT stood at INR861m (-2% YoY) and PAT at INR624m (-7% YoY)
was impacted by higher tax rate at 29% (v/s 20% in FY16). Allcargo adjusted
goodwill against net worth to the extent of INR6.2 (of the total INR9b as on March
2016) under IndAS provisions.
MTO volumes up 7% YoY despite weak macros:
AGLL’s MTO volumes grew 7%
YoY to 120,971 TEUs in 1QFY17 led by China, SE Asia and some parts of Europe.
Realizations declined 11% YoY led by lower freight rates, while EBIT margin
increased to 4.8% (v/s 3.8% in 1QFY16). We expect the current volume growth
to sustain in the medium term despite weak macros, as AGLL’s presence across
164 countries helps it to benefit from pockets of high growth areas.
CFS benefitted by market share gains:
CFS volumes stood at 75,118 TEUs (+4%
YoY, +13% QoQ). CFS revenue stood at INR1.1b (+6% YoY). Realizations (incl.
ICD volumes) stood at INR13,041/TEU as compared to INR13,185/TEU in
1QFY16. EBIT/TEU stood at INR3,641/TEU (v/s INR3,963 in 1QFY16), impacted
by pre-operating expenses for Kolkata CFS (as per IndAS, earlier was
capitalized). While lower EXIM volumes is a near term challenge, expect market
share gains to help Allcargo to report ~7% volume growth in CFS.
P&E impacted by shipping one-offs:
P&E segment’s EBIT stood at INR180m (-
22% (YoY) impacted by (a) dry-docking of one ship, (b) letting go of low-margin
equipment business and (c) higher depreciation for 2 ships bought in July 2015.
Valuation and view:
AGLL with (a) current businesses largely in steady state and minimal capex
requirement and (b) strong balance sheet and ~9% FCF yield; is well placed to
invest in DFC/GST led opportunities.
With effective tax rate increasing (no change in cash tax though) from 20% to
~28%, EPS gets reduced by ~11% and further impacted by higher deprecation
(IndAS impact) resulting in ~EPS cut of ~15% in FY17/FY18.
We value Allcargo Logistics at FY18E EV/EBITDA of 9x and arrive at a fair value
of INR229. On FY18E, the stock trades at P/E of 13.5x and EV/EBITDA of
INR6.8x.
Maintain buy.
Financials & Valuations (INR b)
Y/E Mar
2016 2017E 2018E
Net Sales
56.8
59.1
64.0
EBITDA
5.2
5.6
6.4
PAT
2.9
2.8
3.5
EPS (INR)
11.4
11.1
14.0
Gr. (%)
23.9
(2.6) 26.3
BV/Sh (INR)
87.5
71.6
82.9
RoE (%)
14.0
14.0
18.2
RoCE (%)
11.6
11.5
14.9
P/E (x)
16.7
17.1
13.5
P/BV (x)
2.2
2.7
2.3
Estimate change
TP change
Rating change
Harshad Borawake
(HarshadBorawake@MotilalOswal.com); +91 22 3982 5432
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Allcargo Logistics
Exhibit 1: AGLL 1QFY17 earnings snapshot (INR m)
1QFY15
Volume Details
MTO Volumes (TEU)
CFS/ICD Volumes (TEU)
Financial Summary (INR m)
MTO
CFS/ICD
P&E
Others
Net Revenue
Reported EBITDA
EBITDA margin
Depreciation
EBIT
Interest
Other Income
PBT before exceptional
Exceptional
PBT before exceptional
Tax
Tax rate (%)
PAT
PAT margin (%)
101,937
72,930
11,309
907
1,165
78
13,206
1,214
9.2%
427
787
164
83
706
34
673
159
23.6%
514
3.9%
2QFY15
108,874
75,398
12,500
1,021
1,267
70
14,618
1,225
8.4%
391
835
141
147
841
48
793
132
16.6%
661
4.5%
3QFY15
107,261
70,587
12,101
1,059
1,322
93
14,317
1,359
9.5%
372
987
140
116
962
34
928
187
20.1%
742
5.2%
4QFY15
104,128
72,664
11,828
1,046
1,545
70
14,152
1,071
7.6%
384
687
89
191
789
12
777
222
28.6%
555
3.9%
1QFY16
113,410
78,727
12,431
1,094
1,425
76
14,779
1,411
9.5%
362
1,048
106
67
1,009
49
960
190
19.8%
770
5.2%
2QFY16
117,574
77,027
12,323
1,122
1,382
84
14,681
1,371
9.3%
422
949
108
73
913
(10)
923
178
19.3%
745
5.1%
3QFY16
116,168
74,251
10,964
1,148
1,399
109
13,392
1,183
8.8%
386
797
115
125
807
39
769
162
21.1%
606
4.5%
4QFY16
112,593
74,751
11,908
1,067
1,277
144
14,020
1,216
8.7%
359
858
95
122
884
6
878
169
19.3%
709
5.1%
1QFY17 YoY (%)
120,971
75,118
11,793
1,096
1,322
100
13,989
1,297
9.3%
436
861
75
111
897
17
880
256
29.1%
624
4.5%
6.7
-4.6
-5.1
0.2
-7.2
31.8
-5.3
-8.1
-2.9
20.3
-17.9
-28.9
67.1
-11.1
-66.5
-8.3
34.6
46.8
-18.9
QoQ
7.4
0.5
-1.0
2.6
3.5
-30.4
-0.2
6.6
6.8
21.5
0.4
-20.9
-8.8
1.4
179.7
0.2
51.0
50.7
-11.9
Source: Company, MOSL
Key takeaways from concall
IndAS impact:
Company has used one-time option under IndAS to adjust
INR6.2b (of the total INR9b as on March 2016) of goodwill from the balance
sheet.
Growth expectations
MTO:
1QFY17 volume growth was 7% YoY and company expects the growth
rate to continue.
CFS:
Despite flat/lower port volumes, CFS volume growth was 4% YoY led by
market share gains. Company is targeting internally 10-12% growth.
Targeting 20% RoE:
Management is moving away from the low returns business
and has has exited some equipment leasing (part of P&E segment) in 1QFY17.
Management is targeting to reach 20% RoE (v/s 14% in FY16).
Kolkata CFS:
It is expected to become operational in 1QCY18. The planned
capacity had earlier been announced at 100,000 TEUs. Land for the CFS has
been leased from the port authority on a long-term basis. The total capex for
the CFS is ~INR350m (~20% is incurred till date).
Jhajjhar ICD:
Management is close to complete the due diligence process and
working on rail link revival. Expected to complete Phase-1 in two years in
2H2018. The new logistics park will enable Allcargo to capitalize on DFC.
Allcargo has completed transfer of their contract logistics and freight forwarding
businesses in Avvashya CCI (ACCI) Logistics Private Limited in July 2016. The
impact of this transaction ACCI will be reflected in the 2QFY17.
Net debt stands at INR2.9b.
23 August 2016
2

Allcargo Logistics
Exhibit 2: MTO volumes (TEUs) increased +6.7% YoY and
+7.4% QoQ in 1QFY17
MTO Volumes (TEUs)
120,971
117,574
116,168
113,410
112,593
Exhibit 3: Realizations declined 11% YoY and 8% QoQ in
1QFY17; EBIT (INRb) declined 10% YoY and 14% QoQ
in INR '000/TEU
4.9
5.1
5.7
Realizations
5.2
5.3
4.6
EBIT (RHS)
5.5
5.2
108,874
107,261
104,128
101,937
111
115
113
2.1
114
110
105
94
106
108
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
Source: MOSL, Company
Source: MOSL, Company
Exhibit 4: CFS+ICD volumes (TEUs) increased 6.7% YoY and
+12.4 QoQ in 1QFY17
CFS/ICD Volumes (TEUs)
84,013
78,727
72,930
75,398
70,587
72,664
77,027
74,251 74,751
Exhibit 5: Realizations increased +8% YoY and 15% QoQ in
4QFY16; EBIT flat YoY and +4% QoQ
in INR '000/TEU
4.4
3.3
3.3
Realizations
5.2
4.0
4.2
4.6
4.0
4.2
EBIT (RHS)
12
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
1QFY15
13
15
3QFY15
14
14
1QFY16
15
15
3QFY16
13
15
1QFY17
Source: MOSL, Company
Source: MOSL, Company
23 August 2016
3

Allcargo Logistics
Valuation and view
Allcargo Logistics gives an unique opportunity to participate in the (a) domestic
economic revival (through CFS and P&E) and (b) exposure to global LCL (less
than container load) consolidation market where it is one of the top two players
(fast growing sub-segment in container shipping) with presence in >90
countries.
We believe that Allcargo Logistics through its superior size and global presence
via ECU Line has established an effective competitive advantage versus its
competitors. It is therefore well placed to tackle both any sluggishness in
container business as well as make good use of the opportunities in this space.
Strong balance sheet, increasing FCF will help Allcargo to further consolidate in
global LCL market and help it to make value accretive acquisitions to further
spur growth. Its domestic land banks give it an opportunity to capitalize on
upcoming rail DFC (dedicated freight corridor) and GST reform.
We model volume CAGR of ~7.5% in MTO and ~7% in CFS in FY17/FY18 and
model 70bps EBIT margin improvement in MTO in FY18 over FY16 as we expect
benefits from its consolidation and automation efforts.
With effective tax rate increasing (no change in cash tax though) from 20% to
~28%, EPS gets reduced by ~11% and further impacted by higher deprecation
(IndAS impact) resulting in ~EPS cut of ~15% in FY17/FY18.
We value Allcargo Logistics at FY18E EV/EBITDA of 9x, largely in-line with long-
term average (changed from P/E methodology as the revised tax rates though
does not change cash earnings, distorts true profitability) to arrive at a fair value
of INR229. On FY18E, the stock trades at P/E of 13.5x and EV/EBITDA of INR6.8x.
Maintain buy.
23 August 2016
4

Allcargo Logistics
Story in charts
Exhibit 6: MTO revenues (INRm) grew at 21% CAGR driven
by contribution from acquired entities
Domestic
FCL Marine
Hindustan Cargo
Econocaribe
Ecu-Line
Total
Exhibit 7: Regional MTO revenue share (in %) – America’s
share improved rapidly due to acquisitions
India
11
37
21
18
13
CY09
10
35
23
18
14
CY10
America
10
32
26
17
16
FY12
(15M)
Far East
11
29
25
19
16
FY13
Europe
9
30
24
24
13
FY14
9
30
19
29
12
FY15
Others
7
28
21
29
15
FY16
41
5
3
28
3
3
FY14
47
9
2
29
3
4
FY15
48
8
-
7
2
CY06
15
-
12
0
2
CY07
21
-
17
1
3
CY08
17
-
14
1
2
CY09
22
-
18
2
2
CY10
34
-
28
3
3
32
-
26
3
3
FY12 FY13
(15M)
FY16
Source: Company, MOSL
Source: Company, MOSL
Exhibit 8: Expect MTO volumes to grow at 9% CAGR driven
by improving trade volumes
MTO volume ('000 teu)
YoY (%)
30%
20%
10%
422
460
492
531
0%
-10%
-20%
Exhibit 9: Allcargo has presence near the major ports in
India
200
238
337
285
335
CY09 CY10 FY12 - FY13 FY14 FY15 FY16 FY17E FY18E
15M
Source: Company, MOSL
Source: Company, MOSL
Exhibit 10: Expect CFS volumes to grow at 6% CAGR at FY15-
FY18E
60%
46%
64%
CFS volume ('000 teu)
57%
44%
51%
53%
57%
61%
Exhibit 11: P&E revenue growth lagged increase in capital
employed led by slowdown in domestic economy
P&E EBIT (INRm)
1,053
P&E Capital Employed (INRm)
897
745
579
574
409
135
9,762
643
174
227
275
285
250
292
FY15
305
329
349
2,488 3,611 10,672 10,660
CY09
CY10
FY12 FY13
(15M)
FY14
9,014 8,391 8,843
FY15
FY16 FY17E
CY09 CY10 FY12 - FY13 FY14
15M
FY16 FY17E FY18E
Source: Company, MOSL
Source: Company, MOSL
23 August 2016
5

Allcargo Logistics
Exhibit 12: MTO segment contributes the highest to revenue
Revenue share (%)
9
7
12
8
MTO
11
8
CFS
8
6
P&E
9
7
10
8
Exhibit 13: MTO segment contributes the highest to EBIT
EBIT share (%)
30
41
30
23
38
24
37
MTO
CFS
13
38
P&E
5
36
20
29
15
31
16
7
83
77
79
81
85
84
83
39
CY10
39
FY12
(15M)
49
FY13
59
51
54
CY09
CY10
FY12
(15M)
FY13
FY14
FY15
FY16
CY09
FY14
FY15
FY16
Source: Company, MOSL
Source: Company, MOSL
23 August 2016
6

Allcargo Logistics
Financials and Valuations
Consolidated - Income Statement
Y/E March
Income from Operations
Total Income from Operations
Change (%)
Operational Cost
Personnel Expenses
Other Expenses
Total Expenditure
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Income tax
Tax Rate (%)
PAT
Minority + Associate share
PAT incl. Minority + Associate
Adjusted PAT
Change (%)
Margin (%)
FY12 (15M)
42,696
42,696
49.1
28,645
6,095
2,825
37,565
5,131
12.0
1,337
3,794
644
559
3,709
0
3,709
734
19.8
2,976
132
2,844
2,844
71.4
6.7
FY13
39,255
39,255
-8.1
27,194
5,634
2,873
35,701
3,554
9.1
1,474
2,080
414
670
2,335
0
2,335
512
21.9
1,823
126
1,697
1,697
-40.3
4.3
FY14
48,445
48,445
23.4
34,281
7,290
3,111
44,681
3,763
7.8
1,755
2,009
563
515
1,960
0
1,960
416
21.2
1,544
51
1,493
1,493
-12.0
3.1
FY15
56,180
56,180
16.0
39,622
8,566
3,346
51,534
4,646
8.3
1,574
3,072
535
412
2,950
0
2,950
700
23.7
2,250
73
2,177
2,323
55.5
4.1
FY16
56,756
56,756
1.0
38,124
9,256
4,196
51,575
5,181
9.1
1,529
3,652
425
386
3,614
84
3,530
700
19.8
2,830
47
2,782
2,877
23.9
5.1
FY17E
59,084
59,084
4.1
39,586
9,636
4,279
53,501
5,583
9.4
1,773
3,809
303
480
3,985
17
3,969
1,121
28.2
2,848
57
2,791
2,803
-2.6
4.7
(INR Million)
FY18E
63,993
63,993
8.3
42,875
10,436
4,328
57,639
6,354
9.9
1,888
4,466
266
728
4,928
0
4,928
1,331
27.0
3,597
57
3,541
3,541
26.3
5.5
56.8
Consolidated - Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Deferred Tax assets
Appl. of Funds
E: MOSL Estimates
FY12 (15M)
260
14,638
14,899
311
924
7,653
23,788
16,358
3,801
12,557
4,580
854
1,071
9,369
125
3,576
1,341
4,327
4,815
3,338
1,094
383
4,555
171
23,788
FY13
252
15,604
15,857
433
1,172
7,267
24,728
18,850
5,163
13,687
4,602
139
1,859
9,641
111
3,825
1,382
4,324
5,429
3,536
1,275
619
4,212
228
24,728
FY14
252
17,679
17,931
463
1,284
9,921
29,599
20,528
7,094
13,434
9,051
236
1,902
11,675
114
5,715
1,647
4,199
6,938
4,661
1,674
602
4,737
238
29,599
FY15
252
18,826
19,078
221
1,354
6,133
26,786
20,244
8,283
11,961
8,655
302
894
12,648
117
6,476
1,738
4,318
7,928
5,744
1,557
627
4,720
253
26,786
FY16
504
21,559
22,063
228
1,373
5,431
29,095
21,333
9,351
11,982
9,263
521
1,465
13,531
112
6,669
2,069
4,681
7,875
5,998
1,264
613
5,656
208
29,095
FY17E
504
17,558
18,062
228
1,373
4,681
24,343
23,281
11,125
12,157
3,033
422
1,465
17,229
121
6,944
5,290
4,874
10,171
6,200
3,338
633
7,058
208
24,343
(INR Million)
FY18E
504
20,385
20,889
228
1,373
4,181
26,670
24,221
13,013
11,208
3,033
182
1,465
21,659
131
7,521
8,728
5,279
11,086
6,680
3,616
790
10,573
208
26,670
23 August 2016
7

Allcargo Logistics
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Debtor (Days)
Creditor (Days)
Working Cap. Turnover (Days)
Leverage Ratio (x)
Net Debt/Equity (x)
FY12 (15M)
11.3
16.6
59.1
0.8
7.6
FY13
6.7
12.6
62.9
0.7
12.1
28.2
15.1
3.0
1.4
15.1
0.4
17.0
17.4
20.2
31
43
27
0.5
11.0
8.9
10.1
36
47
26
0.4
FY14
5.9
12.9
71.1
0.8
14.3
32.1
14.8
2.7
1.2
14.9
0.4
8.8
7.3
8.2
43
50
23
0.5
FY15
9.2
15.5
75.7
1.0
13.4
20.6
12.3
2.5
0.9
11.3
0.5
12.6
9.4
10.7
42
53
19
0.3
FY16
11.4
17.5
87.5
2.0
19.8
16.7
10.9
2.2
0.9
9.9
1.1
14.0
11.6
13.3
43
57
23
0.2
FY17E
11.1
18.2
71.6
2.0
19.8
17.1
10.5
2.7
0.8
8.5
1.1
14.0
11.5
14.5
43
57
11
0.0
FY18E
14.0
21.5
82.9
2.5
19.8
13.5
8.8
2.3
0.7
6.8
1.3
18.2
14.9
22.5
43
57
11
-0.2
Consolidated - Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY12 (15M)
3,710
1,337
551
-930
-1,353
3,315
153
3,468
-5,991
-2,524
1,014
-414
-5,391
0
3,009
-556
-530
-90
1,834
-89
1,430
1,341
FY13
2,335
1,474
370
-634
-22
3,522
-278
3,244
-1,896
1,348
52
88
-1,757
0
-563
-538
-74
-271
-1,446
41
1,341
1,382
FY14
1,960
1,755
532
-373
-195
3,680
-572
3,107
-1,290
1,817
-237
-2,665
-4,192
0
2,732
-586
-222
-575
1,350
265
1,382
1,647
FY15
3,171
1,574
492
-478
113
4,872
-573
4,300
-442
3,858
1,218
-1,028
-252
0
-2,509
-550
-310
-589
-3,957
91
1,647
1,738
FY16
3,530
1,529
409
-894
86
4,660
-175
4,484
-1,414
3,070
-449
-109
-1,971
0
1,437
-475
-640
-2,504
-2,182
331
1,738
2,069
FY17E
3,969
1,773
-176
-1,121
1,819
6,264
0
6,264
-1,850
4,414
0
480
-1,370
0
-750
-303
-563
-57
-1,673
3,221
2,069
5,290
FY18E
4,928
1,888
-463
-1,331
-77
4,946
0
4,946
-700
4,246
0
728
28
0
-500
-266
-714
-57
-1,536
3,438
5,290
8,728
23 August 2016
8

Allcargo Logistics
Corporate profile
Company description
AGLL is an integrated logistics services provider with
>USD1b in sales. Its key business divisions are global
Multimodal Transport Operations (NVOCC, LCL and
FCL), domestic CFS/ICD operations and Project and
Engineering division. It also provider contract
logistics services.
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Jun-16
Promoter
DII
FII
Others
69.9
0.1
13.8
16.1
Mar-16
69.9
0.1
14.0
16.0
Jun-15
69.9
0.0
5.9
24.2
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Shashi Kiran Shetty
Blackstone
% Holding
64.5%
14.5%
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Shashi Kiran Shetty
Shailesh Dholakia
Designation
Chairman & Managing
Director
Company Secretary
Exhibit 5: Directors
Name
Adarsh Hegde
Hari L Mudra
M P Bansal
Name
Arathi Shetty
Keki Elavia
J Ramachandran
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Appan & Lokhandwala Associates
BSR & Co LLP
Mehta & Mehta
Mukundan K V
Type
Statutory
Statutory
Secretarial Audit
Internal
Source: Capitaline
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
11.1
14.0
Consensus
forecast
14.1
17.4
Variation (%)
-21.3
-19.4
Source: Bloomberg
23 August 2016
9

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Allcargo Logistics
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ALLCARGO LOGISTICS
No
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