Transportation share price target

Warehousing additions in India to clock 19% CAGR over FY21-FY26 fuelled by ecommerce, more localised spaces and manufacturing growth

Overall container volumes in APSEZ, JNPT saw a QoQ dip in performance in Q1 (9%, 6% at 2.1 million TeUs, ~1.4 mil TeUs, respectively). Also, the greater trans-shipment volumes at Indian ports, may impact the container product mix for ports (due to congestion at major transhipment ports like Colombo and Singapore port). Rail CTOs are also expected to see 7-9% QoQ de-growth in Exim and domestic trade (based on two months data). On a positive note, higher crude oil prices typically help CTOs gain market share over road players (preference over longer distances). CFS, on the other hand,...

For January, February and March, E-Way bill generation saw a continued upmove in performance compared to pre-Covid volumes (double digit growth). March saw exceptional growth (~65% YoY), mainly due to a low base and MoM improvement in fleet utilisation. Supply chain segment benefitted due to revival in 2-W, 4-W volumes, leading to a general upsurge in sales, assisted by inventory de-stocking by dealers towards the end of year (was not visible in the base quarter). Express division, helped by the changed...

Rail Vikas Nigam Ltd (RVNL), a Rail EPC company's has received new orders of Rs61bn in H1FY21 and order book is healthy at Rs822bn (6x TTM revenue). We expect execution (revenue) to improve in H2FY21 (H1FY21 is -8% YoY), as order book in execution stage has increased to Rs462bn (Q2FY21) vs. Rs358bn QoQ i.e. order book in execution stage is now at 56% vs 44% QoQ. Company has made a capital infusion of Rs0.63bn in Angul Sukinda Railway Limited and total investments in JV / Subsidiary stand at Rs16.5bn (30% of networth). We have introduced FY23E financials and roll forward TP. Revised TP is Rs28 (earlier TP Rs24), valued on an unchanged PER multiple of 6x (stock has...

Rail Vikas Nigam Ltd (RVNL) is engaged in the business of constructing rail infrastructure i.e. new lines, doubling, gauge conversion, railway electrification, metro projects and workshop. RVNL's execution (revenue) was up 2% YoY in Q1FY21 versus last 5 years revenue CAGR of 37%. Lower increase in the execution versus past trend is due to lockdown in April-20. Q1FY21 EPS forms 20% of our FY21E EPS estimate. We expect execution to improve as out of RVNL's order book of Rs806bn, 44% are firm orders and execution is in progress. Stock trades at 5x FY22E EPS and offers a dividend...

Further, the increase in axle loading norms has raised effective system capacity by over 15%. Also, we expect railways to gain market share over FY21-22E, post the DFC which will impact demand for MHCV's. We prefer stocks which are market leaders in their respective segments and have a cash rich balance sheet. Due to the COVID impact, we expect volumes in FY21E to decline in double digits across automobile segments. Over FY20-21, this will imply a fall of 30-40% in volumes. We expect a recovery in volumes from 2HFY21 onwards, as the situation gradually normalizes. In the logistics segment, while volumes for container rail operators will be impacted due to the downturn, the phased commissioning of the Dedicated Freight Corridor will partially offset the impact of the above. We believe that the CV recovery will be further pushed out as fleet utilization levels are expected to remain low over FY21E.

In an effort to boost alternate sources of infra funding, NHAI has planned to raise Rs 150-200bn through its maiden InvIT offer.

HG has achieved 34/40% physical/financial progress as of 20th December 2019 and has received 2 milestones based payment. The company is targeting COD 6 months ahead of schedule, making it eligible for an early completion bonus. We attended the HG Infra Analysts Meet/ Gurgaon Sonha Site Visit at Gurgaon on 20th December 2019. This was the first NHAI HAM project secured by the company and involves six-laning and strengthening of the segment of the new NH-248A (from Existing Km 11+682 to Existing Km 24+400) in the State of Haryana. This is a 12.71km stretch with a flexible pavement configuration with Elevated Sections, Vehicular Underpass and Flyover forming the major structures in the package.

High frequency indicators for the logistics industry remained subdued in Nov'19, but have improved incrementally vis--vis the past few months.