Allcargo Logistics
BSE SENSEX
23,554
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm/ Vol m
Free float (%)
S&P CNX
7,163
AGLL IN
252.1
40.3 / 0.6
218 / 128
-10/12/15
46
30.1
15 February 2016
Q3FY16 Results Update | Sector: Logistics
CMP: INR160
TP: INR243(+52%)
Buy
Macros keep EBITDA/PAT subdued, CFS shines; high FCF keeps balance
sheet strong
Financials & Valuations (INR b)
2016E 2017E 2018E
Y/E Mar
Net Sales
56.2
67.6
74.2
EBITDA
5.3
6.4
7.2
PAT
2.9
3.6
4.4
EPS (INR)
11.5
14.4
17.4
Gr. (%)
20.8
25.0
21.1
BV/Sh (INR)
85.5
98.1 113.3
RoE (%)
14.3
15.7
16.5
RoCE (%)
15.2
17.5
19.1
P/E (x)
13.9
11.1
9.2
P/BV (x)
1.9
1.6
1.4
Estimate change
TP change
Rating change
AGLL’s revenue declined 7% YoY and 9% QoQ to INR13.4b in 3QFY16 primarily
impacted by decline in MTO business. Reported EBITDA stood at INR1.2b (-13%
YoY, -14% QoQ); margins declined to 8.9% in 3QFY16 from 9.5% in 3QFY15. PAT
stood at INR0.6b (-14% YoY, -15% QoQ). For 9MFY16, Allcargo’s PAT grew 13% YoY
and its balance sheet continues to remain strong with debt/equity of 0.14 (net debt
of INR2.9b).
MTO volumes up 8% YoY in tough operating environment:
In the backdrop of
excess shipping capacity, Allcargo’s MTO volumes were decent with volumes at
116,168 TEUs (+8% YoY, -1% QoQ) in 3QFY16. Revenues stood at INR11b (-9%
YoY, -11% QoQ) primarily due to decline in freight rates (a pass through
component). While, EBIT stood at INR539m (-12% YoY, -14% QoQ) and margin
at 4.9% (5.1% in 3QFY15, flat QoQ), impacted by expansion costs for new
offices in Americas, Middle East & South East Asia.
CFS business performing strongly:
CFS volumes stood at 74,251 TEUs (+5%
YoY, flat QoQ). CFS revenue stood at INR1.2b (+8.5% YoY, flat QoQ).
Realizations stood at INR15,461/TEU as compared to INR14,566/TEU in
2QFY16. Realizations increased in 3QFY16 primarily due to handling of special
cargo and long standing containers. EBIT/TEU stood at INR5,172/TEU as
compared to INR4,570INR/TEU in 2QFY16 driven by improved efficiencies.
P&E business margins impacted by ship repairs:
While P&E revenue increased
6% YoY to INR1,399m, EBIT declined 45% to INR94m, impacted by (a)
additional depreciation on two new ships that were acquired in 2QFY16, (b)
repair of two ships and (c)INR110m derivative income in 3QFY15. Its crane
utilization continues to be above 90%.
Valuation and view:
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.
We value Allcargo Logistics at 14x FY18E EPS, and arrive at a target price of
INR243. Maintain buy. The stock trades at 10.6x FY18EPS.
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.
Harshad Borawake
(HarshadBorawake@MotilalOswal.com); +91 22 3982 5432
Rajat Agarwal
(Rajat.Agarwal@MotilalOswal.com); +91 22 3982 5558

Allcargo Logistics
Exhibit 1: AGLL 3QFY16 earnings snapshot (INR m)
1QFY15
Volume Details
MTO Volumes (TEU)
CFS/ICD Volumes (TEU)
Financial Summary (INRm)
MTO
CFS/ICD
P&E
Others
Net Revenue
Reported EBITDA
EBITDA margin
Depreciation
EBIT
Interest
Other Income
PBT before exceptionals
Exceptionals
PBT before exceptionals
Tax
Tax rate (%)
PAT
PAT margin (%)
101,937
72,930
2QFY15
108,874
75,398
3QFY15
107,261
70,587
4QFY15
104,128
72,664
1QFY16
113,410
78,727
2QFY16
117,574
77,027
3QFY16 YoY (%) QoQ (%)
116,168
74,251
8
5
-1
-4
11,309
907
1,165
78
13,206
1,214
9.2%
427
787
164
83
706
34
673
159
23.6%
490
3.7%
12,500
1,021
1,267
70
14,618
1,225
8.4%
391
835
141
147
841
48
793
132
16.6%
636
4.4%
12,101
1,059
1,322
93
14,317
1,359
9.5%
372
987
140
116
962
34
928
187
20.1%
718
5.0%
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%
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%
751
5.1%
12,323
1,122
1,382
84
14,681
1,371
9.3%
422
949
108
73
913
(10)
923
178
19.3%
725
4.9%
10,964
1,148
1,399
109
13,392
1,183
8.8%
386
797
115
125
807
39
769
162
21.1%
615
4.6%
-9
8
6
17
-6
-13
4
-19
-18
8
-16
15
-17
-13
-14
-11
2
1
30
-9
-14
-8
-16
6
72
-12
-492
-17
-9
-15
Source: Company, MOSL
Key takeaways from concall
Globally LCL freight rates have nearly reached FCL freight rates. However, the
company guided that since LCL players also provide value-added services,
volumes are less likely to see a shift to FCL providers/shipping lines.
The company incurred INR1.3b expenses this quarterly primarily related for
business expansion and re-branding its offerings in the MTO segment.
During the quarter, two vessels were idle for a period of 10 days due to repair
work.
Allcargo had earlier announced plans to start CFS operations in Kolkata.
Operations are expected to commence in late 2016/early 2017. The CFS will
have a total planned capacity of 100,000 TEUs. Land for the CFS has been leased
from the port authority on a long-term basis.
Allcargo has announced plans to purchase controlling stake in CCI infrastructure,
a contract logistics company specializing in white goods, chemicals,
pharmaceuticals.
Allcargo board has approved an enabling resolution to raise INR3b through debt
for funding future expansion. However, no guidance was given on any particular
usage of these funds. Total FCF generated in the 9MFY16 period stood at
INR2.7b.
15 February 2016
2

Allcargo Logistics
Exhibit 2: MTO volumes (TEUs) increased 8% YoY and
declined 1% QoQ in 3QFY16
MTO Volumes (TEUs)
113,410
108,874
101,937
107,261
104,128
117,574
116,168
Exhibit 3: Realizations declined 16.3% YoY and 10.0% QoQ in
3QFY16; EBIT declines 2.8% QoQ
in INR '000/TEU
4.9
5.1
Realizations
5.7
5.2
EBIT (RHS)
5.3
4.6
111
115
113
114
2.1
110
105
94
Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16
Source: MOSL, Company
Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16
Source: MOSL, Company
Exhibit 4: CFS/ICD volumes (TEUs) increased 5.2% YoY and
declined 3.6% QoQ in 3QFY16
CFS/ICD Volumes (TEUs)
75,398
72,930
70,587
72,664
78,727
77,027
74,251
Exhibit 5: Realizations increased 3.2% YoY and 6.1% QoQ in
3QFY16; EBIT increased 18.1% YoY and 13.2% QoQ
in INR '000/TEU
Realizations
EBIT (RHS)
5.2
4.4
4.0
3.3
12
3.3
13
15
14
14
15
15
4.2
4.6
Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16
Source: MOSL, Company
Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16
Source: MOSL, Company
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 can also look at monetizing its domestic land bank to
benefit from upcoming rail DFC (dedicated freight corridor) and GST reform.
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.
We value Allcargo Logistics at 14x FY18E EPS, to arrive at a fair value of INR243.
Maintain Buy. The stock trades at 11.1x/9.2x FY17/FY18EPS.
15 February 2016
3

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
41
5
3
47
9
2
Exhibit 7: Regional MTO revenue share (in %) – America’s
share improved rapidly due to acquisitions
India
Far East
Mediterranean
6
37
3
21
18
2
13
CY09
5
35
2
23
18
3
14
CY10
Africa
ANZ
5
32
2
26
17
3
16
FY12 (15M)
5
29
3
25
19
3
16
FY13
America
Europe
4
30
3
24
24
2
13
FY14
6
30
3
19
29
0
12
FY15
22
21
17
15
-
-
29
28
28
26
8
-
-
17
18
14
12
-
3
7
3
3
3
1
2
0
1
4
3
3
3
3
2
2
2
2
CY06 CY07 CY08 CY09 CY10 FY12 FY13 FY14 FY15
(15M)
Source: Company, MOSL
34
-
32
-
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
456
497
542
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 FY16E FY17E FY18E
15M
Source: Company, MOSL
Source: Company, MOSL
Exhibit 10: Expect CFS volumes to grow at 8% CAGR at FY15-
FY18E
CFS volume ('000 teu)
60%
46%
227
275
285
64%
57%
44%
250
CFS utilization (%)
51%
292
55%
317
60%
343
65%
371
Exhibit 11: P&E revenue growth lagged increase in capital
employed led by slowdown in domestic economy
P&E Capital Employed (INRm)
1,053
579
105
184
574
P&E EBIT (INRm)
745
409
135
174
CY09 CY10 FY12 - FY13
15M
FY14
FY15 FY16E FY17E FY18E
1,146
CY07
1,342
CY08
2,488
CY09
3,611 10,672 10,660 9,762
CY10FY12 (15M)FY13
FY14
9,014
FY15
Source: Company, MOSL
Source: Company, MOSL
15 February 2016
4

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

Allcargo Logistics
Financials and Valuations
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
2010
28,633
38.9
2,717
9.5
550
2,167
195
266
0
2,239
480
21.4
100
1,659
1,659
27.7
2010
261
11,528
11,789
3,778
408
16,238
10,429
2,338
8,091
560
1,319
7,273
70
2,528
1,430
3,245
4,397
3,853
543
2,876
16,238
2012
42,804
49.5
5,238
12.2
1,337
3,901
644
452
0
3,709
734
19.8
132
2,844
2,844
71.4
2012
260
14,638
14,898
7,654
753
23,617
16,358
3,801
12,557
854
1,071
9,369
125
3,576
1,341
4,327
4,815
4,431
383
4,555
23,617
2013
39,263
-8.3
3,562
9.1
1,474
2,088
414
662
0
2,335
512
21.9
126
1,697
1,697
-40.3
2013
252
15,604
15,856
7,267
943
24,500
18,850
5,163
13,687
139
1,859
9,641
111
3,825
1,382
4,324
5,429
4,810
619
4,212
24,500
2014
48,594
23.8
3,913
8.1
1,755
2,159
563
365
0
1,960
416
21.2
51
1,493
1,493
-12.0
2014
252
17,679
17,931
9,921
1,045
29,361
20,528
7,094
13,434
236
1,902
11,675
114
5,715
1,647
4,199
6,938
6,336
602
4,737
29,361
2015
56,288
15.8
4,754
8.4
1,574
3,180
535
526
0
3,171
700
22.1
73
2,399
2,399
60.6
2015
252
18,826
19,078
6,134
1,101
26,532
20,244
8,283
11,961
302
894
12,648
117
6,476
1,738
4,318
7,928
7,301
627
4,720
26,532
2016E
56,154
-0.2
5,339
9.5
1,560
3,779
440
394
79
3,813
772
20.2
47
2,994
2,994
24.8
2016E
504
21,053
21,557
5,134
1,101
28,011
20,744
9,843
10,901
302
894
14,993
115
6,460
4,110
4,307
7,732
7,217
516
7,260
28,012
2017E
67,643
20.5
4,262
6.3
1,617
2,645
361
368
0
2,651
1,052
39.7
105
1,494
1,494
-50.1
2017E
504
24,222
24,726
4,134
1,101
30,181
21,244
11,459
9,785
363
894
20,028
144
7,782
6,914
5,189
9,543
8,935
608
10,485
30,181
(INR Million)
2018E
74,231
9.7
4,677
6.3
1,655
3,022
283
497
0
3,235
1,274
39.4
126
1,835
1,835
22.8
Balance Sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
(INR Million)
2018E
504
28,062
28,566
3,134
1,101
33,021
21,744
13,114
8,630
399
894
24,950
158
8,540
10,558
5,694
10,506
9,805
700
14,444
33,021
15 February 2016
6

Allcargo Logistics
Financials and Valuations
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2010
6.6
8.8
46.9
1.6
27.6
2012
11.3
16.6
59.1
0.8
8.0
2013
6.7
12.6
62.9
0.7
13.0
2014
5.9
12.9
71.1
0.8
14.8
27.0
12.4
2.2
1.0
12.4
0.5
15.3
17.0
1.7
32
1
50
0.2
2010
2,717
189
-376
-653
88
1,966
-4,425
-2,459
380
232
-3,813
1,047
1,707
-195
-199
2,361
513
916
1,430
17.0
17.3
1.8
30
1
43
0.5
2012
5,238
359
-1,353
-930
153
3,468
-5,991
-2,524
1,014
-414
-5,391
0
3,009
-556
-620
1,834
-89
1,430
1,341
11.0
11.3
1.6
36
1
47
0.4
2013
3,562
617
-22
-634
-278
3,244
-1,896
1,348
52
88
-1,757
0
-563
-538
-345
-1,446
41
1,341
1,382
8.8
9.3
1.6
43
1
50
0.5
2014
3,913
334
-195
-373
-572
3,107
-1,290
1,817
-237
-2,665
-4,192
0
2,732
-586
-797
1,350
265
1,382
1,647
2015
9.5
15.8
75.7
1.0
12.5
16.8
10.2
2.1
0.8
9.4
0.6
13.0
13.1
2.1
42
1
53
0.3
2015
4,754
484
113
-478
-573
4,300
-442
3,858
1,218
-1,028
-252
0
-2,509
-550
-898
-3,957
91
1,647
1,738
2016E
11.5
17.7
85.5
1.2
12.5
13.9
9.0
1.9
0.7
7.7
0.7
14.3
15.2
2.0
42
1
55
0.1
2016E
5,339
-80
-168
-772
0
4,319
-499
3,820
0
394
-105
0
-1,000
-440
-403
-1,842
2,372
1,738
4,110
2017E
14.4
20.8
98.1
1.5
12.5
11.1
7.7
1.6
0.6
5.9
0.9
15.7
17.5
2.2
42
1
54
-0.1
2017E
4,262
2,130
-421
-1,052
0
4,919
-562
4,357
0
368
-194
0
-1,000
-361
-560
-1,921
2,804
4,110
6,914
2018E
17.4
24.0
113.3
1.8
12.5
9.2
6.7
1.4
0.4
4.6
1.1
16.5
19.1
2.2
42
1
54
-0.2
Cash Flow Statement
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
(INR Million)
2018E
4,677
2,555
-315
-1,274
0
5,643
-535
5,108
0
497
-39
0
-1,000
-283
-677
-1,960
3,644
6,914
10,558
15 February 2016
7

Allcargo Logistics
Corporate profile
Company description
Exhibit 1: Sensex rebased
Incorporated in 1993, Allcargo logistics operates in
MTO,CFS/ICD and Project & Engineering services. It also
provides contract logistics services. Allcargo’s MTO
operations are present in more than 90 pairs of countries.
It operates 6 CFS/ICD in India and has landbanks at
Nagpur, Hyderabad and Bangalore.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Sep-15
69.9
0.1
6.2
23.8
Jun-15
69.9
0.0
5.9
24.2
Sep-14
69.9
0.0
13.0
17.1
Exhibit 3: Top holders
Holder Name
BLACKSTONE GPV CAPITAL PARTNERS
MAURITIUS V-ALTD
BLACKSTONE GPV CAPITAL PARTNERS
(MAURITIUS) V-K LTD
BLACKSTONE GPV CAPITAL PARTNERS
(MAURITIUS) V-L LTD
NEW VERNON PRIVATE EQUITY LIMITED
ACACIA PARTNERS, LP
% Holding
4.4
4.4
3.8
2.5
2.3
Source: Capitaline
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
Arathi Shetty
Keki Elavia
J Ramachandran
Name
Akhilesh Gupta
Hari L Mudra
M P Bansal
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)
FY16
FY17
FY18
MOSL
forecast
11.5
14.4
17.4
Consensus
forecast
13.5
16.2
19.0
Variation (%)
-15.0
-10.8
-8.6
Source: Bloomberg
15 February 2016
8

Allcargo Logistics
NOTES
15 February 2016
9

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