Gati - Long race horse?

Stock Opportunities
21

It seems that next two quarters may be difficult, and company may face liquidity issues(as per new chairman)…
Let’s see…if it sail through then may be a big thing…

1 Like
22

@behlokesh - can you pls share the article where chairman talks about the company and liquidity issues. Good to know the views.

1 Like
23

It was a TV interview in 1st week of April…

1 Like
24

I have serious issue over Gati operations, I tried trial booking to see if they are really into business, except the customer care there is none!

Tried with different addresses & services after the customer care call there won’t be any contact to you.

I smell something fishy, won’t be touching this stock for now!

1 Like
25

Though now as it’s a owned entity of All Cargo, I think that while it would be take some time for them to streamline the processes(Due to Covid) though they would be better than GATi Promoters time.

Disc: Holding this stock, so I might be biased

1 Like
26

Is any one still tracking the company?
Any update on recent developments of the company?

27

Company seems to be doing all good things…

Divesting unrelated subsidiaries
Focusing on express business
Gaining market share
Getting asset light
Debt reduction etc …

I

28

Special situation focussed video:

6 Likes
29

Wrote a short thread on Gati, my first Twitter thread :grin:

https://twitter.com/vineetjain1101/status/1601840294999490560?t=5UcSi2YEQDTjERJSNPM9Rg&s=08

9 Likes
30

Gati has gotten even more interesting after the recent correction IMO. The old promotors are exiting - TCI Finance share is down to below 0.4% Jubilee Commercial and Bunny investments are almost sold out, and in the stock is now trading at close to one time sales with rapidly improving fundamentals.

The Indian express logistics space is among the more insulated sectors from a global recession, and falling crude prices should help reduce working capital (even though it is largely passed through to customers). I see a large secular growth runway for efficient national players with expanding margins. It is now my third largest holding and I am considering making it the largest holding if the share price falls to below trailing 12 month sales at any point in time.

This is not advice. This is what I am doing base don my interpretation of the industry and I may be wrong by a long shot. In fact I would request members to present counter views so I can strengthen my understanding of the business.

4 Likes
31

Here is the latest report on GATI

Hope this helps
dr.vikas

4 Likes
32

This helps thanks
Consolidation & turnaround story, strong parent.
Disc: Invested

1 Like
33

Yes. Good report. This can be a great turnaround story. But I guess market is not willing to give it a premium because still its loss making. Maybe once they start posting consistent quarterly net profits, market will upgrade it.
Personal thought. Just tracking.

34

Turnarounds are hard!

Volumes are up, yields are down, both big time. This is worrying for me. The elusive margin uptick remains distant. They continue to guide for 3000cr topline worh 10%-12% Ebitda by FY26. But with new problems surfacing every quarter, it makes me want tonwuqation the capability of the management to make projections in the first place.

Invested and disappointed. I may exit partially or comoletely soon. Will look to add back once the improvement starts reflecting in the numbers, which may be nex quarter or next year. The price will probably be higher then, but thats ok. I dont want to hold on to business underperformance.

Some snippits from the concall:

Gati KWE

  • Volumes up 18%
  • GMs down from 28% to 23%
  • Ebitda up 4% from 370cr to 385cr

H1 FY23
Tonnage up 11%
Revenue from Ops up 2%, Ebitda down 21%

Reasons for drop in yield:

  1. Mix - 65% large, 35% MSME and retail - drop in retail with introduction of E-docket, should stabilize
  2. Drop in prices for intra state (intra zone) to gain more business. For large customer, yield differential between inter to intra state is 20%. Cost reduction will happen subsequently
  3. Increased over 1000 direct pin codes

These have led to higher volumes. Now need to optimize costs and improve yields.

3 Likes
35

Any idea what are these guys upto by doing all these corporate actions?

1 Like
36

Gati has finally started showing NP. But, how will the merger of Gati with Allcargo Logistics affect Gati shareholders? Will they have a overhang until the merger takes place? Any expert opinions?

37
38

Anyone got the summary of this article . Article is behind a paywall

39

Restarting this thread..After analysing the restructuring of Gati into All Cargo and Separation of ECU into a separate entity, here are couple of insights-

  1. Contract logistics is growing at a rapid pace with EBITDA expected in the range of 130 crores to 140 crores which implies a valuation of approx 1,300 to 1,400 crores(Based on EV/EBITDA of 10…comparing with peers)
  2. Gati is currently valued at approx 900 crores plus there is GESCPL stake of approx 30% which will be part of All Cargo so can expect valuation of approx 1,200 to 1,400 crores.
  3. Total Market Cap of new All Cargo is expected to be around 2,800-3,200 crores. Seems like a good arbitrage play as there is decent upside of 35 to 50%.
    Disclosure-Invested

Any views?

40

There is a swap ratio for allcargo gati and allcargo logistics 63:10 so for every 100 0 shares held 6300 new shares of allcargo logistics will be there . if we assume 10 EV/EBITA for both express and contract logistics it will be 2100 cr and assuming cash and debt remains same at current level , approximately 2200 cr market cap for the new entity. Outstanding shares will be 139 cr so expected price is around 15.

Peers like tci express is trading much higher than 10 EVEBITA but gati is not comparable as it is stagnant in terms of total income and volume . So it all depends on synergy in merger with contract logistics, utilization of cash in hand and capacity utilization