Here what value, a rerating after the proposed demerger might unlock
During the gati conference call, management mentioned about the restructuring and further consolidation within the enterprise. PFB. I have not attended allcargo conference call did they mentioned anything about this
Harsh Jhanwar: Hi Sir. Thanks for the opportunity. Sir I want to know are we planning to merge the APPI division of Allcargo with Gati. I just wanted to know are we looking to merge the division of Allcargo with Gati business and what is the reason behind it?
Pirojshaw Sarkari: As I said in my note that board has approved evaluation of restructuring options on appointments of consultants and advisors. We are at preliminary stage just now. Of course if you ask me conceptually contract logistics and express logistics go hand in glove and customers more and more want a single operator who can take end to end fulfillment of their finished goods so we are evaluating this. We have a partner with KWE and we will be in discussions with them very soon.
They are keeping cards close to the chest. They are exploring buying out the stake from KWE, then probably may merge gati it into Allcargo. All asset light units of the conglomorate will become one entity. All real estate and asset heavy will be Transindia (including those in Gati perhaps).
DISC - Invested, quite a bit at around 346 avg price in Allcargo, no units in Gati. Not a recommedation, I am an IDIOT and a rank amateur.
Gati Express is a B2B segment that cannot be directly compared to bluedart, Delhivery etc. But still the PE rating of all these companies and that of the Allcargo conglomorate is quite low at ~7.
If you look at the mix of businesses across AllCargo and Gati, there are around 5 different distinct areas. After the current restructuring, the logistics business is still split between Allcargo, Gati, and Gati KWE. My understanding is they want to bring this under one roof. But it would take a while, given Gati and Allcargo are separate listed entities and KWE has a stake in Gati KWE too. The rationale is pure logistics business which is high growth should get better valuations.
Very detailed PPT shared by company today. Interesting stuff in last few pages regarding post demerger business metrics âŚ
Allcargo ticker went on a tear last few sessions. I first bought at 367 and kept on averaging down as it fell to almost 250. No news except for the superb investor presentation. I hope maybe some big buyer has started loading, who knows.
I am eagerly awaiting Q2. ECU revenues appear to be leveling off, worldwide cargo prices dropping significantly. TransIndia segment is still very opaque and very low ROCE. I would love to hear thoughts from those who understand this better. Not clear how the capital employed splits between project division cranes and logistic parks etc.
DISCLOSURE - Invested, just got real lucky. I am a rank amateur and an idiot. My posts are NOT a recommendation of any kind
Analyst Meet Video. Very impressive presentation. But still the doubt lingers if the perfroance is temporary.
Allcargo Analyst Meet 2022: Powering transformational growth for the future - YouTube.
Disclosure Not invested. Not a recommendation but only academic interest.
Allcargo has came out with decent set of number in a difficult environment of reducing freight rates.
To me the most impressive announcement is the below.
Strong cash flow in past few quarters have been noticeable. Companyâs yearly EPS for almost a decade have been caught between Rs. 6-10 which now appears to be in range of 40s. With debt getting reduced and superior cash flow, the RoE is improving meaningfully.
Link to media release for Q2 - https://www.bseindia.com/xml-data/corpfiling/AttachLive/478c4afd-07db-4af8-b9af-5d7337bd8131.pdf
Link to Q2 results - https://www.bseindia.com/xml-data/corpfiling/AttachLive/15288b8b-cd99-443d-be66-f18210d0b46d.pdf
Allcargo made a new 3 year high post consolidation over the last several weeks on back of good quarterly results. This was on reasonably high volumes. The upcoming demerger should be completed by March next year and should further result in value unlocking.
Regards,
Nikhil
Disc: Invested
Allcargo seems to hit resistance at 460 levels. The dramatic reduction in global freight prices, looming global recession, trade wars and shipping rerouting etc. remain a near term headwind. Ticker may drop down to 400 levels near term.
On the brighter side, mgmt focus on Corp restructuring may lead to rerating. Allcargo MTO, CFS, TransIndia and GATI. 4 companies. India gati shakti and infra push is a huge decadal tail wind for latter 3 companies. The son of promoter looks like a energetic and jovial young chap who is really getting being brought up from an early age. The junior Shetty is already handling the digitization push across all allcargo verticals, working with startups and soon may acquire some too.
DISCLOSURE - Invested heavily at 350 avg price. Fighting temptation to trade in and out.
I got lucky, continue to remain an IDIOT, Donât treat this chatter as a recommendation⌠Do your DD
Demerger record date has been declared as 18th April . ALLCARGO CEO has resigned as he will become the MD of resultant entity AllCargo Terminals .
Since no price ratio has been declared yet ,does anyone have any idea of listing price of the demerged entities ?
Not sure what is meant by price ratio here. The share allotment ratio is decided by the co. nd the shares vl be credited to ur account accordingly.
The mkt vl decide the price nd valuation of the independent biz leading to value unlocking, if any( nd hence was rhe demerger in first place)
I think it was mentioned earlier in the thread too nd pasting again, below is the last FY snapshot of 3 biz for the investor to have an idea of wat valuation to give to each of the biz :-
As per the last FY snapshot of the 3 biz, it is ovious that the other two companies are not promising.
TRANSINDIA REALITY has very low ROCE and ALLCARGO TERMINALS topline growth would be low.
Considering this most of the investors will try to get out of these 2 companies on listing and the prices of these two comapnies may drop drastically. Also, the 3rd company âAllcargo logisticsâ price will also drop as the assets are moved out from it.
In such scenario, will it make sense to hold on to this company till the demerger or would it be wiser to sell before the demerger and then buy only the âAllcargo logistincsâ after the demerge and price drop?
The 3 cos. hv different biz models and at different stages of biz cycle, thus need diff valuation model. The snapshot is provided to be taken as a data point, value the biz nd tk individual call.
If one is not intrstd in the 2 demerged biz - sell thm nd consider the proceeds as dividend of the main biz investmnt
Cmng to main biz post demerger - If u wanna view this as long term investment bet - study Shashi Kiran Shettyâs record of capital allocation esp. post 2015 - Come back with ur findings or questns, if any
Disclosure :- Invested
is anyone has update on when shares of demerged entities will be listed, what will is gray market price for these securities are currently
So, yesterday AllCargo uploaded the apportionment of Cost Acquisition for AllCargo Terminals & Transindia Real Estate being 7.60% & 46.77% respectively. This being my first demerger portfolio stock, I wanted to understand whether this apportionment will apply to stock price of both the companies too?
a32e8015-99e2-4013-8d10-e999f7aa42f4.pdf (137.5 KB)
