Distriparks:Throughput push

The logistics company has recorded 25 per cent growth quarter-on-quarter basis

The striking feature of logistics company Gateway Distripark's Q1 FY08 results is the impressive increase in its throughput, which went up 10 per cent sequentially after a 6.8 per cent increase in the March 2007 quarter.

If Punjab Conware, the container freight station that it operates and manages, is included, the growth is higher at 25 per cent q-o-q.

But competition is also increasing and the cost of higher throughput has been felt on lower realisation and profitability. Average realisations were down 7 per cent per twenty foot equivalent unit (TEU) sequentially, and the average operating profit per TEU was 15.7 per cent lower.

Consolidated revenues went up 3 per cent q-o-q (without Punjab Conware), while operating profit remained flat. The operating profit margin has declined 1,000 basis points y-o-y and 134 basis points sequentially to 45.6 per cent.

According to the management, Gateway's container freight station in Navi Mumbai will have limited growth in terms of throughput, but the Conware CFS, also in Navi Mumbai, has more capacity.

The Chennai and the Vizag CFS have posted 25 per cent and 17 per cent growth in throughput, respectively, and Vizag has turned profitable at the operating level.

At its Garhi inland container depot, which was largely focused on exim traffic, Gateway has started domestic operations. It has also acquired two rakes for its freight train operations. Because of start-up costs, the Garhi EBITDA per TEU was 85 per cent lower q-o-q.

Most of its GDR proceeds have been invested in its rail business and the other income, which has been over 15 per cent of the total income in the past, will start tapering. The cold chain business is expected to grow at about 20 per cent and should turn profitable in the next few quarters.

The operating profit margin is unlikely to be at the 50-55 per cent levels of the past, but the management is confident that it will stay at the current levels. The Gateway stock trades at about 19 times FY08 earnings and should do well.

Deepak Fertilisers: Input pangs

Though Deepak Fertilisers' top line increased by 32 per cent, high raw material costs kept operating profit growth low at 4 per cent. A 7 per cent increase in naphtha prices and higher cost of ammonia, which it had to purchase, led to raw material costs rising 431 basis points as a percentage of sales. As a result, operating profit margin decreased by 466 basis points to 17.6 per cent.

The company is increasing its ammonia plant capacity from 272 tonnes a day to 390 tonnes a day, for which it had to shut down the plant for 41 days last quarter.

As gas availability improves further, the higher ammonia capacity will help the company increase its nitric acid segment products. The stock trades at about 10 times trailing 12 months earnings.