Fundamental Analysis of Gateway Distriparks

Fundamental Analysis of Gateway Distriparks: In the past, we used to send messages through Telegram or mail, but these days, we order online and have the items delivered to our homes or send them by courier to someone else. The use of technology, population growth, and rising income standards are all reasons for this significant improvement.

This fundamental analysis of Gateway Distriparks, one of the leading players in the logistics sector, looks at its business, finances, and more.

Fundamental Analysis of Gateway Distriparks

Company Overview

The company was founded in 2005. Prem Kishan Dass Gupta, managing director and chairman, holds the top job at the company. It has over 500 transport services across India and a network of 31 trains with first to last mile connectivity. We provide a variety of logistics-related services, including container yards, ship-to-rail, refrigeration services, road transport, domestic railways, and EXIM railways.

segment analysis

Intermodal container logistics is the company’s only source of revenue. Rail transport accounted for 63.80% of revenue, road transport accounted for 3.45%, container storage, handling and ground rental accounted for 32.20% and others accounted for 0.55%.

Merger Details

In 2021, the three companies merged to form Gateway Rail Freight Limited. Gateway District Co., Ltd.and Gateway East India Private Limited. It was delisted and relisted on March 22, 2022 as Gateway Distriparks Limited. The goals of the merger are to create shareholder value by simplifying statutory and regulatory affairs, improving revenues, cash flow and debt service, and expanding the asset base.

Industry Overview

The Indian logistics sector has tremendous growth potential. The Government of India has launched the PM Gati Shakti program to support manufacturers and other industries by improving supply chain management and connecting various aspects of their locations.

The logistics sector accounts for 13-14% of GDP. Most of the logistics costs are caused by rising fuel costs, vehicle maintenance costs, labor costs, and packaging costs. In other large economies, logistics accounts for 8-9% of GDP, so lowering costs will benefit both industry and end users.

Establishing a hub and managing supplies effectively will also greatly benefit other industries, ensuring efficiency and cost savings. Proper frequency planning improves efficiency and solves problems in the sector. New rail lines, waterways, and other modes of transportation can help lower prices when trading in large quantities.

disclaimer: The financial information compared is the merged company data from FY19 to FY23.

Gateway Distriparks – Finance

Sales and Net Profit

The company reported Rs. 1,420.94 crore against Rs. It increased by 3.44% to ₹1,373.66 crore in FY22. Punjab Conware’s lease term commitments have impacted its revenue, and the company’s revenue growth trajectory is showing an upward trend at a five-year CAGR of 13.15% even after the COVID-19 lockdown.

Net profit increased by 8% to 50 billion won. 241.90 crore in FY23 from Rs. 223.82 million in FY22. Interest payments and depreciation costs decreased, helping the company’s profitability.

profit

The operating profit ratio has remained stable at an average of 24.60% over the past five years. Margins were impacted in FY23 due to increased variable costs, including rail freight costs.

Despite the decline in operating profit margin in FY23, net profit margin increased to 17.02% due to lower depreciation and interest expenses compared to FY22.

return margin

RoE decreased from 14.39% in FY22 to 14.17% in FY23. The five-year average was 17.53%. RoE is volatile, returns are not promising, and FY19 returns are yet to reach pre-COVID-19 levels of 25.61%.

RoCE was 13.45% in FY23, up from 13.19% in the previous year. The average was 13.97%. If RoCE is lower than RoE, it means shareholders are getting better returns but debt is not being used properly.

debt analysis

The debt ratio is showing a downward trend after peaking in fiscal 21. Debt reduction will help the company achieve more profitability and margins.

The interest coverage ratio in FY23 was 6.34x, an increase from 4.21x in FY22. The increase in ratio is due to reduction in interest expenses and improvement in profitability.

In the long run, debt reduction will improve the company’s financial performance and generate higher returns for investors. The average is 0.28.

Gateway Distriparks Fundamental Analysis – Key Indicators

Let’s take a look at some of Gateway Distriparks Ltd.’s key metrics.

Future plans for Gateway Distriparks

• The acquisition of Freight Terminal Private Limited, which operates Kashipur infrastructure and inland container depots, will help the company expand its business services, increase volumes, reduce costs and connect last-mile deliveries.
• The company is expected to add more warehouses connected by rail in northern and central India. A dedicated freight corridor to the west will help the company increase time efficiency, loadability, and lower logistics costs such as container double-stacking hubs.
• Showman Logistics, a Gateway subsidiary, expects to further expand its business by investing in expanding production capacity, especially for e-commerce and pharmaceutical delivery, with the support of 5PL Services, which provides end-to-end logistics services.
• The company expects to increase volumes in its inland container warehouse segment following the acquisition of the Greenland oil field near Jaipur, which is expected to open by the end of FY24.

conclusion

Let’s take a quick look at Gateway Distriparks as we conclude our fundamental analysis. The company is showing moderate revenue growth, debt is decreasing, and it needs to capitalize on opportunities and improve cost efficiencies to make a difference to the company’s financial stability.

Government support to strengthen supply chain management can be advantageous for logistics companies. What do you think about the future of the company? Does the company have potential? Let us know your thoughts below.

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Written by Santosh

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