Hello ValuePickr forum members,
Would love to hear your views on KTIL for the long term. There are 4 triggers for this company in the next 6-8 quarters that will more than triple its revenues.
Our first research report here - bit.ly/1lvhJI6.
Pls comment.
)- Harbin
Hello Harbin
I am the small investor these reports and services normally target so here’s my feedback.
If I may point out, it looks more like a ’ stock story’ than a research report.
It would be better if you can capture the most important points and maybe list some of the risks that can topple this stock for good and list down the same. preferably here itself.
While Kesar Terminals may do well in the future, you havent provided any data points to help us understand the story better.
How exactly is the growth coming? what’s the projected capacity ? how’s this going to be financed? 3x in 3 times revenue growth is a bit vague.
What makes you say the dividend payout is strong(15 %)? are you expecting it to go up ? why will they do that at the start of a capex cycle for them ?
The AR 2012/13 talks of a 108 crore funding being tied up with Dena Bank as lead. How will that impact the balance sheet strength?
Also their Kandla terminal seems to be fully utilized and only better realizations can bring in higher revenue from there?
Also the company seems to be amidst a huge expansion drive which (if successful) may bring in all the revenues and rerating your report mentions.
But after reading this report, I have to take a leap of faith if i am to buy based on it.
This is simply not the Valuepickr way I feel !!
Cheers
Harbin and Ranjith,
I liked reading the report. Such businesses indeed should be valued much higher than usual logistics businesses. Reasons: strong entry barrier and strong demand. But I believe the expansion will not happen in Pipavav and Kakinada. That is because the full attention is on the October launch of their multimodal logistics hub at Pawarkheda, about 7 km from Itarsi. NOw we know that Itarsi is the centre of india a far as railway movement is concerned. KTIL has about 4 kms of railway sidings there. Railway siding is equivalent of port for a train. You can’t load/unload unless there is a platform. Itarsi has excess passenger traffic and yet faces pressure from freight movement. The KTIL project will reduce pressure on Itarsi, where the railways will close the freight movement once KTIL projects gets going. This is a VERY profitable business, provided there is enough rakes movement. I believe this project will take KTIL to the next level, with logical effect on share price. You may buy at this price.
Cheers,
Anil
KTIl belongs to Kesar Sugar group which runs a distillery n Sugar mill at Baheri dusty Bareilly in UP for last 70 odd years. The co was spun out of the sugar mill and has performed nicely since then. This longevity also gives some comfort factor about Kilachand but we need to find out more.
Is the logistics business somewhat similar to Arshiya Intl n in what ways is the business different n superior to it?
Some very experienced n informed investors with decades of experience are positive on KTIL so that also gives a comfort factor.
We need to explore more from POV of new Itarsi situated business will perform n can create wealth if things work out as planned??
Valid points, we believe that KMLL could also be demerged by 2017 to form a different entity.
Again - the story is the on the triggers of KMLL, Pipav and Kakinada terminals (read last 3 ARs) that will drive the growth.
The cash generated by KTIL is huge - it will be able to repay any debt it has taken for KMLL and other expansion plans.
Harbin Consultants,
Thanks for using ValuePickr Forum.
However please stick to the guidelines or your membership may be reviewed/suspended.
If you are someone who provides unbiased reports, you should have refrained from making highly optimistic forecasts -tripling revenues etc. - without bothering to lay out the investment case with enough details.You are requested to bring out the positives, negatives, entry barriers, risks in this thread itself.
Please initiate the stock investment hypothesis in full details in the thread here. Merely writing 2 lines and pointing to external links is being seen as undue promotion.
Members have been asked before to refrain from replying/encouraging any posts that do not adhere to guidelines. You have a duty of upkeep of the standards VP lives up to. Your repeated encouragement of such violations is being noted - please remember it is actively discouraged.
Sure, our intention was not promotional, but more of getting to start a discussion. I will avoid providing any links outside. Overall, I do find this place to be with people having long term views - 3-5 years or more. Hence the interest.
details.You
I had looked into Kesar Terminals a while back but considering that their current assets are lower then current liabilities, it didn’t make sense for me to invest. I’ll take a re-look only when the balance sheet improves.
few questions :
1). are these liquid terminals exclusive ? If yes, that’s a huge moat - if not, that can mean significant pressure on long term profitability
2). what arrangement do they have with the port ? are they a vendor/partner and is that arrangement exclusive ?
3). what has been the volume of liquids flowing through kandla port and what market share do they have ?
One of the things I would be very very wary about in the logitics space is that because of some fortuituous happenings in the past, a lot of companies have vantage land and it looks like they have a “moat” but then they use all the money and waste it away by making poor location/customer choices.
What is the promoter’s credentials in the logistics business ? Is it just an opportunistic move or do they have professionals on board to help them through ?
Dear all,
After studying this company and looking at its balance sheet, roce levels, profit margins, I made a decision to enter into this stock. My view is that the company has lot of expansion in its horizon.The decision came after one of my friend(he is a subscriber at moneytimes) passed me a big write up on kesar terminals. The target listed @ p/e 20 for now.I am copy and pasting a part of the original paid analysis( dated 18th aug).Hope its helpful
KTILâs 2 Bulk Liquid Chemical Terminals at Kandla, Gujarat has a combined capacity of 127000 KL across 64 tanks including specialized tanks like stainless steel tanks, tanks equipped with heating and insulation facilities and coated tanks that store speciality products. It is awaiting approvals from the concerned authorities to add 7000 KL capacity at its Terminal 1, Kandla. Last year, it converted two of its existing Mild Steel (MS) Tanks to Stainless Steel (SS), which contribute higher revenues. **Subsidiary: **KTIL has a subsidiary called Kesar Multimodal Logistics Ltd (KMLL). **Expansion Plans: **KTIL plans to grow its liquid storage business gradually by venturing into the two new ports at Pipav in Gujarat and at Kakinada in AP. It is a new entrant and an early entrant into the Composite Logistics Hub project that started in 2011 and is expected to go live before the end of 2014. The company got this land at a very strategic location at the mid points of the Indian subcontinent. Composite Logistics Hub: In September 2011, KTIL received a Letter of Award (LOA) from the Madhya Pradesh State Agricultural Marketing Board (Mandi Board) for setting up a Composite Logistics Hub at Pawarkheda in District Hoshangabad of Madhya Pradesh on a Design, Build, Finance, Operate and Transfer (DBFOT) basis through a Public Private Participation (PPP) model. The execution of the project shall be through a special purpose vehicle (SPV) by incorporating a new company i.e. Kesar Multimodal Logistics Ltd, jointly by the company and Kesar Enterprises Ltd (KEL). It has taken possession of about 10 acres of land at Kakinada port in Andhra Pradesh and has commenced initial site development work. It plans to put up both dry cargo and bulk liquid cargo handling facilities at Kakinada. It has purchased about 16 acres of land at Pipavav port in Gujarat and is planning to put up a Bulk Liquid Storage Terminal and a Container Freight Station (CFS) at Pipavav. It has been exploring opportunities for putting up Bulk Liquid Storage Terminals at other ports and also examining putting up other inland port based facilities such as Container Freight Station, Inland Container Depots and Multi Modal Hubs at different locations in the country. **Expansion/Modernization: **KTIL is awaiting necessary permissions from the authorities for the construction of additional tanks at Kandla for enhancing revenue. During the year, it converted 2 Mild Steel (MS) tanks to Stainless Steel tanks (SS) which has enhanced revenues. Based on the market scenario and the demand from its customers, it proposes to convert further such MS tanks into SS tanks. KTIL has about 10 acres of land on long-term lease basis at Kakinada port in Andhra Pradesh. It plans to put up both Dry Cargo Warehousing and Bulk Liquid Terminal facilities at Kakinada. KTIL has already received approval from Inter Ministerial Committee for putting up a Container Freight Station (CFS) on the 16 acres freehold land purchased by the company at Pipavav port in Gujarat. It proposes to set up a Container Freight Station [CFS], Bonded Warehouse and Bulk Liquid terminal at Pipavav. **Performance: **KTIL posed total revenue of Rs.36.24 crore with net profit of Rs.11 crore recording an EPS of Rs.20.95 for 2013-14.
The above article was recommended yesterday by moneytimes-written by Devdas mogili.seniors please put forward your views.
For what it is worth, KTIL ran up a staggering 19% tdy with a new 52 week hi of 312.9. Even, I was not impressed earlier and the saw the margins as simply too good to sustain but as always, market has its own way (often times, opposite of what I think)
my only concern is management, otherwise the balance shee/business looks good from investment point of view. maybe that’s why it is quoting a low p/e.First all research came with a target of 165 last quarter, now after the results on 7 august, I am expecting them to come about with a new target of 450-500—disc: please take your own decision.I am invested in this company and my views may be biased.
Looking at the valuations and numbers at screener.in and www.edelweiss.in gives a mouth watering prospect…but we need to dig into deeper…into the management and corporate governance…from last 5 trading sessions volumes have been huge…but looks people are having a trading game here looking at delivery levels…
I am also trying to find out through my friends who track ports sector about this company n other details…
If ports sector and Infrastructure story is here to stay…Company is bound to run ahead…
Disclosure : Planning to take initial position once conviction gets build and queries get satisfied
Ashish, have been comparing this with Aegis Logistics, Aegis pe is 59,average industrial p/e is 45…if the management is genuine/capable, the share price can move to a different orbit.I have written a detailed email to firstcall research(remember they came with a target of 165 last month) they might give a follow-up target.Also written a mail to management of kesar terminals, wanted to know more about their business.
Hi Shak
Just a small query here, you are saying that aegis p/e is 59, i am not able to understand this. Here are the numbers:
Last year NP : 64 Cr
Market Cap: 1101 Cr
Debt on Books: 220
Doesn’t looks like 59 pe…am i missing something?
Please advise.
Thanks and Regards
Achal
@ Shak,Aegis,consolidated eps for March 14 is 18+& in current year it will be def higher.
yep, i think you are right, i saw the economic times p/e there aegis listed p/e 59—i think shld be 17-18 …but the average industrial p/e listed is 45, correct me if am wrong?
Can the current run up be an operator play?
@shak, screener says industry p/e as 8
but then i think it is categorizing aegis as an oil marketing and distribution company so it depends on which industry you categorize it as…
