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Wednesday, March 16, 2011

Mid cap stock analysis - Gati logistics

Logistics sector is expected to pick up in coming future with revival in economy. Here is a stock analysis of mid cap stock, Gati logistics, that could benefit from increased demand in logistics sector.

Gati logistics is a express distribution and supply-chain services provider. It is one of the leading service provider in it's business. Domestic and international markets are slowly picking up and so the logistics business is experiencing increased demand since recession period of 2009-2010. It has quiate a good solution portfolio for domestic as well as international logistics sectors.

Gati logistics has recently started operating it's own offices in East Asia. It will benefit from growing trades between India and East Asian countries.

Gati Logistics Business Infrastructure
Gati Logistics, as in June 2010, had network of 432 depots at 20,000 locations in India. It had 193 company-owned vehicles and 1,072 rented vehicles from different vendors for its logistics chain. Company had handled 43 million packages in FY10, this was a number higher by 30.3% over FY09.

Gati logistics has recently launched cold chain solution under it’s supply chain management. Name of the division is “RedSun”. This division will also cater SME logistics and allied services. This is going to be an asset light model driven division.

Company also has a shipping sector division that caters sea route logistics. This division has recently lost big chunk of its profits compared to last year profits due to difficulties in that market. Gati is going to separate it as wholly owned subsidiary in near future.

Stock Financials and valuations
If we look at Gati’s trailing 4 quarters EPS, it is 3.06. At current stock price of Rs.54.50, the stock trades at P/E of 17.81. Similar stock Blue Dart express trades at P/E of 24.89 at trailing four quarters EPS.

The stock is certainly not trading at discounts in market. Looking at picking up demand in logistics sector and good future of cold storage chain business, Gati logistics could be a good long term bet. One may buy stocks of Gati logistics at any dips in stock price for long term investment.

2 comments:

  1. Which other companies will benefit from government's thrust on "Cold Storage"? India definitely need many more cold storage for its food security.

    ReplyDelete
  2. Hey Salim,

    Check this out : http://www.indianstocksnews.com/2011/02/stock-to-buy-blue-star-limited.html

    ReplyDelete

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