Fundamental Analysis Of Gateway Distriparks: We used to send messages via telegrams and posts, but these days we order online and have things delivered to our homes or sent to others as couriers. The use of technology, rising population, and rising income standards are all responsible for this significant improvement.

In this Fundamental Analysis Of Gateway Distriparks, one of the major players in the logistics space, we look at its business, financials & more.

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Fundamental Analysis Of Gateway Distriparks

Gateway Distriparks company Logo

Company Overview

The company was incorporated in 2005. Its managing director and chairman, Prem Kishan Dass Gupta, holds the top seat in the company. It holds a network of 31 trainsets with 500+ transportation services and first- to last-mile connectivity across India. They offer a variety of logistics-related services, including container yards, ship-to-rail, reefer services, road transportation, domestic rail, and EXIM rail.

Segment Analysis

Intermodal container logistics is the company’s only source of revenue. Rail transport accounted for 63.80% of revenue, road transport accounted for 3.45%, container storage, handling, and ground rent accounted for 32.20%, and others accounted for 0.55%.

Merger Details

In 2021, three companies merged to form Gateway Rail Freight Limited, Gateway Distriparks Ltd, and Gateway East India Private Limited. It was delisted, and on March 22, 2022, it was relisted as Gateway Distriparks Limited. The goal of the merger is to simplify statutory and regulatory work, improve earnings, cash flows, and debt servicing, and create shareholder value by expanding the asset base. 

Industry Overview

The Indian logistics sector has a huge amount of growth potential. The Indian government even launched the PM Gati Shakti Program to improve supply chain management and connect various aspects of locations to assist manufacturers and other industries.

The logistics sector holds 13–14% of GDP.  The majority of logistics costs are due to rising fuel prices, vehicle maintenance, labor, and packaging. Lowering the cost will help the industry and end users alike, as logistics make up 8–9% of the GDP in other large economies.

Building hubs and effectively managing supplies will greatly benefit other industries and guarantee efficiency and cost savings. A proper frequency plan will improve the sector’s efficiency and address issues. New railway lines, waterways, and other modes of transportation can help reduce prices in high-volume trade.

Disclaimer: The financials compared are the data of amalgamated companies from FY19 to FY23.

Gateway Distriparks – Financials

Revenue and Net Profit

The company reported Rs. 1,420.94 crore as against Rs. 1,373.66 crore in FY22, indicating an increase of 3.44%. The lease term agreement of Punjab Conware impacted revenue, and the company’s revenue growth trajectory is upside at a CAGR of 13.15% for 5 years even after the COVID lockdown.

Net profits increased by 8% to Rs. 241.90 crore in FY23 from Rs. 223.82 crore in FY22. Interest payments and depreciation costs were reduced, which helped the company’s profitability.

Financial YearRevenue (Cr.)Net profit (Cr.)
2022-23₹ 1,420.94₹ 241.90
2021-22₹ 1,373.66₹ 223.82
2020-21₹ 1,179.32₹ 94.43
2019-20₹ 868.65₹ 91.26
2018-19₹ 867.41₹ 111.32
CAGR (4 Years)13.15%21.51%

Profit Margins

Operating profit margins have remained stable over the last five years, averaging 24.60%. The margins were impacted in FY23 due to an increase in variable costs, such as rail haulage charges.

Despite a decrease in OPM in FY23, net profit margins rose to 17.02% as a result of lower depreciation and interest costs in comparison to FY22.

Financial YearOPM (%)NPM (%)
2022-2325.98%17.02%
2021-2226.88%16.29%
2020-2126.58%8.01%
2019-2020.38%10.51%
2018-1923.18%12.83%
Average (4 Years)24.60%12.93%

Return Margins

RoE has decreased to 14.17% in FY23 from 14.39% in FY22. The average stood at 17.53% over 5 years. RoE has been fluctuating, returns are not promising, and returns have not yet reached pre-covid levels of 25.61% in FY19.

RoCE was 13.45% in FY23, up from 13.19% the previous year. The average stood at 13.97%. When the RoCE is lower than the RoE, it indicates that the shareholders are getting a better return, but the debt is not being used properly.

Financial YearRoE (%)RoCE (%)
2022-2314.17%13.45%
2021-2214.39%13.19%
2020-2110.04%13.23%
2019-2023.46%12.93%
2018-1925.61%17.08%
Average (4 Years)17.53%13.97%

Debt Analysis

The trend for debt to equity is declining following a peak in FY21. The reduction in debt will help the company achieve more profitability and margins.

The interest coverage ratio for FY23 is 6.34 times, an increase over FY22’s 4.21 times. The rise in the ratio is due to a reduction in interest costs and growth in profitability. 

In the long run, debt reduction will improve the company’s financial performance and yield higher returns for investors, as the average stood at 0.28.

Financial YearD/EInterest Coverage
2022-230.246.34
2021-220.314.21
2020-210.382.42
2019-200.264.62
2018-190.2410.4
Average (4 Years)0.285.59

Fundamental Analysis of Gateway Distriparks – Key Metrics

Let us look at some of the Key Metrics of Gateway Distriparks Ltd.

ParticularsAmountParticularsAmount
CMP₹ 105Market Cap (Cr.)₹ 5,173.81
EPS₹ 4.91Stock P/E17.72
RoCE13.45%RoE14.17%
Promoter Holding32.32%FII Holding12.85%
Debt to Equity0.24Price to Book Value2.36
Enterprise Value (Cr)₹ 4,702.41Dividend Yield (%)3.19%

Future Plans Of Gateway Distriparks

  • The acquisition of Kashipur Infrastructure and Freight Terminal Private Limited, which operates an inland container depot, will help the company expand its business services, increase volumes, reduce costs, and connect last-mile delivery.
  • The company is expected to add more rail-linked depots in North and Central India. A dedicated freight corridor to the west would assist the company in increasing efficiency in time and loadability, as well as lowering logistical costs such as container double-stacking hubs.
  • Showman Logistics, a Gateway associate company, anticipates growing the expansion even more by investing in capacity expansion, especially for e-commerce and pharmaceutical deliveries, with the assistance of 5PL services, which offer end-to-end logistic services.
  • The company expects to increase its volume in the inland container depot segment following the acquisition of a Greenland field near Jaipur, which it expects to open by the end of FY24.

Conclusion

As we are at the conclusion of the fundamental analysis of Gateway Distriparks, we look into it in brief. The company has moderate revenue growth, debt is decreasing, and it needs to gather opportunities and improve cost efficiency to make a difference in the company’s financial stability.

Government support to enhance supply chain management can be advantageous to the logistics company. How do you feel about the future of the company? Does the company have potential? Let us know your comments below.

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Written by Santhosh

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