Navkar Corporation Ltd. share price target

Navkar Corporation Ltd. (NCL) reported better than expected profit largely due to higher other income. On a consolidated basis, revenue grew by 4.6% yoy and 3.1% qoq to Rs882mn. Revenue growth, however, was lower than volume growth of 18.4% yoy and 6.7% qoq to 80,815 TEUs, as realization fell by 13% yoy and 4% qoq to Rs10,667/TEU due to higher export-import mix at 48:52 and higher share of empty cargo in overall cargo handled. EBITDA adjusted for forex loss increased 1% yoy and was flat on a qoq basis, largely due to higher operating expenses and staff costs. This increase can be attributed to the ongoing capex at Vapi and...

Navkar Corporation (NCL) is one of the largest container freight station (CFS) at JNPT and also one of the three CFS with rail connectivity that provides it an edge over its peers. The current capacity stands at 310,000 TEUs and it has amongst the highest market share at JNPT mainly owing to this rail advantage. Post the IPO, the company is in a massive expansion mode and will be increasing its capacity at Somathane CFS by 252,889 TEUs to 472,889 TEUs and is also coming up with an inland container depot (ICD) at Vapi with capacity of ~474,000 TEUs and an adjacent Logistics Park. Upcoming ICD to provide an edge: The Vapi region has a huge market potential as it is a well developed industrial area. As per the Management and industry sources, the Vapi region accounts for close to 27% of container volumes at JNPT. We believe that ICD (with rail connectivity) will enable the NCL to garner a good portion of the business from the region. At present, imports headed for the region have to get custom cleared at CFS/ICD at JNPT and are then transported via road. With rail transport being a more economical option compared to...

New fully-integrated logistics park and ICD to provide one stop logisticssolution: On completion of the new logistics park and Inland Container Depot(ICD), the company would be in a position to provide one stop solution to theexporters and importers.

NCL reported numbers which were in-line with estimate. Going forward, while the existing facilities continue to deliver, volumes will increase only post commissioning of the Vapi ICD and Somathane expansion. NCL is well placed to capture the expected increase in EXIM trade due to various initiatives taken by the government. As per industry reports, the Indian logistics market is expected to grow at a CAGR of ~8% till 2020. Further, as per our understanding, threat of new entrants in the CFS and ICD (Inland Container Depots) industry is moderate due to limited land availability and that too at high prices at strategic locations near ports. This coupled with a host of...