27 December 2016 Gateway Distriparks - Business...

27 December 2016

Update | Sector: Logistics

Gateway Distriparks

BSE SENSEX S&P CNX CMP: INR233 TP: INR313 (+35% ) Buy 26,213 8,033

Bloomberg GDPL IN Equity Shares (m) 108.7 M.Cap.(INRb)/(USDb) 24.1 / 0.4

52-Week Range (INR) 360 / 206 1, 6, 12 Rel. Per (%) 7/-24/-29 12M Avg Val (INR M) 50 Free float (%) 74.8 Financials Snapshot (INR b)

Y/E Mar 2016 2017E 2018E 2019E

Net Sales 10.5 11.5 12.3 14.0

EBITDA 2.5 2.4 2.9 3.5

PAT 1.2 1.1 1.7 2.2

EPS (INR) 11.4 9.9 15.6 20.1

EPS (INR)* 8.7 7.8 11.7 14.3

EPS Gr. (%)* (31.3) (10.3) 49.8 22.5

RoE (%) 10.1 8.5 12.8 15.2

RoCE (%) 7.5 7.9 10.7 12.7

P/E (x) 20.5 23.6 14.9 11.6

P/E (x)* 26.9 30.0 20.0 16.3 EV/EBITDA (x)* 15.3 16.0 12.9 10.5

* Adjusted for Blackstone’s stake Shareholding pattern (%)

As On Sep-16 Jun-16 Sep-15

Promoter 25.2 25.2 32.9

DII 26.2 27.6 25.4

FII 39.5 38.7 31.4

Others 9.1 8.6 10.4

FII Includes depository receipts Stock Performance (1-year)

Gateway Distriparks Limited (GDPL) is an integrated logistics player. Together with its

subsidiaries, it has a presence in key verticals like Rail, Container Freight Station (CFS),

and Cold Chain. Its subsidiary, Gateway Rail Freight (GRFL) is India’s largest private

sector Container Train Operator (CTO), with ~5% market share. GDPL is one of India’s

largest CFS players, with significant market share in JNPT and Chennai port. Another

subsidiary, Snowman Logistics is the largest Cold Chain player in India, with a capacity

of 98,500 pallets.

RoCE to improve; Viramgam terminal margin-accretive Valuations attractive; Buy

Rail segment RoCE to improve over FY17-19E Gateway Rail Freight’s (GRFL) RoCE is subdued at less than 10% due to

underutilization of new terminals and heavy capex associated with creation of large ground handling capacity ahead of volumes.

RoCE should improve from ~8% in FY17 to 12% in FY19, as RoCE on additional volumes is likely to be in excess of 35%. We expect 12% CAGR in rail volume over FY17-19E.

Viramgam terminal to improve rail margins in FY18 With the commissioning of the Viramgam terminal, we expect the lead

distance of double stacking, particularly for containers transporting to JNPT, to increase meaningfully, resulting in better margins.

Management expects haulage savings of 2-4% post stabilization of the terminal.

We estimate ~460bp margin expansion over FY17-19 for the rail segment, with stabilization of the Viramgam terminal in FY18.

Rail segment deserves to trade at premium to Concor We believe GRFL should trade at premium valuations to market leader,

Concor due to (a) better sustainable RoCE / return ratios, (b) better margin profile due to higher proportion of double-stacking and route optimization, and (c) higher volume growth, led by ramp-up of new terminals.

Valuations attractive; Buy GDPL trades at 20x FY18E and 16.3x FY19E earnings (adjusted for

Blackstone’s 49% stake in GRFL), which we believe makes the stock attractive, given ~460bp RoE improvement over FY16-19E.

We arrive at a TP of INR313 (upside of 35%), valuing CFS business at 12x FY19E earnings, 40% stake in Snowman at 50% discount to market value, and rail segment at 15x FY19E EV/EBITDA (premium to Concor). Maintain Buy.

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Gateway Distr.Sensex - Rebased

Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Abhishek Ghosh ([email protected]); +91 22 3982 5436 Abhinil Dahiwale ([email protected]); +91 22 3980 4309

Gateway Distriparks

27 December 2016 2

Rail segment RoCE to improve over FY17-19E Major capex is over; incremental volumes to boost return ratios Gateway Rail’s (GRFL) RoCE is subdued at less than 10% due to underutilization of new

terminals and heavy capex associated with creation of large ground handling capacity

ahead of volumes.

RoCE should improve from ~8% in FY17 to 12% in FY19, as RoCE on additional volumes

is likely to be in excess of 35%. We expect 12% CAGR in rail volume over FY17-19E.

RoCE profile improving GRFL’s RoCE should see meaningful improvement from the current sub-10%

levels, as returns from incremental volumes are likely to be superior. The associated capex requirement for incremental volumes is only towards rake

addition, which at present constitutes only 25% of overall capital employed. Blended return ratio profile for the rail segment is likely to inch up from present levels with addition of each rake.

Subdued return ratios due to high capex and underutilization of terminals GRFL has incurred meaningful capex towards creation of ground handling

capacity near industrial areas in Ludhiana, Gurgaon and Faridabad. The terminals are strategically located near the trunk railway line to provide access. As the associated infra capex is quite high for creation of ground handling capacity, the capex towards rake is only 25% of overall capital employed.

Return ratios for the segment are ~8% in FY17E due to underutilization of large ground handling capacity created. However, the additional capex required for incremental volumes is mainly towards rakes (only INR130m per rake). The rake addition could also be done through the lease model, thus not hurting return ratios. As the additional capex towards incremental volumes is quite low, return ratios from incremental volumes are superior (over 30%), which improves the blended ratio profile of the segment.

Exhibit 1: GRFL’s total current capital employed is INR11b; major capex is over

Source: Company, MOSL

Capital employed towards 21 rakes

25%

Capital employed towards infra

75%

Gateway Distriparks

27 December 2016 3

Incremental rake addition to improve return ratios Our analysis suggests that for every additional rake of volume handled (4% of

volume), RoCE for the segment increases by ~40bp. For every five rakes handled, the RoCE increases by over ~200bp.

Exhibit 2: Every rake addition to improve RoCE

Incremental volume ROCE profile For 1 rake For 5 rakes

Present capital employed 11,000 11,000

Current ROCE 9.0% 9.0%

Current EBIT ~8% ROCE 990 990

Additional capex for additional rake 130 650

Incremental EBITDA from additional rake 65 325

Depreciation 6.5 32.5

Incremental EBIT from additional rake 58.5 292.5

Blended ROCE 9.42% 11.01%

Increase in RoCE (%) 0.42% 2.01%


We estimate 12% volume CAGR over FY17-19 due to ramp-up of Faridabad

terminal and pick-up in international trade. Accordingly, we expect RoCE to improve from ~8% in FY17 to ~12% in FY19.

The current ground handling capacity of the segment is around 5m TEU. As major portion of the capex is towards land acquisition; the additional ground handling capacity of ~5m TEU would be done at much lower capex due to excess land available.

Exhibit 3: Rail RoCE to improve from 7.5% in FY17 to 12.5% in FY19


10.0% 9.8%

7.0%

13.2%

9.9%

7.6%

10.1%

12.5%

FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

RoCE

Gateway Distriparks

27 December 2016 4

Viramgam terminal to improve rail margins in FY18 Savings from double-stacking to start well ahead of DFC completion With the commissioning of the Viramgam terminal, we expect the lead distance of

double stacking, particularly for containers transporting to JNPT, to increase

meaningfully, resulting in better margins.

Management expects haulage savings of 2-4% post stabilization of the terminal.

We estimate ~460bp margin expansion over FY17-19 for the rail segment, with

stabilization of the Viramgam terminal in FY18.

Strategically located The Viramgam Terminal is located at the confluence of two double-stack routes

between ICD Gurgaon and two main ports on the West coast at Mundra and Pipavav in Gujarat. The terminal will cater to the needs of the Ahmedabad, Sanand, Mehsana and Becharaji EXIM markets by providing ICD services such as customs clearance and storage of cargo.

It is spread across 35 acres of land, which will be the second hub for Gateway Rail’s container train service. The railway terminal will be built over 25 acres and will initially have a capacity to handle two trains simultaneously. The remaining 10 acres will be used to develop an ICD to cater to the needs of Gujarat trade.

It is expected to become operational by March 2017. Its completion will increase double-stacking and result in ~4% saving in rail haulage charges, well ahead of DFC completion (expected to complete by FY20).

Exhibit 4: Strategically located at the major EXIM market


Gateway Distriparks

27 December 2016 5

Viramgam to further boost return ratios The terminal would increase double-stacking lead distance for the rail segment,

as container volumes transported to JNPT would be partially double-stacked as against no double-stacking at present.

It would also improve frequency levels and subsequently reduce empty running charges for the segment. The management expects 2-4% reduction in haulage charges once the terminal stabilizes.

The terminal is likely to generate RoCE of 15-35%, with 2-4% savings on haulage charges. The RoCE of the terminal is extremely sensitive to haulage savings.

Exhibit 5: Savings from haulage charges to boost return ratios Viramgam Terminal Viramgam Capex 600 600 600 Savings in haulage charges (%) 2% 3% 4% Savings in haulage charges 120 180 240 Depreciation 30 30 30 EBIT 90 150 210 ROCE (%) 15% 25% 35%


Gateway Distriparks

27 December 2016 6

Rail segment deserves to trade at premium to CONCOR

GRFL deserves a premium to market leader CONCOR

GRFL’s return ratios to be sustainably higher than CONCOR in the medium term led by

better profitability of additional volumes and efficient capital allocation.

Margin profile for GRFL to be better than CONCOR due to higher proportion of double

stacking of volumes and route optimization.

GRFL is expected to witness higher volume growth, led by ramp-up of new terminals.

Superior return ratios GRFL’s return ratio profile is estimated to be much better than Concor’s, as

returns from GRFL’s additional volumes are expected to generate much better yield, thus improving blended returns for the segment.

Additionally, Concor is expected to continue investing in logistics park, which is likely to result in sub-optimal returns in the medium term.

Exhibit 6: GRFL’s RoCE to increase beyond the market leader’s


Better margin profile We expect GRFL to continue reporting better margins than Concor, led by

concentrated presence in profitable route for rail movement, which is West coast to North hinterland. Movement of containers is typically profitable for lead distance higher than 400-500km.

Nearly all of GRFL’s volumes are on the North hinterland to West coast route. For Concor, this route accounts for ~50% of volumes (FY16), which lowers its overall margins.

Additionally, double-stacked movement of containers is only possible for Mundra and Pipavav ports, which constitute ~67% of GRFL’s volumes and ~45% of Concor’s volumes. With higher proportion of double-stacking, GRFL’s margins are superior.

15.7% 15.0%

13.8% 13.9%

9.8% 8.4%

10.1%

10.4% 10.0% 9.8%

7.0%

13.2%

9.9%

7.6%

10.1%

12.5%


CCRI GRFL

Gateway Distriparks

27 December 2016 7

Exhibit 7: GRFL has exposure to North-West trade corridor (higher lead distance)


Exhibit 8: Concor has only ~56% of its total container traffic in North-West corridor


We expect EBITDA to improve from ~INR6,300/TEU in FY17 to ~INR7,950/TEU by

FY19, and EBITDA margin to improve from 18.3% in FY17 to 23% in FY19.

Western Region , 13%

Eastern Region , 7%

Southern Region , 14%

Central Region , 6%

North Central Region , 12%

Northern Region , 33%

South Central Region , 6%

North Western Region , 11%

Gateway Distriparks

27 December 2016 8

Volume growth led by ramp up of new terminals Strategic ICD locations to ensure volume growth: GDPL’s presence in the key

North-West corridor gives it an edge over the market leader Concor and other road operators. GDPL’s Gurgaon ICD is well placed to benefit from the volume growth in the NCR, given the limited competition in the area and the capacity constraint for Concor’s Tughlakabad ICD.

Volume growth is likely to be driven by ramp-up of the Faridabad terminal and commissioning of Viramgam terminal, resulting in market share gains.

Exhibit 10: GDPL’s ICD facilities are present across the North-West trade corridor

Location Ownership Area

(Acres)

Developed Area (Sq. Mt) Current

Capacity (TEUs) Yard Warehouse

ICD Garhi Harsaru (Near Gurgaon) Freehold 90 250,000 15,000 200,000

ICD Sanehwal (Near Ludhiana) Freehold 60 220,000 4,000 300,000

ICD Asaoti (Faridabad) Freehold 66 240,000 5,000 50,000

ICD Kalamboli terminal (Navi Mumbai) Alliance 17 20,000 1,000 75,000

ICD Viramgam terminal (Near Ahmedabad) Freehold 33 NA NA NA


ICD Faridabad Established in 2012, GRFL’s Faridabad ICD spreads across 66 acres and is

equipped with a capacity of 50,000 TEU. It is strategically located near NH-2 to serve the industrial hubs of Faridabad, Ballabgarh, Palwal and Noida. It is connected to the Kundli-Manesar-Palwal Expressway and Faridabad-Ghaziabad-Noida corridor.

The management expects volume growth for rail operations to come through the ramp-up of the Faridabad terminal. It is currently doing 1,700 TEU per month, which should ramp up to 2,000 TEU per month by March 2017.

All areas in the catchment of Faridabad are much closer to GRFL’s Faridabad ICD as compared to Concor’s Tughlakabad ICD.

The Faridabad terminal is likely to benefit from the capacity constraint at Concor’s Tughlakabad ICD (lead distance of ~22km).

Exhibit 9: GDPL’s rail EBITDA/TEU is to be higher compared to CONCOR due its presence in the north-western trade corridor


4,17

3

4,27

4

4,12

3

4,36

4

3,92

0

3,55

0

4,08

9

4,16

4

3,97

1

3,51

0 4,81

9

6,84

0

7,36

3

6,34

0 7,45

0

7,95

0


CCRI GDL

Gateway Distriparks

27 December 2016 9

Exhibit 11: Proximity to catchment market of Faridabad


Exhibit 12: Key markets are closer to GRFL’s Faridabad ICD than to Tughlakabad ICD

Market Distance from (Kms)

ICD Faridabad ICD Tughlakabad Ballabgarh 11 25 Prithala 9 34 Dudhola 12 37 Sohna 35 45 Palwal 19 44 Hodal 50 75 Kosi Kalan 62 89 Aligarh 100 134 Mathura 107 132 Agra 173 206 Firozabad 200 233


ICD Gurgaon – Garhi Harsaru GRFL’s Gurgaon ICD is strategically located to cover the key industrial hubs in

the NCR (Gurgaon, Manesar, Faridabad, Ghaziabad), Haryana (Hissar, Panipat, Sonepat) and Rajasthan (Bhiwadi, Rewari, Dharuhera, Neemrana).

Most of the areas in the catchment of Gurgaon are much closer to GRFL’s Gurgaon ICD than to Concor’s Tughlakabad ICD.

Gateway Distriparks

27 December 2016 10

Exhibit 13: Proximity to catchment market of Gurgaon


Exhibit 14: GDPL’s Gurgaon ICD is closer to most of the key markets

Market Distance from (Kms)

ICD Gurgaon, Garhi ICD Tughlakabad Manesar 9 33 Bhiwadi 45 67 Rewari 49 87 Bawal 67 97 Sonepat 82 73 Bhiwani 117 141 Panipat 147 113 Hisar 165 189 Karnal 182 147 Jaipur 233 263


ICD Ludhiana - Sahnewal GRFL’s Ludhiana ICD at Sahnewal is the first private rail-linked ICD / logistics

park in the state of Punjab. It is spread across 60 acres and has capacity of 300,000 TEU.

It is strategically located, with excellent connectivity to NH-1. The Ludhiana terminal caters to Punjab, Himachal Pradesh, Chandigarh, Jammu & Kashmir and northern Haryana.

Gateway Distriparks

27 December 2016 11

Container Freight Stations – A cash cow business It is likely to generate over INR2b of free cash over FY16-19

One of India’s largest CFS operators: Gateway Distriparks (GDPL) is one of the largest container freight station (CFS) operators in India, with a capacity to handle 624,000 TEU annually. It has its facilities at four major ports – JNPT, Chennai, Vizag and Kochi. It is also adding CFS capacity (beginning with 50,000 TEU) in Krishnapatnam.

Profitability impacted due to weak international trade: Profitability of the CFS segment has declined ~50% over FY12-16 due to weak EXIM trade and increasing competition. Competitive intensity is particularly high for JNPT, where port volumes have been flat for 4-5 years but the number of CFS players has consistently increased. Kochi CFS volumes have been sluggish due to higher proportion of direct clearance at the port level.

JNPT’s 4th terminal key trigger for volume growth: The JNPT CFS has been under severe pressure both on volume and profitability. It is likely to benefit from the upcoming 4th terminal, which would double capacity. The terminal would not only bring in extra volumes for the CFS, but would also result in higher congestion at the port. This would increase the dwell time at the CFS and improve profitability. GDPL has ~11% market share in JNPT and is likely to be the key beneficiary of the expansion of the terminal.

CFS business a cash cow: The CFS business is a cash cow for GDPL and is likely to generate over INR2b of free cash over FY16-19.

Exhibit 15: GDPL’s CFS facilities are present across India

Location Ownership Area (Acres) Developed Area (Sq. Mt) Current Capacity

(TEUs) Yard Warehouse

Navi Mumbai (Near JNPT/Uran) 60-year Lease 35 100,000 40,000 366,000

Punjab Conware (Near JNPT) 15-year O & M w.e.f 1-Feb-07 27 65,000 50,000

Chennai (Beween Chennai and Ennore) Freehold 20 70,000 7,000 140,000

Chennai (Near Ennore/Kattupalli) Freehold 10.5 36,000 4,000

Vizag 30-year Lease 20 75,000 3,000 70,000

Kochi (Vallarpadam) 30-year Lease 6.5 24,000 1,000 48,000

Kochi (Kalamasserry) Freehold 20 Land Bank

Krishnapatnam (Andhra Pradesh) Freehold 48 NA 50,000


Gateway Distriparks

27 December 2016 12

Exhibit 16: CFS contributed ~30% of revenue in FY16


Exhibit 17: Major capacity is at JNPT


Exhibit 18: JNPT and Chennai ports have handled +70% of EXIM traffic at major ports in FY16


Exhibit 19: GDPL had significant market share at both the major ports in FY16


Exhibit 20: EBITDA margin for CFS business to improve by ~140bp by FY19

Source: MOSL, Company

Gateway Rail 30%

CFS 70%

366,000

140,000

70,000 48,000

JNPT Chennai Vizag Kochi

Capcity (TEUs)

JNPT, 46%

Chennai, 24%

Others, 29% 11%

7%

JNPT Chennai

FY16

4,94

9

4,12

0

3,43

6

3,67

4

2,91

1

2,54

9

2,74

3

2,93

2

53.3 46.3

39.5 41.5

31.4 27.5 28.8 30.0


EBITDA/TEUs (INR) EBITDA Margin (%)

Gateway Distriparks

27 December 2016 13

Snowman Logistics – play on cold-chain logistics GDPL owns 40% stake in Snowman Logistics

Snowman Logistics is the largest integrated cold chain service provider in India, offering warehousing, transport and other value-added services. It operates 30 temperature-controlled warehouses across India, with a capacity of 98,500 pallets.

It operates 400+ reefer vehicles with a nationwide network, connecting more than 500 cities and towns. It also provides value-added services (VAS) such as inventory management, reverse logistics, labeling, sorting, repacking and blast freezing.

It was listed on the exchanges in September 2014. GDPL now has 40% stake in Snowman Logistics.

Exhibit 21: Snowman Logistics has a pan India presence

Exhibit 22: Well diversified revenue mix


Meat 18%

Agro Food 13%

Sea Food 13%

Dairy Products

10% QSR 10%

Confectionery 10%

Ice cream 8%

FSD 6%

RTC 4%

Industrial Products

4%

Health care & Pharmacy

3% Others

1%

Gateway Distriparks

27 December 2016 14

Attractive valuations Our SOTP-based target price works out to INR313, implying 35% upside Over the last decade, GDPL has invested heavily in land and associated

infrastructure, creating a large ground handling capacity for containers in key strategic locations. As most of these capacities are operating at sub-optimal levels, the current operating metrics do not reflect the business’ true potential. Its large terminals, particularly for the rail segment, act as huge entry barriers, giving GDPL a competitive edge.

We expect GDPL to witness strong RoE/RoCE improvement over FY17-19 on account of (1) better utilization of underutilized terminals, (2) margin expansion, with pick-up in trade, resulting in lower empty running, and (3) higher proportion of double-stacking.

The stock trades at 14.9x FY18E and 11.6x FY19E earnings, not adjusting for Blackstone’s 49% stake in the rail business. It trades at 20x FY18E and 16.3x FY19E adjusted earnings. We believe valuations are attractive, given 460pp RoE improvement over FY16-19E. The RoE improvement to ~15% in FY19 would be largely driven by 380bp expansion in net profit margin.

GDPL has consistently paid dividend of INR7/share, which translates into a dividend yield of ~3%.

We value GDPL on SOTP basis, in which we value individual segments as follows: CFS – We value CFS business at 12x FY19E earnings. Rail – We value the rail business at 15x FY19E EV/EBITDA, at a premium to

CONCOR due to better return ratios and higher volume growth. Snowman – We value GDPL’s stake in snowman business at 50% discount to

market value. Our SOTP-based target price works out to INR313, implying 35% upside. Exhibit 23: Our SOTP fair value stands at INR313, implying 35% upside (INR m) SOTP Valuation CFS-12x FY19E earnings 9,569 9,569 9,569 Rail- FY19E 15 x EV/EBITDA 32,803 32,803 32,803 Snowman's stake valued at 50% discount 1,700 1,700 1,700 Total value of GDPL 44,072 44,072 44,072 Less debt to buy out Blackstone's stake 10,000 12,000 14,000 Market value of GDPL ( Net debt is negligible) 34,072 32,072 30,072 Target price (per share) 313 295 277 % from CMP 35% 27% 19%


Gateway Distriparks

27 December 2016 15

Company background Gateway Distriparks (GDPL) offers container (rail and CFS/ICDs) and cold chain

logistics services across India. The GDPL group consists of: Gateway Rail: Largest private sector container train operator (CTO) in India GDPL: A listed company offering container freight station (CFS) services Snowman: India’s largest cold chain operator

Gateway Rail Gateway Rail is India’s largest private sector container train operator, with an

expanding network of inland container depots (ICD) and a wide inter-modal logistics network in India.

Exhibit 24: Gateway Rail provides multi-modal logistics services through its rail-linked ICDs


It operates three ICDs located at Gurgaon (Garhi-Harsaru), Ludhiana (Punjab)

and Faridabad (Asaoti, Haryana). It also has one private freight terminal at Kalamboli (Navi Mumbai).

These ICDs are linked through rail network to western India ports of Mumbai in Maharashtra, and Mundra and Pipavav in Gujarat. Gateway Rail owns 21 rakes and 235+ road trailers for the last mile connectivity.

Gateway Distriparks

27 December 2016 16

Exhibit 25: Gateway Rail connects Mumbai and Gujarat ports to the hinterlands in North India with its ICDs at Gurgaon, Ludhiana and Faridabad


All the three ICDs are strategically located at the key demand centers for

imports in India and export hubs – Gurgaon, Ludhiana and Faridabad. Western corridor (Mumbai/Gujarat to Delhi) accounts for the highest share of

India’s container traffic and Gateway Rail is well poised to benefit from growth in this region.

The company plans to add new ICD locations at Ahmedabad (acquired land), Jaipur and Nagpur (central location in India).

Gateway Distriparks

27 December 2016 17

Story in charts

Exhibit 26: Upcoming dedicated freight corridors (DFC) in railways to significantly multiply freight train capacity

Source: PTI, PMO, MOSL

Exhibit 27: DFC features to significantly boost container train operators’ (CTO) efficiencies

Source: DFCCIL, MOSL

Exhibit 28: GDPL’s strategically-located inland container depots (ICDs) to benefit from Western DFC


Exhibit 29: GDPL’s CFS are located at Mumbai, Chennai, Vizag and Kochi


Gateway Distriparks

27 December 2016 18

Story in charts

Exhibit 30: Model 11% Rail volume CAGR through FY19E, led by Faridabad ramp-up and expansion at Garhi and Ludhiana


Exhibit 31: Expect 14% Rail EBITDA CAGR through FY18E, led by volume growth and likely improvement in profitability


Exhibit 32: Model consolidated CFS volume CAGR at 8% through FY19E, helped by JNPT port capacity expansion


Exhibit 33: Expect 8% CFS EBITDA CAGR through FY19E, led by volume growth


Exhibit 34: GDPL’s market share in container rail business has more than doubled in the last few years (%)


Exhibit 35: Expect GDPL’s RoE and RoCE to improve (%)


112 131

180

234 212

248

203 220 238

275

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

Rail throughput ('000 TEUs)

302 438 717 820 1,023 1,699 1,494 1,392 1,770 2,187

2,687 3,333

3,971 3,510 4,819

6,840 7,363 6,340

7,450 7,950


Rail EBITDA (INRm) EBITDA (INR/teu)

215 230 219 223 209 223 213 234 256 275

64 74 78 76 74 88 78 87 91 99 24 29 37 43 51

60 58 62 62 64

- - - 1 6 16 16

14 17 18 304

333 334 343 340 387 365

397 426

456


Mumbai Chennai Vizag Kochi TotalIn '000 TEU

995 1,136 1,654

1,412 1,168

1,422 1,062 1,011 1,167 1,336

3,273 3,408

4,949 4,120

3,436 3,674 2,911

2,549 2,743 2,932


CFS EBITDA (INRm) CFS EBITDA (INR/teu)

11.7 13.0

11.9 12.3

16.0

10.1 8.5

12.8

15.2

10.7 11.6

10.7 10.8

12.9

7.5 7.9

10.7 12.7

FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

RoE RoCE

Gateway Distriparks

27 December 2016 19

Financials and valuations

Consolidated - Income Statement (INR Million) Y/E March FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Income from Operations 8,215 9,541 10,128 11,113 10,470 11,493 12,293 13,994 Less: Excise Duty 0 0 0 0 0 0 0 0 Total Income from Operations 8,215 9,541 10,128 11,113 10,470 11,493 12,293 13,994 Change (%) 36.3 16.1 6.2 9.7 -5.8 9.8 7.0 13.8 EBITDA 2,498 2,464 2,587 3,281 2,518 2,394 2,937 3,523 Margin (%) 30.4 25.8 25.5 29.5 24.1 20.8 23.9 25.2 Depreciation 628 699 801 889 805 808 861 914 EBIT 1,870 1,766 1,786 2,392 1,714 1,587 2,076 2,609 Int. and Finance Charges 149 187 294 254 184 334 282 282 Other Income 144 155 171 128 165 285 302 386 EO Items 0 0 0 0 0 0 0 0 PBT 1,865 1,734 1,662 2,266 1,695 1,537 2,096 2,712 Income tax 508 373 190 441 671 488 478 621 Tax Rate (%) 27.3 21.5 11.4 19.4 39.6 31.7 22.8 22.9 Add: Profit in Associate Company 0.0 0.0 0.0 89 83 30 90 104 Less: Minority (excl. Blackstone) 36 93 114 37 10 7 10 14 PAT 1,320 1,267 1,358 1,878 1,097 1,073 1,699 2,180 Adjusted PAT 1,320 1,267 1,358 1,878 1,237 1,073 1,699 2,180 Change (%) 36.5 -4.0 7.2 38.2 -34.1 -13.3 58.3 28.3 Margin (%) 16.1 13.3 13.4 16.9 11.8 9.3 13.8 15.6 Consolidated - Balance Sheet (INR Million) Y/E March FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Equity Share Capital 1,083 1,085 1,086 1,087 1,087 1,087 1,087 1,087 Preference Capital 2,958 2,958 2,958 2,958 2,958 2,958 2,958 2,958 Total Reserves 6,395 6,802 7,280 8,146 8,346 8,786 9,719 10,910 Net Worth 10,436 10,845 11,324 12,191 12,391 12,831 13,764 14,955 Minority Interest 663 806 1,257 259 259 259 259 259 Deferred Liabilities 602 1,012 1,016 290 290 290 290 290 Total Loans 1,270 2,520 3,241 1,820 2,820 3,320 3,320 3,320 Capital Employed 12,971 15,183 16,839 14,560 15,761 16,700 17,633 18,825 Gross Block 11,993 14,585 16,033 13,757 15,494 16,529 17,629 18,784 Less: Accum. Deprn. 2,703 3,391 4,005 4,110 4,915 5,723 6,584 7,498 Net Fixed Assets 9,290 11,194 12,028 9,647 10,579 10,806 11,045 11,286 Goodwill on Consolidation 310 511 553 317 317 317 317 317 Capital WIP 565 565 760 299 452 567 567 512 Total Investments 0 1 340 2,253 3,023 3,023 3,023 3,023 Curr. Assets, Loans&Adv. 3,320 2,852 3,481 3,077 2,506 3,215 3,971 5,120 Inventory 1 0 0 0 0 0 0 0 Account Receivables 664 964 1,136 1,064 1,028 1,129 1,207 1,374 Cash and Bank Balance 1,600 927 1,149 744 805 1,348 1,974 2,846 Loans and Advances 1,056 961 1,196 1,270 673 738 790 899 Curr. Liability & Prov. 976 863 1,300 1,173 1,257 1,368 1,430 1,574 Account Payables 244 274 339 349 387 443 455 510 Other Current Liabilities 274 505 494 346 415 455 487 555 Provisions 458 84 467 478 455 470 488 510 Net Current Assets 2,344 1,989 2,181 1,904 1,250 1,847 2,541 3,546 Deferred Tax assets 462 924 976 140 140 140 140 140 Misc Expenditure 0 0 0 0 0 0 0 0 Appl. of Funds 12,971 15,183 16,839 14,560 15,760 16,700 17,633 18,824 E: MOSL Estimates

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Financials and valuations

Ratios Y/E March FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Basic (INR)

EPS 12.2 11.7 12.5 17.3 11.4 9.9 15.6 20.1 EPS (excl. 49% Rail JV share) 11.2 10.4 10.1 12.6 8.7 7.8 11.7 14.3 Cash EPS 18.0 18.1 19.9 25.4 18.8 17.3 23.5 28.5 BV/Share 96.4 100.0 104.3 112.1 114.0 118.0 126.6 137.5 DPS 6.0 7.0 7.0 7.0 7.0 4.9 6.0 7.7 Payout (%) 57.2 69.6 65.5 47.9 81.7 59.0 45.1 45.4 Valuation (x)

P/E 18.7 13.5 20.5 23.6 14.9 11.6 P/E (excl. 49% Rail JV share) 23.1 18.5 26.9 30.0 20.0 16.3 Cash P/E 11.7 9.2 12.4 13.5 9.9 8.2 P/BV 2.2 2.1 2.0 2.0 1.8 1.7 EV/EBITDA 10.6 8.1 10.9 11.4 9.1 7.3 Adj. EV/EBITDA 13.2 10.8 15.3 16.0 12.9 10.5 Dividend Yield (%) 2.6 3.0 3.0 3.0 3.0 2.1 2.6 3.3 Return Ratios (%)

RoE 13.0 11.9 12.3 16.0 10.1 8.5 12.8 15.2 RoCE 11.6 10.7 10.8 12.9 7.5 7.9 10.7 12.7 RoIC 12.8 11.3 11.2 14.9 9.1 9.3 13.5 16.4 Working Capital Ratios

Asset Turnover (x) 0.6 0.6 0.6 0.8 0.7 0.7 0.7 0.7 Working Cap. Turnover (Days) 33 41 37 38 15 16 17 18 Leverage Ratio (x)

Net Debt/Equity 0.0 0.2 0.3 0.1 0.2 0.2 0.1 0.0 * Rail JV share post CCPS conversion can be between 37% to 49% Consolidated - Cash Flow Statement (INR Million) Y/E March FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E OP/(Loss) before Tax 1,865 1,734 1,662 2,266 1,695 1,537 2,096 2,712 Depreciation 628 699 801 889 805 808 861 914 Interest & Finance Charges 29 46 179 190 19 49 -20 -104 Direct Taxes Paid -436 -285 -405 -615 -671 -488 -478 -621 (Inc)/Dec in WC -84 -264 -133 -304 716 -55 -68 -133 CF from Operations 2,001 1,930 2,105 2,427 2,564 1,852 2,392 2,769 Others 71 3 -7 -52 0 0 0 0 CF from Operating incl EO 2,073 1,933 2,098 2,375 2,564 1,852 2,392 2,769 (inc)/dec in FA -1,116 -2,383 -1,964 -1,554 -1,890 -1,150 -1,100 -1,100 Free Cash Flow 957 -450 134 820 674 702 1,292 1,669 (Pur)/Sale of Investments 147 0 -340 -437 -770 0 0 0 Others 60 -77 519 -89 165 285 302 386 CF from Investments -909 -2,460 -1,785 -2,080 -2,495 -865 -798 -714 Issue of Shares 28 22 10 12 0 0 0 0 (Inc)/Dec in Debt -79 1,240 675 428 1,000 500 0 0 Interest Paid -135 -148 -269 -238 -184 -334 -282 -282 Dividend Paid -648 -1,084 -434 -761 -896 -633 -766 -989 Others -107 -176 -74 -141 73 23 80 89 CF from Fin. Activity -940 -146 -92 -700 -8 -444 -968 -1,182 Inc/Dec of Cash 223 -673 222 -405 62 543 626 872 Opening Balance 1,377 1,600 927 1,149 744 805 1,348 1,974 Closing Balance 1,600 927 1,149 744 805 1,348 1,974 2,846 E: MOSL Estimates

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N O T E S

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Disclosures

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