Firstcall research gave a buy call at the price of Rs. 126 with target of Rs. 165. As per the report, EPS is seen at 25.18 and 29.84 for FY15E and FY16E respectively which, at CMP of Rs. 280,translates into PE of 11x and 9.4x respectively.
No doubt at 126 the stock was a steal but from July 1st to till date the stock has sharp run of 122%. If you look at the price movement it has gone up almost 6x in past 7-8 months which calls for correction. Before jumping to it, makes sense to dig deeper in KMLL story as most of the future growth can be from there as KTIL is operating at full capacity currently.
@aksh, true the buy call is an old one, but dont you think we can expect the stock to get re-rated? Does it deserve a pe of 11(its got the best roce ,roe and pat margins in the industry)? i agree kmll will drive the future growth, will have to wait for the next qtrly results for further updates.Till then leave it to markets to give it a fair valuation. I dont see a correction in the stock. regards
There are only two ways to create wealth, one is earings growth and 2nd is PE re rating, This fits the bill on both factors, FY 15 EPS growth could be 40 %
Today it is up 15 %, what is cooking ?
@shak, I also thought the same about this boring industry.
Disc : took a small position today @300.
Let us see how Q2 goes, even if it maintain Q1 PAT rate, it will be 50 % growth over q2 FY 14. It main again re rate during snowman listing !, Its PE is mind blowing cheap for such a growth company!
Please note that the company is taking debt several times equity to fund the multimodal logistics facility at pawarkheda. The MP govt has given it the land on long lease which is a big plus. But is borrowing hugely to set up the infra. Yes Bank has lent it money at around 11 per cent p.a for the agri-related storage facilities.
at the agm management indicated that it would be taking debt to the tune of three times equity which is a cause for concern. however it all boils down to the margins the company can earn from the pawarkheda facility.
we should be looking at the logistics biz more than the terminals business for this one.
Please note that the company is taking debt several times equity to fund the multimodal logistics facility at pawarkheda. The MP govt has given it the land on long lease which is a big plus. But is borrowing hugely to set up the infra. Yes Bank has lent it money at around 11 per cent p.a for the agri-related storage facilities.
at the agm management indicated that it would be taking debt to the tune of three times equity which is a cause for concern. however it all boils down to the margins the company can earn from the pawarkheda facility.
we should be looking at the logistics biz more than the terminals business for this one.
Yes. I agree that, in all probability, it can be further re-rated. But re-rating is already on and because it has gone up so fast, it can consolidate for a while before further re-rating, giving better entry points, which it has done today, when it touched 256, down almost 20% down from all time high of 325.
Rather than waiting for the Q2 results, It would make more sense to compile a list of questions around blind points and reach out to management for more clarity on things to come.
At the moment, I wonât be much concerned about the planned debt for KMLL project as Itâs in the nature of the Infra. business and standard industry practice. In fact, If you look at the kind of average ROCE numbers that KTIL has thrown in the past, and if it can manage similar numbers in future, Debt will add much needed levers which will shoot ROE figures with very low equity base.
If you attended AGM, could you please share your experience? what all issues were discussed there?
1- It is not reaosnable to extrapolate current RoE and margins for new investments. Becasue nature of business is completely different - Liquid Terminalling vs Full-fledged Logistics parks.
2- Check last two three ARs. KMLL is on drawing board for two years at least, with no progress. That was my main concern when I analyzed it in detail at 120/- a few months back. Based on above fact, i considered it an annuity business at excellent valuations, even if no growth takes place from KMLL. But it was so illiquid, i could not pursue hard.
As per latest AR - âwork at the site of KMLL is progressing well and itâs ahead of schedule. The facilities of the 1st phase are expected to be physically ready by June 2014. The Private Freight Terminal is likely to be commissioned by Aug 2014 after receiving clearances from the authorities. Construction of some of the agro warehouses is complete and some space is already been contracted. Marketing activities are already geared up to make awareness about new facilitiesâ.
There are lots of synergies between storage terminals and logistics business which company is trying to take advantage of. Company is trying to become a fully integrated player which will make its services broadbased and give it more teeth.
Apart from this, at current valuations, you are not paying anything for KMLL. If one looks at the valuations that the peers are getting with not so good numbers, KTIL is available at very attractive valuations and ripe for further re-rating any time. When KMLL becomes fully operational, Itâs also likely to be listed separately.
On a side note, for a patient value investor, illiquidity is blessings in disguise :).
Yes true, canât agree more on this. Itâs quite difficult to work against âPrice Anchoring Biasâ, but one has to learn it any way. In this bull frenzy, I myself kept staring at prices as they moved up so fast as I lost on big winners like Superhouse, Kitex, PFS, Munjal Showa, Premco Global etc. only to enter them later at much higher prices. Luckily I had few winners like RS Software, Mold-tek, Avanti Feeds etc. to my credit which turned out to be well.
I could never convince myself of entering some of the VP winners like Astral, Mayur, Atul etc. because of Price Anchoring.
@ aksh, your remark on valuation of KTIL is trueâŚits available at dirt cheap throw away priceâŚbtwn did you check out snowman ipo listing price, at 78.75 its available at a p/e of 38.5âŚKTIL wake up!!!
@ rajul doriwala, spkg about illiquidity, so was ttk prestige in 2010!! trading at volumes of 200 in nse, when the stock used to trade at 115rs. missed a golden opportunity.
YesâŚIâm following developments on snowman logistics and know the kind of valuations that some of peer companies are getting with not so good numbers and trying to understand why? May be Harbin Consultants can helpâŚ
@Harbin Consultants,
Thanks for initiating the story, looks good so far. I appreciate the kind of digging that youâve done on the story and realize the potential that it offers. could you please help me and community understand following better?..
In your report dated 5 Aug 14, you have made following projectionsâŚ
With expansion, Total revenue to be 3x in 3 years
2014 - KMLL goes live in Aug-Oct 14 (2x revenue of 2014)
2014 - Expand in Kandla (7000 KL, 6% addition to capacity) â Feb 2015
2015 â Container Station and Bulk Liquid Terminal @ Pipavav, Gujarat (16 acres of land), June 2015 (2x 2014 revenue from 2016)
2016 - Dry cargo warehousing & Bulk liquid terminal @ Kakinada, AP (10 Acres of Land) â Aug 2016 (2x 2014 revenue from 2017)
Could you please share the source of this info. and calculations and logic to arrive at these projections?
In one of your earlier posts, you mention thatâŚyou estimate KMLL to be worth 350 cr as it stands nowâŚKTIL is sitting on NAV of 200 cr. even after taking out equity and debtâŚYou estimate KTIL at 400 crâŚTotal sell-out value at 750 cr. if company decides to sell out ( KTIL-400 cr and KMLL-350 cr.). Could you please share your calculations and logic to arrive at such valuations?
Please share RFP as well as Final Concession Agreement between KMLL and Mandi Board, MP, if you have it.
1.As of now a big resistance for the stock at 300 levels. Once that is crossed we may see new highs for ktil.
2). I dont understand as to why the website (kmll, ktil) are not updated? They still show some bhoomi puja done in 2013.Have written to the management, so far nothing has been done, Harbin can you find out? All these things play a vital role to shareholder community.maybe thats why mr.market is giving it a rating of p/e.11.
3.Half of the investment community is not aware that ktil has a logistic wing, they relate it to as storage and terminal/infra sect., with time this will change and so will the price.
Just went through the annual report,They have a head start and locational advantage with the terminal at kandla.They have mentioned a key risk in the report,namely coming of two liquid terminals at pipavav,which is closer to mumbai.There is also a liquid terminal at dahej operated as GCPTCL,run by gujarat government.There are quite a bit of private port players in gujarat and it is easy for them to open a tank farm along with the private port they operate and if ideally located at dahej or hazira,they cater to the industrial areas of south gujarat and maharashtra.Therefore to assume or project earnings into the future would be dangerous atleast for the terminals business.There is no locational moat.
Itâs not easy for any player to expand capacities just like that as you need to have large land parcel in the proximity of jetties and even with that it involves lots of regulatory mechanism at each stage and then construction of infra. etc. so things are bound to take time in this business. Past AR mentions that new land is not available nearby area at various old as well as new upcoming ports. This should explain why mgmt has not been able to expand much despite trying hard for the same during previous years.
Kandla is one of the biggest ports in India and to have terminals there gives lots of locational advantage to KTIL in storage terminal space and that reflects in the numbers. They have already got permission to expand capacities at Pipavav in 16 acres of land, which, being close to Mumbai, will further boost the revenue. Meanwhile margins could be under pressure, which AR mentions, which I think, is a big plus as far as mgmt transparency and integrity is concerned. The same has been mentioned in last yearâs AR as well but topline and bottomline has seen healthy growth despite that. I think Kandla is operating at full capacity so further growth possible through expansion.
The upcoming composite logistics hub at Pawarkheda could be the real game changer looking at the strategic location (Just 8 km away from Itarsi) and scale of the project. Itarsi is a commercial hub for agricultural goods and major railway junction right in the center of the country joining East-West, North-South Corridors. NH-69 connects Itarsi to other major cities through Road. As per AR, Phase - I of the project should be physically ready by now.
@biju, kmll will be the game changer in this stock, i think that will drive the future growth. By how much, is the question? can someone throw lightâŚesp oneâs with knowledge of logistic business. If its first phase is functional by oct, it will reflect on q3 patsâŚright? so the figures could be great by the end of q4 fy15. already the balance sheet looks good compared to other stocks in logistic space, i think everyone is waiting to get in at lower levels.stocks with less volumes can throw a wild surprise.Its destined to go atleast above 400rs anytime.
@ aksh, i like the way you dissect every stock, i think i used to follow you in rs software board as well, the stock has given me hefty profits, more to come, next in line is this.thanks for your contribution.
just trying to dissect this,so that we can allocate a large percentage.just got this from kandla port trust site.The liquid terminals around kpt.There are other private players who have got liquid storage space.Please go through the GCPTCL(www.gcptcl.com) website also.What i feel is the tank facility at pipavav is going to be started by somebody else also.I have seen the adani port coming up at hazira and recently saw some tanks coming up,although i think it is for petroleum products.However they can be aggressive and quickly scale up.They can also undercut prices to draw traffic to them.Iam not sure of long term prospects however in the present run anything with infra/logistics can go up.However aksh/shaks we can dig deeper .
Liquid Storage Facilities Around Kandla Complex : Private Sector
@biju , yes, @ kandla port kesar terminal stands no-3 in terms of capacity , among private players. you think we can allocate a slightly larger percentage for this stock in our pf?.If so how much? seniors pl share. i somehow have started liking this scrip after the snowman logistics success.
