Business in detail:
Navkar Corporation Limited provides container freight station (CFS) facilities in India. It operates a railway freight terminal, which loads and unloads cargo from container trains. The company also offers cargo storage facilities, including a buffer yard and warehouses for the storage of cargo; and services, such as packing, labelling/bar-coding, palletizing, fumigation, and other related activities. In addition, it offers storage and handling services for hazardous cargoes. Navkar Corporation Limited was founded in 2007 and is based in Panvel
Navkar Corporation Limited is engaged in container freight station (CFS) operations and related activities. It provides inland container depot (ICD) services. It offers cargo storage facilities, including a buffer yard and warehouses for the storage of cargo. In addition, the Company offers other services, such as packing and re-packing, labelling/bar-coding, palletizing, shrink-wrapping, fumigation, pest control and other related activities. The Company has a private railway freight terminal (PFT), which allows it to load and unload cargo from container trains. The Company has approximately three CFSs, which include Ajivali CFS I and Ajivali CFS II at Ajivali and Somathane CFS at Somathane, with an installed handling capacity of over 310,000 twenty-foot equivalent units (TEUs) per annum. The Company manages all over-dimensional cargoes (ODC) and out-of-gauge (OOG) cargoes. The Company’s subsidiary is Navkar Terminals Limited.
Navkar Corporation (NCL) is one of the largest container freight station (CFS) at JNPT and also one of the three CFS with rail connectivity that provides it an edge over its peers. The current capacity stands at 310,000 TEUs and it has amongst the highest market share at JNPT mainly owing to this rail advantage. Post the IPO, the company is in a massive expansion mode and will be increasing its capacity at Somathane CFS by 252,889 TEUs to 472,889 TEUs and is also coming up with an inland container depot (ICD) at Vapi with capacity of ~474,000 TEUs and an adjacent Logistics Park. Upcoming ICD to provide an edge: The Vapi region has a huge market potential as it is a well developed industrial area.The Vapi region accounts for close to 27% of container volumes at JNPT. It is believed that ICD (with rail connectivity) will enable the NCL to garner a good portion of the business from the region. At present, imports headed for the region have to get custom cleared at CFS/ICD at JNPT and are then transported via road. With rail transport being a more economical option compared to road, the imports should head directly to Vapi ICD. As for exports from Vapi region, a large portion (~60%) is stuffed at factory and transported to JNPT. However, the balance 40% or ~170,000 TEUs (less-thancontainer load [LCL]) which is being transported via road and consolidated at JNPT, can be consolidated at the ICD. Once the scale advantages kick in and given its rail advantage, the company can also cater to some portion of bulkier factory stuffed cargo. Capacity enhancement at Somathane to aid revenue growth: The company has managed to outgrow its peers in the region by attracting volumes on the back of its rail advantage. NCL has been facing capacity constraints at JNPT and is forced to reject certain bulk commodities like PTA, Fiber, Scrap, Marble, etc. Although the current South Gujarat volume of NCL (~70,000 TEUs) is expected to shift to the Vapi ICD, the company will now be able to handle these bulk commodities and effectively utilize its extended capacity. NCL will now also be handling domestic traffic, which it had been rejecting earlier, thus aiding growth. Logistics park at Vapi to be an additional revenue driver: The logistics park will be a one-stop solution for importers and exporters, providing a host of warehousing and other value added services. Its close proximity to one of the largest industrial clusters in India augurs well for NCL.
Investor Ashish Kacholia has bought 10 lakh shares or 0.7% stake in Navkar Corporation on Wednesday, bulk deal data on the National Stock Exchange of India’s website showed. Kacholia bought the shares at Rs 187 apiece
I analysed this stock little bit and then made my purchase. I am now further analysing this stock. The beauty of this stock and this business is that it is comparatively very easy to understand its economics. You just need to go through last 3 year balance sheet and the investors concall for last 3 to 4 quarters. I do not have much expertise on valuations front but got a good understanding on operations side.
Will share further details of my analysis in this forum.
This stock has been languishing since IPO with range betwwen 160-220. Lately few month ago it rallied due to entry of an ace investor. But has been dragged again due to broader market factor. Since IPO, promoter gave GST as value accretive and potential trigger for upside in business.
There had been a lot of CAPEX going on which are almost at the completion stage , the main being the railway terminal at Vapi which the company had been confirming commencement since last 12 months. However it is expected that the same will be completed during this month. Once the rail terminal at Vapi starts this will give a re-rating to the stock . As per the latest conference concal the company has been doing a lot of marketing and has also captured large number of new customers. The business model is comparatively easy to understand and the CFO is having a good command on the financials and business model of the company. There are not much variables in the business model.
I think the gestation period from the time of IPO will be over very soon and any body who makes an investment at this level will definitely get dual benefit
a) Stock re rating after start of Vapi rail terminal probably by the end of Feb 18
b) Oppertunity cost on the fund in comparison to somebody who had invested at the time of IPO.
Cons:
The stock is not getting re rated because of the track record of promoters and the market will upgrade this stock only on the basis of results and not on the basis of projections.
The promoters track record is definitely a negative for the stock, however I am of the camp of Porinju Veliyath, who firmly believes that the perception about the so called "Chor Management " are definetly going to change and l large money can be made in such kind of Stocks.
Pros. The stock is highly under owned by retail investors less then 2% because of which the trading volumes are very low .69% promoter holding and 29 % institutional and Mutual fund holding.
I tried search anything negative for the promoters of Navkar, but could not find. Could you please elaborate what promoter’s track record is negative for the stock?
There were some issues with their earlier companies from which they(the promoters) have dis- associated themselves before the current IPO.
Earlier I was also skeptical on this(quality of management) issue, however when I saw the large holding by institutional investors and Mutual funds, I had to convince my self that all this things might have been factored in the price. The institutional investors are more privy to the information then retail investors.
I was analyzing this stock for a long time however buying of this stock by Ashish Kacholia was the turning point for me and then I finally decided to buy it.
The stock has not performed for the last 3 years and there had been large amount of Capital Expenditure during the last 3 years. the total capital Expenditure during the last 3 years was more then 900 Cr. A major portion of their capital expenditure has been invested in Vapi rail terminal which can start its operations any time during this month or may be next month (Although the company had been assuring this for last 12 months). The reason for delay as advised by the management is not on their part as they have completed all the necessary infrastructure required for starting of operation, the delay is on the part of railways who have to give final green signal for commencing of operation. In the latest con call it was advised that the railways have completed their inspection and have given their final observation which the company is confident of complying with in Feb 2018.
If any one who appreciates the fact that investments do not generate revenue during the gestation period can definitely have a look at this stock with time horizon of at least 18 to 24 months. The gestation period is about to get over and it is good that the stock is available at a price less then IPO ( 10% PA opportunity cost for fund invested @ 155 for 3 years).
The operations of the company is very easy to understand and the variables are also very less. I believe this stock is not being followed or tracked by many retail investors.
The margins in this business are very good and the main thing to track is the total no of TEU handled by the company which is directly related to the
(1) EXIM (Export -Import) business of the country and
The EXIM business of the country is bound to grow without an iota of doubt.
(2) Market share of the company in this segment.
The company is an old , established and experienced player in this business. The current CAPEX is definitely going to help the company in increasing its market share.
Over all I see a good opportunity for the company which will be very much visible within next 6 to 12 months.
How you claiming that it is holding in a falling market? It had a price of 210 around 15th jan’ 2018 and now it is quoting around 150 that is it has lost around 35% in this market. Capex cycle has completed so that should start giving in good numbers going forward but need to dig deep.
