Gateway Distriparks Ltd

Gateway Distriparks is a multi-location CFS (Container Freight Station) operator, with one of the largest CFSs in the country at Jawaharlal Nehru port. The scrip GDL went to the bourses in March 2005. The IPO price was Rs. 72. It made an opening of Rs 90 on the day of listing. It gave bonus shares in 2007, 1 share for every 4 held. Business has grown consistently over the past four years. Its turnover in 2005 stood at Rs. 93 crores. This past year, it was 453 crores.

The stock currently trades in a range of Rs 90-100. It witnessed some serious upmoves in the last couple of days- in tandem with the broader market, slightly outperforming it. That's the bit of information for the short termers. For the long termers, this is a serious opportunity. Gateway Distriparks is a debt free company. The Mar '09 Quarterly results were less than spectacular, due to the general downturn in the economy. Gateway Distriparks has the potential to do better given its great debt free position. The promoters increasing their stakes in the company corroborates this. According to this piece of news even mutual funds and FIIs are increasing their holdings in companies like GDL. Although GDL has a formidable competitor in Concor, GDL has till now stood well and has also maintained a far from over stretched balance sheet. Companies competing with major players end up corroding their balance sheets, but here we have an exception.

The Rail Budget also had its share of incentives for GDL. Though there were no direct incentives, there were some announcements that catch one's attention. A host of measures announced such as private sidings for containers, private operation of freight terminals, etc will increase the market for rail container operators such as Gateway Distriparks Ltd. The dedicated freight corridor implementation being put on fast track will push up the market for rail container operators in the longer term. The investment-linked tax incentive scheme proposed in the Budget to firms that are setting up cold stores and warehouses for farm produce will also be positive for GDL, which operates a cold storage business via its subsidiary, Snowman Frozen Foods Ltd, a JV with Mitsubishi. This is another area that has huge potential. Agricultural produce's wastage is significant, and this move to promote those who do prevent that was welcomed by the industry. These incentives are investment-linked and thus, the general industry sense is that a lot of money may be invested here now. Gateway Rail, a subsidiary is expected to achieve operational break-even in FY10. The reason is that the company will be operating with an increased capacity. For FY09, it reported a revenue growth of 23.4 % to Rs 203.6 crore and PAT growth of 24.7% at Rs 94 crore, despite a marginal reduction in volumes, particularly in the last quarter of FY09, as discussed earlier. GDL was also looking for PE investors, with a dilution of promoter stake for its rail project.

There is a lot of buzz going around for the stock. Temasek exited from GDL, but its block was bought by Allcargo earlier this year. Long termers may evaluate the stock price, and consider this as an investment candidate.