Allcargo Logistics (ALL) has reported not so encouraging profit after tax of Rs.55.5 crore which was below our expectation of Rs.69 crore. Volumes were stable for both the key segments of container freight stations and multimodal transport oOperations (MTO), but realisations have fallen. It is important to note that Q4 is usually weak for logistics companies.
In the last 4 quarters, the following has emerged as positives for Allcargo Logistics: 1) Healthy volume growth in the key multimodal transport operations; 2) Recovery of volumes in the container freight station segment; and 3) Improvement in Margins.
We continue to assign a PE of 16x FY17E earnings to the stock on the back of 1) Immune nature of MTO (less than container load) business to weak trade; 2) Latest acquisitions which help diversify the business; 3) Stable performance of the CFS segment; and 4) Estimated recovery in global trade.
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