Allcargo Logistics: Right place, right time

Allcargo Logistics

BSE Sensex

24,682

S&P CNX

7,510

Initiating Coverage | Sector: Logistics

Allcargo Logistics

CMP: INR184

TP: INR243 (+32%)

Buy

Right place, right time

Steady growth in MTO; domestic GDP revival to benefit CFS, P&E

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Avg Val ( INR m)

Free float (%)

Financial Snapshot (INR Billion)

Y/E Mar

Sales

EBITDA

EPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

RoE (%)

RoCE (%)

P/E (x)

P/BV (x)

2016E 2017E 2018E

61.9

5.7

2.9

11.6

22.0

85.7

14.4

15.9

15.6

2.1

68.3

6.4

3.6

14.3

22.9

98.2

15.5

17.6

12.7

1.8

74.9

7.3

4.4

17.4

21.7

113.4

16.4

19.1

10.6

1.6



AGLL IN

252.1

218/128

2/35/21

46.4

0.7

46.0

30.1



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.

Strong balance sheet, increasing FCF will help Allcargo to further consolidate in

global LCL market and can also look at monetizing its domestic land bank to

benefit from upcoming rail DFC (dedicated freight corridor) and GST reform.

We expect EBITDA CAGR of 15% through FY18 led by 17% in MTO, 15% in CFS and

12% in Project and engineering leading to earnings CAGR of 22%. We value

Allcargo at 14x FY18 EPS to arrive at a fair value of INR243. Initiate coverage with

a Buy.

Leader in LCL market; to benefit from shift in shipping trends



Shareholding pattern (%)

As on

Sep-15 Jun-15 Sep-14

Promoter

69.9

DII

0.1

0.0

FII

6.2

5.9

13.0

Others

23.8

24.2

17.1

FII Includes depository receipts

Domestic economic recovery augurs well for its CFS, P&E businesses



AllCargo, led by acquisitions is now among top two in the world in niche LCL

market with presence in 90 countries. LCL is expected to grow above

industry average led by shift in global business dynamics.

Allcargo MTO volumes are expected to grow above industry average and

improve margins led by (a) efforts to improve volume per container filled

factor to boost margins and (b) negotiating better rates with shippers (scale

helps!), an advantage over competitors to attract volumes.

We expect LCL margins to remain 200-300bps above FCL's 3-3.5% and model

Allcargo's volume CAGR at 9% through FY18 and EBIT margin improvement

from 4% in FY15 to 5% by FY18.

We expect an uptick in CFS/ICD (7% of revenue, 25% of EBITDA), operating

at 65% utilization with improving port volumes and containerization trend.

We expect P&E segment (7% of revenue, 33% of EBITDA), which includes

cranes, project logistics and shipping to grow with higher infrastructure

activity in India through higher utilization.

We model EBIT CAGR (FY15-18) of 13% in CFS/ICD and 18% in P&E.

With current net debt/equity of ~0.3x and likely FCF of ~INR13b till FY18 (v/s

MCap of INR46b, gross block of INR20b), AGLL is well positioned to play to

its strengths of value accretive acquisitions and invest in allied businesses.

We expect it to (a) increase its hold on global LCL business through

opportunistic acquisitions, (b) invest in DFC and GST led opportunities.

We believe that Allcargo Logistics through its superior size and global

presence has created an effective economic moat versus its competitors.

We value Allcargo Logistics at 14x FY18E EPS, and arrive at a target price of

INR243. Initiate coverage with a 'Buy'. The stock trades at 10.6x FY18EPS.



Well positioned to invest growing FCF in value accretive opportunities



Valuation and view



Please click here for Video Link

12 January 2016

Allcargo Logistics

Stock Performance (1-year)

LCL leader; to benefit with shift in shipping trends

Global presence, focus on improving fill factor to drive margins



Allcargo, led by acquisitions is now present in 90 countries and is one of the leaders in

niche recession proof LCL segment (~10% of industry). LCL is expected to grow above

industry average led by shift in global business practices to just-in-time, shorter

turnaround from factory to end consumers, ecommerce and high air transport costs.

Allcargo, through concentrated efforts is focusing on (a) improving container fill factor

to drive margin growth and (b) negotiating better rates (scale helps!) with shippers to

negotiate better rates, an advantage over competitors to attract volumes.

We expect LCL margins to remain 200-300bps above FCL’s 3-3.5% and model Allcargo’s

volume CAGR at 9% through FY18 and EBIT margin improvement from 4% in FY15 to

4.6% by FY18.

Leadership position in LCL segment built on acquisitions

Presence in all the key markets and at origination and terminating destination is a

critical factor for global logistics player. Allcargo, within a short period of time, has

achieved a much necessary global scale in the LCL consolidation industry with

presence in 90 countries and ~200 offices, primarily led by acquisitions in US, Europe

and Asia. Allcargo is now amongst the top 2 neutral (third party) LCL consolidators in

the world.

LCL consolidation industry is a niche sub-segment of the global shipping industry and

contributes 10-15% (estimate based on industry interactions and Datamyne

estimates) of the total container volumes transported through ocean.

Exhibit 1: MTO segment revenues grew at 21% CAGR since CY06 driven by contribution

from acquired entities (INR b)

Domestic

Fully

acquired

ECU Line,

acquired

Hindustan

Cargo

CY08

Hindustan Cargo

Ecu-Line

Acquired

controlling

stakes in

HK based

NVOCCs

FY12

(15M)

FCL Marine

Econocaribe

Total

Acquired

Econocaribe

and 75% stake

in FCL Marine

FY13

FY14

FY15

CY06

CY07

CY09

CY10

Source: Company, MOSL

Strategic acquisitions boosted growth and gave scale:

While Allcargo commenced

LCL business in 1995, the big boost to its owned network came in 2005/06 when it

acquired Belgium based ECU-Line (Ecu-line then had 100 offices in 56 countries and

agent network in 120 countries). Its other acquisitions include 2 Hong Kong based

NVOCC’s in 2010, US based LCL operator Econocaribe in 2013 and majority stake

(75%) in Netherlands based FCL Marine in 2013.

12 January 2016

Allcargo Logistics



Allcargo’ first major LCL space acquisition was in 2005 when it acquired a 33.8%

stake in ECU-Line followed by purchase of remaining stake in 2006 leading to a

total enterprise value of ~€50m. At the time of acquisition ECU-Line had 4.3x

Allcargo revenue and acquisition catapulted Allcargo to the top 2 LCL player with

other being US based Vanguard.

Econocaribe (deal value of ~USD50m; was then agent of ECU-Line and among

top 3 LCL consolidators in US) strengthened Allcargo position in US with its then

nine offices and 22 container freight terminals in the US and Canada.

FCL Marine is a niche player operating FCL player primarily operating to and fro

Europe and US/Canada.

Exhibit 2: Regional MTO business revenue share (in %) - Share of America geography

improved rapidly helped by recent acquisitions

India

2009

Africa

2010

America

2012

Far East

ANZ

2013

Europe

2014

Mediterranean

2015

Source: Company, MOSL

Exhibit 3: Acquisition led growth strategy as positioned Allcargo among Top 2 LCL operators

1995

1998

2001

2002

2005

•Entered

into LCL consolidation as agent of ECU Line

•Obtained

MTO license from the Ministry of Shipping Government of India in June 1998

•Made

strategic investments in Ecu Line Mauritius and Ecu Line Middle East (Dubai).

•Acquired

50% stake in ACM Lines (Pty) Ltd.

•In

June2005, acquired 33.8% stake in ECU Line

•In

January, increased its stake in ECU Line to 49.9% with an option to increase the stake further

•In

June, acquired the remainder of ECU Line

•In

December, acquired Hindustan Cargo Limited, the freight forwarding arm of Thomas Cook

•Acquired

two Hong Kong based companies engaged in Non Vessel Owning Common Carrier (NVOCC) business in China

•Acquired

US Based Company Econocaribe consolidators

•Acquired

75% stake in Netherlands based logistics company FCL Marine Agencies Rotterdam through ECU-LINE

Source: Company, MOSL

2006

2010

2013

12 January 2016

Allcargo Logistics

Exhibit 4: ECU-Line geographical presence (highlighted in blue)

Source: Company, MOSL

Global scale is a win-win for all in value chain?

LCL players like Allcargo book the

container berths with the shipping companies on a regular basis and in turn resell

the space in smaller quantity (less than container load) to the consumers at higher

rates. This is a win-win for both as consumers save the cost of hiring the full

container and LCL player is able to resell the space at favorable rates.

Allcargo’s advantage over other operators is that while Allcargo has global presence,

other operators cannot expand on the same scale. If local players want to expand

abroad they will need to do so via agents which then begin to eat away at the

margins of the business, making it unattractive. Due to its global presence Allcargo

can offer more and more direct trade lanes. This greatly reduces operational risk to

not only Allcargo but also its customers.

Global scale gives an edge to (a) negotiate better rates with the shipping companies,

(b) be cost competitive versus competition to attract more volumes and (c) not shy

away from business even if there is margin imbalance.

a) Ability to book large container volume with shipping companies gives Allcargo

an advantage to negotiate better rates with the shipping companies.

b) Lower rates by the shippers helps Allcargo to offer better rates to its customers

versus competition thereby attracting more volumes.

c) Network reach with offices in both origination and destination is one of the key

competitive advantages in the LCL business as LCL operator will have control on

the cargo at both ends and also secure business even if there is margin

imbalance* between the destinations.

*If container margin on a trade lane from “A to B” is better than from a trade

lane from “B to A”, then the LCL operator with offices at both ends will have an

advantage over an operator with agent network (LCL operator at origin with

agent network will try to avoid business from “B to A”).

12 January 2016

Allcargo Logistics

What is LCL and dynamics of LCL

What is LCL?

LCL stands for ‘less than container load’ and LCL service provider is a

cargo consolidator. Customers who do not have a cargo which can fill the container

fully opt for the services of LCL consolidator like Allcargo.

Allcargo is a LCL service provider and acts as a conduit between a shipping line and

its customers which primarily include Customs House Agents (CHAs), freight

forwarders, importers and exporters.

The Importance of LCL is increasing with the changing business practices like just-in-

time, low inventories, emergence of e-commerce etc which require frequent but

smaller shipments of cargo. LCL is also largely immune to economic recessions.

Further, shipping lines do not offer LCL services usually and these services are

handled by consolidators like ECU-Line (Allcargo).

Where does LCL stand in overall shipping business?

A customer who wants to transport container can either contact the shipping line

(Eg. Maersk, CMA, Hapag Lloyd ) directly or can use the services of the third party

freight forwarders (Eg. DHL, Panalpina, CH Robinson), who primarily deal in FCL (full

container load). Shipping lines can entertain customer directly too if the customer is

large in size.

The third party freight forwards are also called as NVOCCs (Non-vessel operating

common carriers) and these can be further divided into LCL and FCL NVOCC’s.



LCL stands for less than container load

FCL stands for full container load

Exhibit 5: The LCL Consolidation process

How big is the LCL market?

Globally, the LCL segment accounts for 10-15% of the total revenue generated by

forwarders, the remaining 85-90% is by FCL. LCL revenues stand at USD10-12b

(CY14), with an annual volume of 2.3 million TEUs. (twenty Feet Equivalent).

Niche opportunity:

LCL is a niche sub-segment within the shipping business and in

our view freight forwarders do not do LCL themselves as (a) it is a more tedious

process, involving interaction with a minimum of 10 entities per container and (b)

low scale versus FCL business.

Competitive scenario:

Top three (Allcargo, Vanguard and Shipco) LCL consolidators

contribute to about 40% of the neutral global LCL market. Other LCL operators in

India include Team Global and LCL Logistics.

Source: Company, MOSL

12 January 2016

Allcargo Logistics

LCL is expected to grow above industry average led by shift in global business

practices to just-in-time, shorter factory-to-fork time, ecommerce and high air

transport costs.

Sticky volumes:

LCL volumes tend to be sticky and are more immune to slowdown in

the overall container market. During economic recessions, a large part of FCL

volumes gets converted into LCL volumes.

LCL margins higher than FCL:

Allcargo realizations are typically cost plus basis, i.e.

the shipping freight is a pass-through and Allcargo charges 28-30% margin above it.

LCL offers margins up to 200-300 basis points higher than FCL.

Exhibit 6: Allcargo EBIT margin higher than other global FCL players

DHL

6.0%

4.5%

3.0%

1.5%

0.0%

2011

*Ocean segment EBIT margins

2012

2013

2014

Source: Industry, MOSL

Kuehne + Nagel

CEVA

Sinotrans

Allcargo

Evolving market dynamics to keep LCL volume growth high

Can Allcargo enter into FCL in a big way?



Allcargo focus on the LCL business is driven by the shipping market dynamics,

wherein it is already dominated by the large established companies. To gain a

foothold in a market dominated by such heavyweights would be an arduous

task, in our view.



While Allcargo too does FCL in a small way, but it is not its core business and is

done only on a case-to-case business as per requirement of its clients. 30% of

LCL volume for Allcargo comes from these big freight forwarders. However, the

company has realized that given its LCL network, it can selectively offer FCL

services to its existing and prospective clients without adding any major indirect

costs.



If Allcargo goes into a pure-play freight forwarding (FCL + LCL) then it will be

competing against its customers which are much bigger than Allcargo. It will also

be forced to offer the entire supply-chain solutions the likes of which are

offered by DHL and other players.

We model Allcargo’s MTO volume CAGR at 9% in FY15-18E driven by underlying

business dynamics and EBIT margin improvement from 4% to 4.6% helped by

superior negotiating with shippers, higher use technology in planning and improving

fill factor.

We model MTO volume growth at 9%

12 January 2016

Allcargo Logistics

Model high single digit organic volume growth:

While majority of the historical

growth in the MTO business is through acquisitions, the evolving global business

dynamics offer double digit volume growth possibility through organic growth too.

However, in order to further strengthen its market shares in some geographies like

US, China, Brazil and Africa, Allcargo can do further acquisitions in the MTO space in

our view. Focus could be also in strengthening its position in the countries where it

has presence but has room to improve its market share.

Exhibit 7: Model MTO volumes to grow at 9% CAGR

MTO volume ('000 teu)

19%

14%

-9%

200

CY09

238

CY10

337

FY12 -

15M

285

FY13

335

FY14

18%

497

542

26%

YoY (%)

422

456

FY15

FY16E

FY17E

FY18E

Source: Company, MOSL

Exhibit 8: Conservatively model marginal improvement in EBIT margin

EBIT (INRm)

4.5%

3.4%

4.9%

4.6%

3.8%

EBIT margin (%)

4.0%

4.1%

2,118

4.2%

2,435

4.6%

2,883

1,669

576

CY09

1,003

CY10

FY12 -

15M

1,484

1,558

1,896

FY13

FY14

FY15

FY16E

FY17E

FY18E

Source: Company, MOSL

12 January 2016

Allcargo Logistics

Domestic economic recovery augurs well for CFS/P&E

Steady growth led by port volumes and strong alliances with shipping lines



CFS/ICD business (7% of revenue, 25% of EBITDA) currently operating at 51%

utilization will see an uptick with improving port volumes and containerization trend.

We expect P&E segment (7% of revenue, 33% of EBITDA), which includes cranes,

project logistics and shipping to grow with higher infrastructure activity in India

through higher utilization. Switching to an asset light model in the P&E segment will

improve return ratios

We expect EBIT CAGR (FY15-18) of 13% in CFS/ICD and 18% in P&E.

Allcargo operates a total of 4 CFS (three locations - JNPT, Chennai and Mundra) and

2 ICDs (Pithampur and Dadri). The company has also started developing another CFS

at Kolkata which is expected to start operations in FY17. We expect Allcargo’s CFS

business to benefit from (a) Macro trends – Port volume growth and increasing

containerization, (b) its relationship with the shipping companies on account of MTO

business and (c) strategic location and (d) favorable EXIM mix. We model volume

growth at 8% CAGR through FY18 and EBITDA margin at 38.8%.

Exhibit 9: We model CFS volumes to grow at 8% CAGR from FY15-18

CFS volume ('000 teu)

60%

46%

227

174

275

285

64%

57%

44%

250

292

CFS utilization (%)

55%

317

60%

343

65%

371

Higher utilization of CFS capacity will drive volumes in FY15-18E

51%

CY09

CY10

FY12 -

15M

FY13

FY14

FY15

FY16E

FY17E

FY18E

Source: Company, MOSL



Macros supportive for strong growth ahead:

Container volume in India is

expected to be 2x by 2020, driven by EXIM trade and an increase in

containerization from the current 55% to >65% (versus developed countries’

average of 70%). The containerization growth will be driven by:

1. Growth in the typical containerized cargo like electronics, textiles, food

products, pharmaceuticals, machinery and paper, and other break-bulk

commodities like steel, cement, sugar and rice.

2. Availability of rail transit capacity post DFCs commissioning, expansion in the

container handling capacity at ports, CFCs, ICDs and inland waterways.

3. Multi-modal logistics park development.

12 January 2016

Allcargo Logistics

Exhibit 10: Increasing EXIM trade and containerization to keep container volume growth at ports healthy

Cargo traffic (mmt)

600

450

300

150

CAGR

(%)

1971-80: 3.8

1981-90: 7.0

1991-00: 6.7

2001-15: 5.3

Container traffic (mmt)

160

CAGR

(%)

1992-00: 17.5

2000-15: 9.8

120

Source: IPA, Industry, MOSL



Leveraging relationships in the LCL segment:

Indian CFS business while

competitive led by large number of players at each port location, the operators

who can ensure higher utilization will continue to benefit more. Typically,

majority of the CFS are located within the 10-20km from the port thereby

making it difficult to differentiate for the CFS operators to differentiate. We

believe, Allcargo’s large LCL business gives it an advantage as it can leverage its

relationships with shipping companies to attract more volumes.

CFS locations strategic:

Allcargo’s CFS presence in three ports is strategic in our

view as these ports handle 76% (FY15) of the India’s container volume. Further,

current utilization levels leave ample space for future volume growth. Even at

JNPT, given that it has utilized just 50% of the 2

CFS land, it is geared to benefit

for the planned doubling of the JNPT port capacity.

Exhibit 11: Allcargo CFS strategically located

Area (acres)

CFS

JNPT - 1

Capacity (teu)

144,000

77,000

120,000

52,000

36,000

Details

JNPT port handles 39% of India's container traffic

Mundra handles 24% of India’s container traffic

Chennai handles 4% of India’s container traffic

JNPT - 2

43 (25 developed)

Mundra

Chennai

ICD

Dadri

Pithampur

Landbank (undeveloped)

Nagpur

Hyderabad

Bangalore

110

Total

346

573,000

Source: Company, MOSL



EXIM mix and dwell time critical to ensure higher profitability:

We understand

~50% of the CFS revenue come from the ground rental linked to dwell time

(number of days container stored in the CFS). Typically, earnings from import

containers are more than export and Allcargo’s relationships with shipping

companies helps it to keep this ratio favorable. However, on the dwell time

front with improving infrastructure it has reduced from 12-13 days five years

12 January 2016

Allcargo Logistics

back to ~10 days now and we expect it to reduce further. The company is using

modern equipment at its CFS in the form of RTGs (Rubber-tire Gantry) replacing

the older reach stackers, leading to better turnaround time.

Exhibit 12: Listed player CFS EBITDA comparison: Allcargo profitability better than its peers

Allcargo

6,000

5,000

4,000

3,000

2,000

FY12

FY13

FY14

FY15

Source: Company, MOSL

GDPL

Navkar

Expect infra spend pick-up to drive P&E and contract logistics segment

Allcargo’s Project and Engineering (P&E) division comprises of (a) Crane leasing, (b)

project cargo transportation and (c) shipping. All these businesses are heavily

correlated with the domestic economic growth and investment cycle.

Allcargo’s P&E division post the heavy capex on the crane business was caught in the

downturn before resurrecting in the last two years. While the return ratios in this

business are subdued, going forward are expected to improve as the company plans

to adopt asset light model (will lease cranes instead of outright purchase).

Exhibit 13: Infrastructure related sectors contribute highest to the P&E segment revenue

Oil & Gas, 16%

Power, 32%

Eng. & Infra, 9%

Logistics, 7%

Cement & Metals,

Others, 25%

Port & CFS, 5%

Source: Company, MOSL

12 January 2016

Allcargo Logistics

Exhibit 14: P&E revenue growth lagged increase in capital employed led by slowdown in

the domestic economy

P&E Capital Employed (INRm)

1,053

579

105

184

574

745

409

135

P&E EBIT (INRm)

1,146

CY07

1,342

CY08

2,488

CY09

3,611

CY10

10,672

FY12 (15M)

10,660

FY13

9,762

FY14

9,014

FY15

Source: Company, MOSL

Exhibit 15: Snapshot of P&E and contract logistics businesses and business drivers

Sub-segments

Crane leasing

Details

Owns 140 cranes with total capacity

of 25,000 tonnes ranging from 45

tonnes - 750 tonnes

Owns 5 ships with an average

capacity of 8000 deadweight

tonnes, one has been chartered

Key drivers

Way forward

Investments in mega projects, Plans to lease instead of outright

wind power, etc.

purchase

Sagarmala Project, increase in Secure long-term

capacity of existing ports and increase margins

investment in new ports

Increase fleet size

contracts

and

Shipping

Project Cargo transport

Owns ~200 axles, 20 prime movers

INR 700mn Investments in infra, Plans to enter e-logistics, increase

particularly in power generation, asset utilisation and secure longer

cement and energy

term contracts

GST bill, Dedicated Freight

Introduce

Corridors, Make in India, FDI in

solutions

retail and marketing

Contract Logistics

Manage supply chains of customers

and work on projects using owned

logistics assets and in-house

management capabilities

innovative

logistics

Source: Company, MOSL

Cranes: Economic revival, wind energy investments to drive growth

Demand for cranes is expected to increase with economic revival and investments in

wind farms. Based on the industry interaction and peer comparison, we believe the

crane leasing margins can be >50% and would be one of the highest in Allcargo’s

P&E segment.

However, going forward as the company moves to a more asset light model by

leasing cranes rather than purchasing them, reported margins could be lower but

will improve overall returns. With the utilization rates already above 90%, further

growth will be driven by increased pricing power.

Coastal shipping focus to help the company post healthy returns

The government plans has targeted that by 2020, coastal shipping will account for

10% of the transportation from the current 7%. It has announced various projects

and financial incentives. These will directly lead to the growth of the coastal

shipping business. AllCargo is steadily increasing its fleet size (FY15 revenues at

~INR750m) to create barriers to entry and also plans to aggressively expand coastal

shipping.

12 January 2016

Allcargo Logistics

Project Cargo being driven by increase in infra spending

The segment growth is primarily driven by infrastructure spending and investment

in large scale projects. With government’s plan to significantly boost power

generation, cement and energy sectors in India, project cargo business is expected

to grow favorably.

Exhibit 16: Transport modal mix in India in comparison to other countries

Rail

Road

India

China

Water

Air

Europe

Source: KPMG, MOSL

Other segments: Contract Logistics (3PL) expected to grow post GST and

DFC

Contract logistics revenue contribution was negligible (compared to Allcargo overall

revenues) at ~INR120m in FY15, however we believe has a potential to grow

substantially driven by e-commerce, GST and DFC (dedicated freight corridor) led

opportunities. We believe the growth would be both organic as well as inorganic;

however timelines and opportunity size will emerge over the medium term.

12 January 2016

Allcargo Logistics

Expect large FCF deployment to be RoE accretive

Expect AGLL to invest on DFC and GST led opportunities



With current net debt/equity of ~0.3x and likely FCF of INR13b till FY18 (v/s MCap of

~INR46b, gross block of INR20b), AGLL is well positioned to play to its strengths of

value accretive acquisitions and invest in allied businesses.



We expect it to (a) further strengthen its hold on global LCL business through

opportunistic acquisitions, (b) invest in DFC and GST led opportunities.

Prudent balance sheet, high FCF creates opportunities

AGLL management has strong investment track record:

Allcargo has made more

than 8 acquisitions in the last 10 years primarily in the MTO space and has invested

significantly in the domestic CFS and P&E segment. These acquisition and

investments has helped AGLL to grow revenue, EBITDA and PAT at 26%/25%/19%

respectively. While the acquisitions has led to accretion of goodwill (INR8.7b) and

depressed RoE’s (ex-goodwill reported FY15 RoE improves from 13% to 24%), but

nevertheless its book value (adjusted for goodwill) has grown at 15% CAGR in the

last 8 years.

Exhibit 17: AGLL revenue/EBITDA/PAT grew at

26%/25%/19% since CY06

EBITDA (INRb)

PAT (INRb)

5.2

3.6

2.2

0.8

1.4

0.8

1.1

2.2

1.3

2.7

1.7

2.8

1.7

1.5

4.0

2.4

114

126

4.8

Exhibit 18: Book value CAGR at 15% impressive despite

acquisition led goodwill accretion

Reported Book value (INR/sh)

Bookvalue adjusted for goodwill (INR/sh)

142

151

0.6

CY06 CY07 CY08 CY09 CY10

FY12 FY13

(15M)

FY14

FY15

CY06 CY07 CY08 CY09 CY10 FY12 FY13 FY14 FY15

(15M)

Source: Company, MOSL

Large FCF – Increase dividend or invest aggressively?

While, there is a room to improve dividend payout (currently at 12.5% on

consolidated basis), we expect AGLL management to play to its strengths and opt for

more investment in the core and allied businesses.

Based on our AGLL’s capex understanding in the current businesses, we expect AGLL

to generate FCF of INR13b till FY18 (v/s MCap of INR46b, gross block of INR20b).

Further, its prudent net debt/equity of 0.3x (FY15 basis) gives room to raise debt if

any large investment opportunity comes up.

12 January 2016

Allcargo Logistics

Exhibit 20: Expect AGLL to generate cumulative FCF of INR13b by FY18 (INR b)

3.9

1.3

0.2

3.9

4.5

5.1

(1.2)

CY09

(2.5)

CY10

(2.5)

FY12

(15M)

FY13

FY14

FY15

FY16E

FY17E

FY18E

Source: Company, MOSL

Exhibit 21: AGLL to turn net cash based on current

maintenance apex plans

Net Debt / (Cash) (INRb)

Exhibit 22: Already prudent balance sheet position to

strengthen further

Net Debt/Equity (x)

0.5

0.1

0.2

0.4

0.5

0.3

0.1

-0.1

-0.2

-3

CY09 CY10 FY12 FY13

(15M)

FY14

-7

FY15 FY16E FY17E FY18E

Source: Company, MOSL

CY09 CY10 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

(15M)

Source: Company, MOSL

Expect AGLL management to pursue shareholder value accretive opportunities

We expect AGLL management to (a) further strengthen its hold on global LCL

business through opportunistic acquisitions, (b) invest in DFC and GST led

opportunities. Of its three business segments, we expect further investments in its

MTO and P&E segment as current CFS utilization leaves large scope of growth

without any capex requirement.

Exhibit 23: Analyzing investment opportunities

Cash deployment avenues

Increase dividend

CFS

MTO

Crane leasing

Coastal shipping

DFC, GCT led opportunities

Our view

While dividend payout can be increased marginally, AGLL shareholders could benefit more by investing

in new businesses given the management's investment track record

Given the current utilization levels, no need to commit further capex in CFS in the medium term

Focus on strengthening position in countries with high potential and where consolidation will be value

accretive

Changed business dynamics now make cranes available for leasing, so expect AGLL to sub-lease cranes

rather than outright purchase, thereby boosting return ratios

Large opportunity given government focus - can selectively add more ships

Recent senior management induction of Mr. Tulsiani could help in developing this business segment.

Can explore opportunities to develop its landbank (213 acres at Nagpur, Bangalore and Hyderabad) or

add more to pursue logistics parks opportunities or develop its contract logistics opportunities.

Source: MOSL

12 January 2016

Allcargo Logistics

Valuation and view

Initiate coverage with Buy



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.

We estimate EBITDA/PAT CAGR of 15%/23% through FY15-18E and return ratios

are expected to improve from ~13% to 17%-19% driven by improvement in

margins and reduction in capex intensity in the business.

Due to strong EBITDA/PAT growth driven by (a) consistent increase in volumes

and (b) increase in margins, we assign a PE multiple of 14x to Allcargo.

Our target PE is in line with the last ~10 year average PE; we expect 22%

earnings growth through FY18 v/s ~18% earnings growth since CY06 to FY15.

Based on our implied FY17 PE of 17.0x, AGLL is relatively undervalued by ~26%

when compared to Navkar and ~33% when compared to GDPL (adj.)

We value Allcargo Logistics at 14x FY18E EPS, and arrive at a target price of

INR243. Initiate coverage with a 'Buy'. The stock trades at 10.6x FY18EPS.

Exhibit 24: On an EBITDA basis, AGLL currently trades at a

~10% premium to its historical average

11.2

8.9

6.6

6.3

6.9

EV/EBITDA(x)

Avg(x)

Exhibit 23: AGLL currently trades at a 5% discount to its 10

years average P/E

13.7

9.9

13.2

P/E (x)

5 Yrs Avg(x)

10 Yrs Avg(x)

4.3

2.0

Source: Bloomberg, MOSL

Source: Company, MOSL

Exhibit 24: Allcargo currently trades at a discount to its peers

Company

Allcargo

Concor

Navkar

GDPL*

Gati

Blue Dart

Transport Corp

*(Adj. for 49% JV sh. in Rail)

M Cap

USD M

695

3,668

427

521

200

2,244

327

FY14

5.9

48.4

10.1

51.7

9.8

EPS

P/E (x)

FY15 FY16E FY17E FY15 FY16E

9.5

11.6 31.1 19.3 15.8

54.1 44.9 55.4 23.3 28.1

5.7

8.7

34.8

13.1

9.3

12.5 24.3 34.0

4.7

4.8

6.4

45.9 31.9

54.5 82.6 114.8 133.9 76.5

11.1 13.0 15.5 23.5 22.1

EV/EBITDA (x)

RoE (%)

FY17E FY15 FY16E FY17E FY15 FY16E FY17E

12.9 10.7

8.3

6.8

13.0 14.5 15.6

22.8 15.6 15.6 15.6 14.7 14.7 14.7

23.0

6.9

8.7

25.4 14.5 18.6 13.9 16.4 10.8 13.6

23.9 16.9 12.4

9.9

6.2

7.4

9.2

55.1 78.0 47.2 32.8 27.2 50.3 50.9

18.6 11.4 11.2

9.5

14.6 14.8 15.5

Source: Bloomberg, MOSL

12 January 2016

Allcargo Logistics

Key risks



Economic risks:

CFS and MTO businesses are closely linked to the global trade

volumes. Any slowdown in global trade, due to slowdown in global GDP growth

or due to the slowdown in key trade hubs like China, or due to other factors will

impact overall volumes growth.

Currency risks:

The MTO revenues are generated by subsidiaries based outside

India. While preparing the consolidated statements, the earnings are translated

into INR. Any fluctuations in forex will hence impact the financial statements of

the company.

Risk of impairment of goodwill:

Allcargo has reported more than INR8.5bn of

goodwill, due to the number of acquisitions it has done in the past. Any

impairment in the value of this goodwill will negatively impact the financial

statements of the company.

12 January 2016

Allcargo Logistics

Company background



Incorporated in 1993 by promoter Shashi Kiran Shetty, Allcargo Logistics (a part

of Avvashya Group) started operations as cargo handler at Mumbai port. Over

the years through organic and inorganic route it has become a leading

integrated logistics service provider with >USD1b in sales and ~883 permanent

employees (as on March 31, 2015). Majority of the company’s workers are

contractual,

Its key business divisions are global Multimodal Transport Operations (NVOCC,

LCL and FCL), domestic CFS/ICD operations and Project and Engineering division

(which includes Project Logistics, Equipment Hiring). It also provides contract

logistics services.

Allcargo, as a multimodal transport operator (MTO) under a single document

provides LCL and FCL forwarding services using multiple transport modes (sea,

road and rail). Its customers include Customs House Agents (CHAs), freight

forwarders, exporters and importers.

It has presence in 90 countries and 4,000 port pairs and operates 6 CFS/ICD in

India. It has yet to develop >200 acres of land banks at Nagpur, Hyderabad and

Bangalore.

Business Verticals

CFS: Container Freight

Station

ICD: Inland Container

Depot

MTO: Multimodal

Transport Operations

NVOCC: Non vessel

operating container carrier

LCL: Less than container

load

FCL: Full container load

12 January 2016

Allcargo Logistics

Exhibit 25: KEY MANAGEMENT



Mr. Shashi Kiran Shetty,

Chairman

and

Managing

Director

The promoter and the founder of Allcargo. He has led the growth

of the company from a freight forwarding agent to the world’s

2 largest LCL player with total revenues of INR 56bn. He has

more than 35 years of experience in the industry.



Mr. Adarsh Hedge,

Executive Director

The head of CFS business and corporate marketing of Allcargo.

He has more than 22 years of experience in the logistics industry.

He is a mechanical engineer.



Mr. Umesh Shetty,

CEO – Projects & Engineering

Solutions

Responsible for the growth of Projects & Engineering Solutions

division, Mr. Umesh Shetty has more than 20 years of experience

in cargo and logistics.



Mr. S. Suryanarayanan,

Director Finance & Executive

Director ECU-LINE

He has more than year 22 years of experience in the logistics,

chemicals and engineering sector. He had worked in Reliance

and Great Eastern before joining AllCargo. He is a Chartered

Accountant.



Mr. Prakash Tulsiani,

Executive Director & COO

Having served as the MD of Gujarat Pipavav Port and COO of

Gateway Terminals, Mr. Tulsiani brings with substantial

leadership experience in the ports industry. He has more than

three decades of experience.

Exhibit 26: MTO segment contributes the highest to revenue

Revenue share (%)

MTO

CFS

P&E

Exhibit 27: P&E segment contributes the highest to EBIT

EBIT share (%)

MTO

CFS

P&E

FY15

CY09

CY10

FY12 (15M)

FY13

FY14

FY15

CY09

CY10 FY12 (15M) FY13

FY14

Source: Company, MOSL

12 January 2016

Allcargo Logistics

Exhibit 29: Geographical revenue break-up for AGLL (% share)

Mediterranean

India

26%

Europe

25%

Africa

ANZ

America

Far East

25%

16%

Exhibit 30: Allcargo CFS and ICD locations

12 January 2016

Allcargo Logistics

Exhibit 31: Key timelines for AllCargo Logistics

Year

1993

1994

1995

1998

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

In June, acquired 33.8% stake in ECU Line

On December 8, changed company name to Allcargo Global

Logistics Pvt Ltd.

PE firm New Vernon acquired 6.42% in Allcargo for INR600m

(@~3x sales)

In Jan-06, hiked stake in ECU Line to 49.9% with an option to

increase further

Listed on BSE and NSE in June

In Jun-06, fully acquired ECU Line. With ECU Line revenues

4.3x of Allcargo, it became the world's No.2 NVOCC LCL firm,

after Vanguard.

In Dec-06, acquired freight forwarding arm (air and custom

clearance) of Thomas Cook - Hindustan Cargo for ~INR89m

In Apr-07 started Chennai and

Mundra CFS

Acquired P&E division of

Transindia Freight

In Feb-08, Blackstone took 10.38% stake through equity shares, FCCDs and warrants for ~INR2.4b (valued AllCargo at INR23b, 30%

premium to then share price)

In Sept-09, Blackstone increases stake to 14.99% by converting warrants.

Started 1st ICD at Pithampur

Started operations in 3PL

In April, raised USD23.5m via QIP

Acquired Hong Kong based NVOCC's for USD22m (operating

profit of USD3.6m): (1) 75% stake in Shanghai based and (b)

100% stake for Ningbo based.

Started ICD at Dadri in JV with

Concor

Started 2nd CFS at JNPT port

Through ECU Line acquired US based Econocaribe consolidators

for ~USD50m

Through ECU Line acquired 75% stake in Netherlands based FCL

Marine

Source: Company, MOSL

In Apr-11, acquired MHTC

Logistics

MTO

CFS

P&E and others

Incorporated on August 18, 1993 as a private limited company - Allcargo Movers (India) Pvt Ltd. Started as(a) cargo handling

operator at Mumbai port, (b) a shipping agency house and (c) provided freight forwarding services

Appointed as agents of ASIA Lines Ltd. a Mauritian Shipping

Line

Entered into LCL consolidation as agent of ECU Line in

Mumbai and Delhi

Obtained MTO licence from the Government of India in June

1998

Made strategic investments in ECU Line - Mauritius and

Middle East (Dubai).

Acquired 50% stake in ACM Lines (Pty) Ltd.

Entered into a JV with Transworld Logistics & Shipping

Services Inc

Started CFS at Kroploi near JNPT

Commissioned 2nd phase of its

JNPT CFS

Commissioned 3rd phase

expansion JNPT CFS

2011

2012

2013

Changed its name to Allcargo Logistics Ltd.

12 January 2016

Allcargo Logistics

Financials and valuations

Consolidated – Income Statement

Y/E March

Total Income from Operations

Change (%)

Operational Cost

Personnel Expenses

Other Expenses

Total Expenditure

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT after EO Exp.

Current Tax

Deferred Tax

Tax Rate (%)

Less: Minority Interest

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY12 (15M)

42,804

49.5

28,645

6,095

2,824

37,564

5,240

12.2

1,337

3,903

644

452

3,710

376

358

19.8

132

2,845

71.5

6.6

0.0

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

FY13

39,263

-8.3

27,194

5,634

2,835

35,663

3,600

9.2

1,474

2,127

453

662

2,335

320

192

21.9

126

1,697

-40.3

4.3

0.0

FY14

48,594

23.8

34,281

7,290

3,065

44,635

3,959

8.1

1,755

2,205

609

365

1,960

277

139

21.2

1,493

-12.0

3.1

0.0

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

56,288

15.8

39,609

8,566

3,279

51,454

4,834

8.6

1,574

3,260

601

526

3,185

629

22.0

2,412

61.5

4.3

0.0

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

FY16E

61,886

9.9

43,563

9,418

3,679

56,660

5,724

9.2

1,578

4,146

507

227

3,865

-39

3,826

842

22.0

2,897

22.0

4.7

0.0

FY16E

504

21,107

21,611

221

1,354

5,133

28,319

20,744

9,861

10,883

8,655

332

894

15,852

128

7,120

3,857

4,747

8,550

6,315

1,712

524

7,302

253

28,319

FY17E

68,256

10.3

48,047

10,388

4,057

62,492

6,422

9.4

1,617

4,805

417

359

4,748

1,045

22.0

105

3,598

22.9

5.3

0.0

FY17E

504

24,254

24,758

221

1,354

4,133

30,466

21,244

11,477

9,767

8,655

367

894

19,989

142

7,852

6,759

5,236

9,458

6,965

1,888

605

10,531

253

30,466

(INR Million)

FY18E

74,880

9.7

52,710

11,396

4,451

68,557

7,268

9.7

1,655

5,612

327

490

5,775

1,271

22.0

126

4,379

21.7

5.8

0.0

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

(INR Million)

FY18E

504

28,083

28,588

221

1,354

3,133

33,296

21,744

13,132

8,612

8,655

402

894

24,891

155

8,615

10,377

5,744

10,411

7,641

2,071

699

14,480

253

33,296

12 January 2016

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

Working Capital Ratios

Debtor (Days)

Creditor (Days)

Working Cap. Turnover (Days)

Leverage Ratio (x)

Net Debt/Equity (x)

0.5

0.4

0.5

0.3

0.1

-0.1

-0.2

17.0

17.3

11.0

11.5

8.8

9.5

13.0

13.4

14.4

15.9

15.5

17.6

16.4

19.1

19.3

11.7

2.4

0.9

10.7

0.5

15.8

10.3

2.1

0.8

8.3

0.7

12.9

8.9

1.9

0.6

6.8

0.8

10.6

7.7

1.6

0.5

5.4

1.0

11.3

16.6

59.1

0.8

8.0

6.7

12.6

62.9

0.7

13.0

5.9

12.9

71.1

0.8

14.8

9.5

15.8

75.7

1.0

12.5

11.6

17.9

85.7

1.2

12.5

14.3

20.7

98.2

1.5

12.5

17.4

23.9

113.4

1.8

12.5

FY12 (15M)

FY13

FY14

FY15

FY16E

FY17E

FY18E

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

12 January 2016

FY12 (15M)

3,710

1,337

551

-930

-1,353

3,315

153

3,468

-5,991

-2,524

1,014

-414

-5,391

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

-1,757

-563

-538

-74

-271

-1,446

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

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

-2,509

-550

-310

-589

-3,957

1,647

1,738

FY16E

3,826

1,578

280

-842

-462

4,380

-530

3,850

227

-303

-1,000

-507

-363

-87

-1,958

2,119

1,738

3,857

FY17E

4,748

1,617

-1,045

-327

5,050

-534

4,516

359

-175

-1,000

-417

-451

-105

-1,973

2,902

3,857

6,759

(INR Million)

FY18E

5,775

1,655

-163

-1,271

-331

5,666

-536

5,131

490

-46

-1,000

-327

-549

-126

-2,002

3,618

6,759

10,377

REPORT GALLERY

RECENT INITIATING COVERAGE REPORTS

Disclosures

This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and

Allcargo Logistics

its

may be distributed by it and/or

affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or

inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to

you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment

objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek

professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for

future performance, future returns are not guaranteed and a loss of original capital may occur.

MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some

companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are

seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors

on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and

interpreting information. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business.

MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt

generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates

may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment

decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest.

MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies

mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an

advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing

whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent

conflict of interest in some of the stocks mentioned in the research report

Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match

with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various

objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any

and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and

harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources

believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription

service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we

would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt

and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in

this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of

merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for

any necessary explanation of its contents.

Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for

products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.

Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.

Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this

report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412

There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or

indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive

compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues

Analyst Certification

Disclosure of Interest Statement



Analyst ownership of the stock



Served as an officer, director or employee

ALLCARGO LOGISTICS

A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes

Regional Disclosures (outside India)

For U.S.

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which

would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a

registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the

absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This

document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be

engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by

the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal

Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore,

may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC)

pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with

Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any

investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.”

Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in

Hong Kong & are not conducting Research Analysis in Hong Kong.

For Hong Kong:

For Singapore

Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a

subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the

Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.

In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Kadambari Balachandran

Email : kadambari.balachandran@motilaloswal.com

Contact : (+65) 68189233 / 65249115

Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

12 January 2016

Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025

Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com

Motilal Oswal Securities Ltd