GATEWAY DISTRIPARKS
Reco price: Rs 130
Current market price: Rs 127.70
Target price: Rs 154
Upside: 20.6%
Brokerage: Religare Capital Markets
Gateway Distriparks (GDL) is engaged in three lines of operations –Container Freight Station (CFS), rail haulage (through subsidiary, Gateway Rail Freight or GRFL) and cold storage (through subsidiary, Snowman Frozen Foods). In a recent development, it was announced that Blackstone GPV Capital Partners will be investing Rs 300 crore in GRFL through compulsory convertible preference shares entitling it to acquire a 37-50 per cent stake in GRFL.
GRFL will be repaying Rs 85 crore to GDL (CFS business) towards part payment of earlier advances. The remaining funds will be utilised for development of terminals (at Faridabad, Ludhiana, and Grahi) and rake addition, going ahead. The deal is value accretive for GDL and will aid its medium and long-term growth.
The deal values GRFL at Rs 600 crore (50 per cent stake for Rs 300 crore) at the lower end, and at Rs 810 crore (37 per cent stake for Rs 300 crore) at the upper end. The brokerage has upgraded GDL’s stock to ‘buy’ and factored in the fund infusion and relevant expansion plans. It has also increased the revenue estimates for GDL by 2.1 per cent and 6.9 per cent for FY10 and FY11, respectively.
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