Right place, right time

Allcargo Logistics

Initiating Coverage |12 January 2016Sector: Logistics

Harshad Borawake (HarshadBorawake@MotilalOswal.com); +91 22 3982 5432Rajat Agarwal (Rajat.Agarwal@motilaloswal.com); +91 22 3982 5558

Allcargo Logistics

12 January 2016 2

Allcargo Logistics: Right place, right time Summary ...........................................................................................................3

LCL leader; to benefit with shift in shipping trends ..............................................4

Domestic economic recovery augurs well for CFS/P&E ........................................10

Expect large FCF deployment to be RoE accretive ................................................15

Valuation and view .............................................................................................17

Company background .........................................................................................19

Financials and valuations ....................................................................................23

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.

Key terms used throughout the report MTO: Multimodal Transport Operations NVOCC: Non vessel operating container carrier CFS: Container Freight Station ICD: Inland Container Depot LCL: Less than container load FCL: Full container load

Allcargo Logistics

12 January 2016 3

Right place, right time Steady growth in MTO; domestic GDP revival to benefit CFS, P&E

Allcargo Logistics gives an unique opportunity to participate in the (a) domesticeconomic revival (through CFS and P&E) and (b) exposure to global LCL (less thancontainer load) consolidation market where it is one of the top two players (fastgrowing sub-segment in container shipping) with presence in >90 countries.

Strong balance sheet, increasing FCF will help Allcargo to further consolidate inglobal LCL market and can also look at monetizing its domestic land bank tobenefit from upcoming rail DFC (dedicated freight corridor) and GST reform.

We expect EBITDA CAGR of 15% through FY18 led by 17% in MTO, 15% in CFS and12% in Project and engineering leading to earnings CAGR of 22%. We valueAllcargo at 14x FY18 EPS to arrive at a fair value of INR243. Initiate coverage witha Buy.

Leader in LCL market; to benefit from shift in shipping trends AllCargo, led by acquisitions is now among top two in the world in niche LCL

market with presence in 90 countries. LCL is expected to grow aboveindustry average led by shift in global business dynamics.

Allcargo MTO volumes are expected to grow above industry average andimprove margins led by (a) efforts to improve volume per container filledfactor to boost margins and (b) negotiating better rates with shippers (scalehelps!), an advantage over competitors to attract volumes.

We expect LCL margins to remain 200-300bps above FCL's 3-3.5% and modelAllcargo's volume CAGR at 9% through FY18 and EBIT margin improvementfrom 4% in FY15 to 5% by FY18.

Domestic economic recovery augurs well for its CFS, P&E businesses We expect an uptick in CFS/ICD (7% of revenue, 25% of EBITDA), operating

at 65% utilization with improving port volumes and containerization trend. We expect P&E segment (7% of revenue, 33% of EBITDA), which includes

cranes, project logistics and shipping to grow with higher infrastructure activity in India through higher utilization.

We model EBIT CAGR (FY15-18) of 13% in CFS/ICD and 18% in P&E.Well positioned to invest growing FCF in value accretive opportunities With current net debt/equity of ~0.3x and likely FCF of ~INR13b till FY18 (v/s

MCap of INR46b, gross block of INR20b), AGLL is well positioned to play toits strengths of value accretive acquisitions and invest in allied businesses.

We expect it to (a) increase its hold on global LCL business throughopportunistic acquisitions, (b) invest in DFC and GST led opportunities.

Valuation and view We believe that Allcargo Logistics through its superior size and global

presence has created an effective economic moat versus its competitors. We value Allcargo Logistics at 14x FY18E EPS, and arrive at a target price of

INR243. Initiate coverage with a 'Buy'. The stock trades at 10.6x FY18EPS.

Initiating Coverage | Sector: Logistics

Allcargo Logistics CMP: INR184 TP: INR243 (+32%) Buy BSE Sensex S&P CNX

24,682 7,510

Stock Info

Bloomberg AGLL IN Equity Shares (m) 252.1 52-Week Range (INR) 218/128

1, 6, 12 Rel. Per (%) 2/35/21 M.Cap. (INR b) 46.4 M.Cap. (USD b) 0.7

Avg Val ( INR m) 46.0 Free float (%) 30.1

Financial Snapshot (INR Billion)

Y/E Mar 2016E 2017E 2018E Sales 61.9 68.3 74.9 EBITDA 5.7 6.4 7.3 NP 2.9 3.6 4.4

EPS (INR) 11.6 14.3 17.4 EPS Gr. (%) 22.0 22.9 21.7

BV/Sh. (INR) 85.7 98.2 113.4 RoE (%) 14.4 15.5 16.4 RoCE (%) 15.9 17.6 19.1

P/E (x) 15.6 12.7 10.6 P/BV (x) 2.1 1.8 1.6

Shareholding pattern (%)

As on Sep-15 Jun-15 Sep-14 Promoter 69.9 69.9 69.9 DII 0.1 0.0 0.0 FII 6.2 5.9 13.0 Others 23.8 24.2 17.1 FII Includes depository receipts

Please click here for Video Link

Allcargo Logistics

12 January 2016 4

LCL leader; to benefit with shift in shipping trends Global presence, focus on improving fill factor to drive margins

Allcargo, led by acquisitions is now present in 90 countries and is one of the leaders inniche recession proof LCL segment (~10% of industry). LCL is expected to grow aboveindustry average led by shift in global business practices to just-in-time, shorterturnaround from factory to end consumers, ecommerce and high air transport costs.

Allcargo, through concentrated efforts is focusing on (a) improving container fill factorto drive margin growth and (b) negotiating better rates (scale helps!) with shippers tonegotiate better rates, an advantage over competitors to attract volumes.

We expect LCL margins to remain 200-300bps above FCL’s 3-3.5% and model Allcargo’svolume CAGR at 9% through FY18 and EBIT margin improvement from 4% in FY15 to4.6% by FY18.

Leadership position in LCL segment built on acquisitions Presence in all the key markets and at origination and terminating destination is a critical factor for global logistics player. Allcargo, within a short period of time, has achieved a much necessary global scale in the LCL consolidation industry with presence in 90 countries and ~200 offices, primarily led by acquisitions in US, Europe and Asia. Allcargo is now amongst the top 2 neutral (third party) LCL consolidators in the world.

LCL consolidation industry is a niche sub-segment of the global shipping industry and contributes 10-15% (estimate based on industry interactions and Datamyne estimates) of the total container volumes transported through ocean.

Exhibit 1: MTO segment revenues grew at 21% CAGR since CY06 driven by contribution from acquired entities (INR b)

Source: Company, MOSL

Strategic acquisitions boosted growth and gave scale: While Allcargo commenced LCL business in 1995, the big boost to its owned network came in 2005/06 when it acquired Belgium based ECU-Line (Ecu-line then had 100 offices in 56 countries and agent network in 120 countries). Its other acquisitions include 2 Hong Kong based NVOCC’s in 2010, US based LCL operator Econocaribe in 2013 and majority stake (75%) in Netherlands based FCL Marine in 2013.

2 2 3 2 2 3 3 3 4 1 1 2 3 3 3 3 7 12

17 14

18 28 26 28 29

- -

- -

-

- - 3 2

- -

- -

-

- - 5

9

8 15

21 17

22

34 32

41 47

CY06 CY07 CY08 CY09 CY10 FY12(15M)

FY13 FY14 FY15

Domestic Hindustan Cargo Ecu-Line FCL Marine Econocaribe Total

Stock Performance (1-year)

Fully acquired ECU Line, acquired

Hindustan Cargo

Acquired controlling stakes in HK based NVOCCs

Acquired Econocaribe

and 75% stake in FCL Marine

Allcargo Logistics

12 January 2016 5

Allcargo’ first major LCL space acquisition was in 2005 when it acquired a 33.8%stake in ECU-Line followed by purchase of remaining stake in 2006 leading to atotal enterprise value of ~€50m. At the time of acquisition ECU-Line had 4.3xAllcargo revenue and acquisition catapulted Allcargo to the top 2 LCL player withother being US based Vanguard.

Econocaribe (deal value of ~USD50m; was then agent of ECU-Line and amongtop 3 LCL consolidators in US) strengthened Allcargo position in US with its thennine offices and 22 container freight terminals in the US and Canada.

FCL Marine is a niche player operating FCL player primarily operating to and froEurope and US/Canada.

Exhibit 2: Regional MTO business revenue share (in %) - Share of America geography improved rapidly helped by recent acquisitions

Source: Company, MOSL

Exhibit 3: Acquisition led growth strategy as positioned Allcargo among Top 2 LCL operators

Source: Company, MOSL

13 14 16 16 13 12 2 3 3 3 2 0

18 18 17 19 24 29

21 23 26 25 24 19 3 2 2 3 3 3

37 35 32 29 30 30

6 5 5 5 4 6

2009 2010 2012 2013 2014 2015

India Africa America Far East ANZ Europe Mediterranean

1995 •Entered into LCL consolidation as agent of ECU Line

1998 •Obtained MTO license from the Ministry of Shipping Government of India in June 1998

2001 •Made strategic investments in Ecu Line Mauritius and Ecu Line Middle East (Dubai).

2002 •Acquired 50% stake in ACM Lines (Pty) Ltd.

2005 •In June2005, acquired 33.8% stake in ECU Line

2006

•In January, increased its stake in ECU Line to 49.9% with an option to increase the stake further•In June, acquired the remainder of ECU Line•In December, acquired Hindustan Cargo Limited, the freight forwarding arm of Thomas Cook

2010 •Acquired two Hong Kong based companies engaged in Non Vessel Owning Common Carrier (NVOCC) business in China

2013 •Acquired US Based Company Econocaribe consolidators•Acquired 75% stake in Netherlands based logistics company FCL Marine Agencies Rotterdam through ECU-LINE

Allcargo Logistics

12 January 2016 6

Exhibit 4: ECU-Line geographical presence (highlighted in blue)

Source: Company, MOSL

Global scale is a win-win for all in value chain? LCL players like Allcargo book the container berths with the shipping companies on a regular basis and in turn resell the space in smaller quantity (less than container load) to the consumers at higher rates. This is a win-win for both as consumers save the cost of hiring the full container and LCL player is able to resell the space at favorable rates.

Allcargo’s advantage over other operators is that while Allcargo has global presence, other operators cannot expand on the same scale. If local players want to expand abroad they will need to do so via agents which then begin to eat away at the margins of the business, making it unattractive. Due to its global presence Allcargo can offer more and more direct trade lanes. This greatly reduces operational risk to not only Allcargo but also its customers.

Global scale gives an edge to (a) negotiate better rates with the shipping companies, (b) be cost competitive versus competition to attract more volumes and (c) not shyaway from business even if there is margin imbalance.a) Ability to book large container volume with shipping companies gives Allcargo

an advantage to negotiate better rates with the shipping companies.b) Lower rates by the shippers helps Allcargo to offer better rates to its customers

versus competition thereby attracting more volumes.c) Network reach with offices in both origination and destination is one of the key

competitive advantages in the LCL business as LCL operator will have control onthe cargo at both ends and also secure business even if there is marginimbalance* between the destinations.*If container margin on a trade lane from “A to B” is better than from a tradelane from “B to A”, then the LCL operator with offices at both ends will have anadvantage over an operator with agent network (LCL operator at origin withagent network will try to avoid business from “B to A”).

Allcargo Logistics

12 January 2016 7

What is LCL and dynamics of LCL What is LCL? LCL stands for ‘less than container load’ and LCL service provider is a cargo consolidator. Customers who do not have a cargo which can fill the container fully opt for the services of LCL consolidator like Allcargo.

Allcargo is a LCL service provider and acts as a conduit between a shipping line and its customers which primarily include Customs House Agents (CHAs), freight forwarders, importers and exporters.

The Importance of LCL is increasing with the changing business practices like just-in-time, low inventories, emergence of e-commerce etc which require frequent but smaller shipments of cargo. LCL is also largely immune to economic recessions. Further, shipping lines do not offer LCL services usually and these services are handled by consolidators like ECU-Line (Allcargo).

Where does LCL stand in overall shipping business? A customer who wants to transport container can either contact the shipping line (Eg. Maersk, CMA, Hapag Lloyd ) directly or can use the services of the third party freight forwarders (Eg. DHL, Panalpina, CH Robinson), who primarily deal in FCL (full container load). Shipping lines can entertain customer directly too if the customer is large in size.

The third party freight forwards are also called as NVOCCs (Non-vessel operating common carriers) and these can be further divided into LCL and FCL NVOCC’s.

LCL stands for less than container load FCL stands for full container load

Exhibit 5: The LCL Consolidation process

Source: Company, MOSL How big is the LCL market? Globally, the LCL segment accounts for 10-15% of the total revenue generated by forwarders, the remaining 85-90% is by FCL. LCL revenues stand at USD10-12b (CY14), with an annual volume of 2.3 million TEUs. (twenty Feet Equivalent).

Niche opportunity: LCL is a niche sub-segment within the shipping business and in our view freight forwarders do not do LCL themselves as (a) it is a more tedious process, involving interaction with a minimum of 10 entities per container and (b) low scale versus FCL business.

Competitive scenario: Top three (Allcargo, Vanguard and Shipco) LCL consolidators contribute to about 40% of the neutral global LCL market. Other LCL operators in India include Team Global and LCL Logistics.

Allcargo Logistics

12 January 2016 8

Evolving market dynamics to keep LCL volume growth high LCL is expected to grow above industry average led by shift in global business practices to just-in-time, shorter factory-to-fork time, ecommerce and high air transport costs.

Sticky volumes: LCL volumes tend to be sticky and are more immune to slowdown in the overall container market. During economic recessions, a large part of FCL volumes gets converted into LCL volumes.

LCL margins higher than FCL: Allcargo realizations are typically cost plus basis, i.e. the shipping freight is a pass-through and Allcargo charges 28-30% margin above it. LCL offers margins up to 200-300 basis points higher than FCL.

Exhibit 6: Allcargo EBIT margin higher than other global FCL players

*Ocean segment EBIT margins Source: Industry, MOSL

Can Allcargo enter into FCL in a big way? Allcargo focus on the LCL business is driven by the shipping market dynamics,

wherein it is already dominated by the large established companies. To gain afoothold in a market dominated by such heavyweights would be an arduoustask, in our view.

While Allcargo too does FCL in a small way, but it is not its core business and isdone only on a case-to-case business as per requirement of its clients. 30% ofLCL volume for Allcargo comes from these big freight forwarders. However, thecompany has realized that given its LCL network, it can selectively offer FCLservices to its existing and prospective clients without adding any major indirectcosts.

If Allcargo goes into a pure-play freight forwarding (FCL + LCL) then it will becompeting against its customers which are much bigger than Allcargo. It will alsobe forced to offer the entire supply-chain solutions the likes of which areoffered by DHL and other players.

We model MTO volume growth at 9% We model Allcargo’s MTO volume CAGR at 9% in FY15-18E driven by underlying business dynamics and EBIT margin improvement from 4% to 4.6% helped by superior negotiating with shippers, higher use technology in planning and improving fill factor.

0.0%

1.5%

3.0%

4.5%

6.0%

2011 2012 2013 2014

DHL Kuehne + Nagel CEVA Sinotrans Allcargo

Allcargo Logistics

12 January 2016 9

Model high single digit organic volume growth: While majority of the historical growth in the MTO business is through acquisitions, the evolving global business dynamics offer double digit volume growth possibility through organic growth too.

However, in order to further strengthen its market shares in some geographies like US, China, Brazil and Africa, Allcargo can do further acquisitions in the MTO space in our view. Focus could be also in strengthening its position in the countries where it has presence but has room to improve its market share.

Exhibit 7: Model MTO volumes to grow at 9% CAGR

Source: Company, MOSL

Exhibit 8: Conservatively model marginal improvement in EBIT margin

Source: Company, MOSL

200 238 337 285 335

422 456 497 542 -9%

19% 14%

6%

18% 26%

8% 9% 9%

CY09 CY10 FY12 -15M

FY13 FY14 FY15 FY16E FY17E FY18E

MTO volume ('000 teu) YoY (%)

576 1,003

1,669 1,484 1,558 1,896

2,118 2,435

2,883 3.4% 4.5% 4.9% 4.6%

3.8% 4.0% 4.1% 4.2% 4.6%

CY09 CY10 FY12 -15M

FY13 FY14 FY15 FY16E FY17E FY18E

EBIT (INRm) EBIT margin (%)

Allcargo Logistics

12 January 2016 10

Domestic economic recovery augurs well for CFS/P&E Steady growth led by port volumes and strong alliances with shipping lines

CFS/ICD business (7% of revenue, 25% of EBITDA) currently operating at 51%utilization will see an uptick with improving port volumes and containerization trend.

We expect P&E segment (7% of revenue, 33% of EBITDA), which includes cranes,project logistics and shipping to grow with higher infrastructure activity in Indiathrough higher utilization. Switching to an asset light model in the P&E segment willimprove return ratios

We expect EBIT CAGR (FY15-18) of 13% in CFS/ICD and 18% in P&E.

Higher utilization of CFS capacity will drive volumes in FY15-18E Allcargo operates a total of 4 CFS (three locations - JNPT, Chennai and Mundra) and 2 ICDs (Pithampur and Dadri). The company has also started developing another CFS at Kolkata which is expected to start operations in FY17. We expect Allcargo’s CFS business to benefit from (a) Macro trends – Port volume growth and increasing containerization, (b) its relationship with the shipping companies on account of MTO business and (c) strategic location and (d) favorable EXIM mix. We model volume growth at 8% CAGR through FY18 and EBITDA margin at 38.8%.

Exhibit 9: We model CFS volumes to grow at 8% CAGR from FY15-18

Source: Company, MOSL

Macros supportive for strong growth ahead: Container volume in India isexpected to be 2x by 2020, driven by EXIM trade and an increase incontainerization from the current 55% to >65% (versus developed countries’average of 70%). The containerization growth will be driven by:

1. Growth in the typical containerized cargo like electronics, textiles, foodproducts, pharmaceuticals, machinery and paper, and other break-bulkcommodities like steel, cement, sugar and rice.

2. Availability of rail transit capacity post DFCs commissioning, expansion in thecontainer handling capacity at ports, CFCs, ICDs and inland waterways.

3. Multi-modal logistics park development.

174 227

275 285 250

292 317 343

371 46%

60% 64% 57%

44% 51%

55% 60%

65%

CY09 CY10 FY12 -15M

FY13 FY14 FY15 FY16E FY17E FY18E

CFS volume ('000 teu) CFS utilization (%)

Allcargo Logistics

12 January 2016 11

Exhibit 10: Increasing EXIM trade and containerization to keep container volume growth at ports healthy

Source: IPA, Industry, MOSL

Leveraging relationships in the LCL segment: Indian CFS business whilecompetitive led by large number of players at each port location, the operatorswho can ensure higher utilization will continue to benefit more. Typically,majority of the CFS are located within the 10-20km from the port therebymaking it difficult to differentiate for the CFS operators to differentiate. Webelieve, Allcargo’s large LCL business gives it an advantage as it can leverage itsrelationships with shipping companies to attract more volumes.

CFS locations strategic: Allcargo’s CFS presence in three ports is strategic in ourview as these ports handle 76% (FY15) of the India’s container volume. Further,current utilization levels leave ample space for future volume growth. Even atJNPT, given that it has utilized just 50% of the 2nd CFS land, it is geared to benefitfor the planned doubling of the JNPT port capacity.

Exhibit 11: Allcargo CFS strategically located Area (acres) Capacity (teu) Details

CFS JNPT - 1 24 144,000 JNPT port handles 39% of India's container traffic JNPT - 2 43 (25 developed) 144,000 Mundra 16 77,000 Mundra handles 24% of India’s container traffic Chennai 25 120,000 Chennai handles 4% of India’s container traffic

ICD Dadri 11 52,000 Pithampur 14 36,000

Landbank (undeveloped) Nagpur 63 Hyderabad 40 Bangalore 110

Total 346 573,000 Source: Company, MOSL

EXIM mix and dwell time critical to ensure higher profitability: We understand~50% of the CFS revenue come from the ground rental linked to dwell time(number of days container stored in the CFS). Typically, earnings from importcontainers are more than export and Allcargo’s relationships with shippingcompanies helps it to keep this ratio favorable. However, on the dwell timefront with improving infrastructure it has reduced from 12-13 days five years

0

150

300

450

600

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

CAGR (%) 1971-80: 3.8 1981-90: 7.0 1991-00: 6.7 2001-15: 5.3

Cargo traffic (mmt)

0

40

80

120

160

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

CAGR (%) 1992-00: 17.5 2000-15: 9.8

Container traffic (mmt)

Allcargo Logistics

12 January 2016 12

back to ~10 days now and we expect it to reduce further. The company is using modern equipment at its CFS in the form of RTGs (Rubber-tire Gantry) replacing the older reach stackers, leading to better turnaround time.

Exhibit 12: Listed player CFS EBITDA comparison: Allcargo profitability better than its peers

Source: Company, MOSL

Expect infra spend pick-up to drive P&E and contract logistics segment Allcargo’s Project and Engineering (P&E) division comprises of (a) Crane leasing, (b) project cargo transportation and (c) shipping. All these businesses are heavily correlated with the domestic economic growth and investment cycle.

Allcargo’s P&E division post the heavy capex on the crane business was caught in the downturn before resurrecting in the last two years. While the return ratios in this business are subdued, going forward are expected to improve as the company plans to adopt asset light model (will lease cranes instead of outright purchase).

Exhibit 13: Infrastructure related sectors contribute highest to the P&E segment revenue

Source: Company, MOSL

2,000

3,000

4,000

5,000

6,000

FY12 FY13 FY14 FY15

Allcargo GDPL Navkar

Power, 32%

Oil & Gas, 16%

Eng. & Infra, 9%

Logistics, 7%

Cement & Metals, 6%

Port & CFS, 5% Others, 25%

Allcargo Logistics

12 January 2016 13

Exhibit 14: P&E revenue growth lagged increase in capital employed led by slowdown in the domestic economy

Source: Company, MOSL

Exhibit 15: Snapshot of P&E and contract logistics businesses and business drivers Sub-segments Details Key drivers Way forward

Crane leasing Owns 140 cranes with total capacity of 25,000 tonnes ranging from 45 tonnes - 750 tonnes

Investments in mega projects, wind power, etc.

Plans to lease instead of outright purchase

Shipping Owns 5 ships with an average capacity of 8000 deadweight tonnes, one has been chartered

Sagarmala Project, increase in capacity of existing ports and investment in new ports

Secure long-term contracts and increase margins Increase fleet size

Project Cargo transport Owns ~200 axles, 20 prime movers INR 700mn Investments in infra, particularly in power generation, cement and energy

Plans to enter e-logistics, increase asset utilisation and secure longer term contracts

Contract Logistics

Manage supply chains of customers and work on projects using owned logistics assets and in-house management capabilities

GST bill, Dedicated Freight Corridors, Make in India, FDI in retail and marketing

Introduce innovative logistics solutions

Source: Company, MOSL

Cranes: Economic revival, wind energy investments to drive growth Demand for cranes is expected to increase with economic revival and investments in wind farms. Based on the industry interaction and peer comparison, we believe the crane leasing margins can be >50% and would be one of the highest in Allcargo’s P&E segment. However, going forward as the company moves to a more asset light model by leasing cranes rather than purchasing them, reported margins could be lower but will improve overall returns. With the utilization rates already above 90%, further growth will be driven by increased pricing power.

Coastal shipping focus to help the company post healthy returns The government plans has targeted that by 2020, coastal shipping will account for 10% of the transportation from the current 7%. It has announced various projects and financial incentives. These will directly lead to the growth of the coastal shipping business. AllCargo is steadily increasing its fleet size (FY15 revenues at ~INR750m) to create barriers to entry and also plans to aggressively expand coastal shipping.

1,146 1,342 2,488 3,611 10,672 10,660 9,762 9,014

105 184

579 574

1,053

409

135

745

CY07 CY08 CY09 CY10 FY12 (15M) FY13 FY14 FY15

P&E Capital Employed (INRm) P&E EBIT (INRm)

Allcargo Logistics

12 January 2016 14

Project Cargo being driven by increase in infra spending The segment growth is primarily driven by infrastructure spending and investment in large scale projects. With government’s plan to significantly boost power generation, cement and energy sectors in India, project cargo business is expected to grow favorably.

Exhibit 16: Transport modal mix in India in comparison to other countries

Source: KPMG, MOSL

Other segments: Contract Logistics (3PL) expected to grow post GST and DFC Contract logistics revenue contribution was negligible (compared to Allcargo overall revenues) at ~INR120m in FY15, however we believe has a potential to grow substantially driven by e-commerce, GST and DFC (dedicated freight corridor) led opportunities. We believe the growth would be both organic as well as inorganic; however timelines and opportunity size will emerge over the medium term.

31 23 48

10

60

30

37

46

8

46

14

43

1 1 1 1

India China US Europe

Rail Road Water Air

Allcargo Logistics

12 January 2016 15

Expect large FCF deployment to be RoE accretive Expect AGLL to invest on DFC and GST led opportunities

With current net debt/equity of ~0.3x and likely FCF of INR13b till FY18 (v/s MCap of~INR46b, gross block of INR20b), AGLL is well positioned to play to its strengths ofvalue accretive acquisitions and invest in allied businesses.

We expect it to (a) further strengthen its hold on global LCL business throughopportunistic acquisitions, (b) invest in DFC and GST led opportunities.

Prudent balance sheet, high FCF creates opportunities AGLL management has strong investment track record: Allcargo has made more than 8 acquisitions in the last 10 years primarily in the MTO space and has invested significantly in the domestic CFS and P&E segment. These acquisition and investments has helped AGLL to grow revenue, EBITDA and PAT at 26%/25%/19% respectively. While the acquisitions has led to accretion of goodwill (INR8.7b) and depressed RoE’s (ex-goodwill reported FY15 RoE improves from 13% to 24%), but nevertheless its book value (adjusted for goodwill) has grown at 15% CAGR in the last 8 years.

Exhibit 17: AGLL revenue/EBITDA/PAT grew at 26%/25%/19% since CY06

Exhibit 18: Book value CAGR at 15% impressive despite acquisition led goodwill accretion

Source: Company, MOSL

Large FCF – Increase dividend or invest aggressively? While, there is a room to improve dividend payout (currently at 12.5% on consolidated basis), we expect AGLL management to play to its strengths and opt for more investment in the core and allied businesses.

Based on our AGLL’s capex understanding in the current businesses, we expect AGLL to generate FCF of INR13b till FY18 (v/s MCap of INR46b, gross block of INR20b). Further, its prudent net debt/equity of 0.3x (FY15 basis) gives room to raise debt if any large investment opportunity comes up.

0.8 1.4

2.2 2.2 2.7

5.2

3.6 4.0

4.8

0.6 0.8

1.1 1.3 1.7

2.8

1.7 1.5

2.4

CY06 CY07 CY08 CY09 CY10 FY12(15M)

FY13 FY14 FY15

EBITDA (INRb)PAT (INRb)

39 42 55

79 91

114 126

142 151

27 27 39

59 64 78

89 70

83

CY06 CY07 CY08 CY09 CY10 FY12(15M)

FY13 FY14 FY15

Reported Book value (INR/sh)Bookvalue adjusted for goodwill (INR/sh)

Allcargo Logistics

12 January 2016 16

Exhibit 20: Expect AGLL to generate cumulative FCF of INR13b by FY18 (INR b)

Source: Company, MOSL

Exhibit 21: AGLL to turn net cash based on current maintenance apex plans

Source: Company, MOSL

Exhibit 22: Already prudent balance sheet position to strengthen further

Source: Company, MOSL

Expect AGLL management to pursue shareholder value accretive opportunities We expect AGLL management to (a) further strengthen its hold on global LCL business through opportunistic acquisitions, (b) invest in DFC and GST led opportunities. Of its three business segments, we expect further investments in its MTO and P&E segment as current CFS utilization leaves large scope of growth without any capex requirement.

Exhibit 23: Analyzing investment opportunities Cash deployment avenues Our view

Increase dividend While dividend payout can be increased marginally, AGLL shareholders could benefit more by investing in new businesses given the management's investment track record

CFS Given the current utilization levels, no need to commit further capex in CFS in the medium term

MTO Focus on strengthening position in countries with high potential and where consolidation will be value accretive

Crane leasing Changed business dynamics now make cranes available for leasing, so expect AGLL to sub-lease cranes rather than outright purchase, thereby boosting return ratios

Coastal shipping Large opportunity given government focus - can selectively add more ships

DFC, GCT led opportunities Recent senior management induction of Mr. Tulsiani could help in developing this business segment. Can explore opportunities to develop its landbank (213 acres at Nagpur, Bangalore and Hyderabad) or add more to pursue logistics parks opportunities or develop its contract logistics opportunities.

Source: MOSL

0.2

(2.5) (2.5)

1.3

(1.2)

3.9 3.9 4.5

5.1

CY09 CY10 FY12(15M)

FY13 FY14 FY15 FY16E FY17E FY18E

1 2

6 6 8

4 1

-3

-7CY09 CY10 FY12

(15M)FY13 FY14 FY15 FY16E FY17E FY18E

Net Debt / (Cash) (INRb)

0.1 0.2

0.5 0.4 0.5

0.3

0.1 -0.1

-0.2

CY09 CY10 FY12(15M)

FY13 FY14 FY15 FY16E FY17E FY18E

Net Debt/Equity (x)

Allcargo Logistics

12 January 2016 17

Valuation and view Initiate coverage with Buy

We believe that Allcargo Logistics through its superior size and global presencevia ECU Line has established an effective competitive advantage versus itscompetitors.

It is therefore well placed to tackle both any sluggishness in container businessas well as make good use of the opportunities in this space.

We estimate EBITDA/PAT CAGR of 15%/23% through FY15-18E and return ratiosare expected to improve from ~13% to 17%-19% driven by improvement inmargins and reduction in capex intensity in the business.

Due to strong EBITDA/PAT growth driven by (a) consistent increase in volumesand (b) increase in margins, we assign a PE multiple of 14x to Allcargo.

Our target PE is in line with the last ~10 year average PE; we expect 22%earnings growth through FY18 v/s ~18% earnings growth since CY06 to FY15.

Based on our implied FY17 PE of 17.0x, AGLL is relatively undervalued by ~26%when compared to Navkar and ~33% when compared to GDPL (adj.)

We value Allcargo Logistics at 14x FY18E EPS, and arrive at a target price ofINR243. Initiate coverage with a 'Buy'. The stock trades at 10.6x FY18EPS.

Exhibit 23: AGLL currently trades at a 5% discount to its 10 years average P/E

Source: Bloomberg, MOSL

Exhibit 24: On an EBITDA basis, AGLL currently trades at a ~10% premium to its historical average

Source: Company, MOSL

Exhibit 24: Allcargo currently trades at a discount to its peers Company M Cap EPS P/E (x) EV/EBITDA (x) RoE (%)

USD M FY14 FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E Allcargo 695 5.9 9.5 11.6 31.1 19.3 15.8 12.9 10.7 8.3 6.8 13.0 14.5 15.6 Concor 3,668 48.4 54.1 44.9 55.4 23.3 28.1 22.8 15.6 15.6 15.6 14.7 14.7 14.7 Navkar 427 NA NA 5.7 8.7 NA 34.8 23.0 NA NA NA NA 6.9 8.7 GDPL* 521 10.1 13.1 9.3 12.5 24.3 34.0 25.4 14.5 18.6 13.9 16.4 10.8 13.6 Gati 200 NA 4.7 4.8 6.4 45.9 31.9 23.9 16.9 12.4 9.9 6.2 7.4 9.2 Blue Dart 2,244 51.7 54.5 82.6 114.8 133.9 76.5 55.1 78.0 47.2 32.8 27.2 50.3 50.9 Transport Corp 327 9.8 11.1 13.0 15.5 23.5 22.1 18.6 11.4 11.2 9.5 14.6 14.8 15.5

*(Adj. for 49% JV sh. in Rail) Source: Bloomberg, MOSL

13.2

9.9

13.7

0

10

20

30

40

50

Jun-

06

Jul-0

7

Aug-

08

Sep-

09

Sep-

10

Oct

-11

Nov

-12

Nov

-13

Dec

-14

Jan-

16

P/E (x) 5 Yrs Avg(x) 10 Yrs Avg(x)

6.9 6.3

2.0

4.3

6.6

8.9

11.2

Jun-

06

Jul-0

7

Aug-

08

Sep-

09

Sep-

10

Oct

-11

Nov

-12

Nov

-13

Dec

-14

Jan-

16

EV/EBITDA(x) Avg(x)

Allcargo Logistics

12 January 2016 18

Key risks

Economic risks: CFS and MTO businesses are closely linked to the global tradevolumes. Any slowdown in global trade, due to slowdown in global GDP growthor due to the slowdown in key trade hubs like China, or due to other factors willimpact overall volumes growth.

Currency risks: The MTO revenues are generated by subsidiaries based outsideIndia. While preparing the consolidated statements, the earnings are translatedinto INR. Any fluctuations in forex will hence impact the financial statements ofthe company.

Risk of impairment of goodwill: Allcargo has reported more than INR8.5bn ofgoodwill, due to the number of acquisitions it has done in the past. Anyimpairment in the value of this goodwill will negatively impact the financialstatements of the company.

Allcargo Logistics

12 January 2016 19

Company background

Incorporated in 1993 by promoter Shashi Kiran Shetty, Allcargo Logistics (a partof Avvashya Group) started operations as cargo handler at Mumbai port. Overthe years through organic and inorganic route it has become a leadingintegrated logistics service provider with >USD1b in sales and ~883 permanentemployees (as on March 31, 2015). Majority of the company’s workers arecontractual,

Its key business divisions are global Multimodal Transport Operations (NVOCC,LCL and FCL), domestic CFS/ICD operations and Project and Engineering division(which includes Project Logistics, Equipment Hiring). It also provides contractlogistics services.

Allcargo, as a multimodal transport operator (MTO) under a single documentprovides LCL and FCL forwarding services using multiple transport modes (sea,road and rail). Its customers include Customs House Agents (CHAs), freightforwarders, exporters and importers.

It has presence in 90 countries and 4,000 port pairs and operates 6 CFS/ICD inIndia. It has yet to develop >200 acres of land banks at Nagpur, Hyderabad andBangalore.

Business Verticals CFS: Container Freight Station ICD: Inland Container Depot MTO: Multimodal Transport Operations NVOCC: Non vessel operating container carrier LCL: Less than container load FCL: Full container load

Allcargo Logistics

12 January 2016 20

Exhibit 25: KEY MANAGEMENT

Mr. Shashi Kiran Shetty, Chairman and Managing Director

The promoter and the founder of Allcargo. He has led the growthof the company from a freight forwarding agent to the world’s2nd largest LCL player with total revenues of INR 56bn. He hasmore than 35 years of experience in the industry.

Mr. Adarsh Hedge, Executive Director

The head of CFS business and corporate marketing of Allcargo.He has more than 22 years of experience in the logistics industry.He is a mechanical engineer.

Mr. Umesh Shetty, CEO – Projects & Engineering Solutions

Responsible for the growth of Projects & Engineering Solutionsdivision, Mr. Umesh Shetty has more than 20 years of experiencein cargo and logistics.

Mr. S. Suryanarayanan, Director Finance & Executive Director ECU-LINE

He has more than year 22 years of experience in the logistics,chemicals and engineering sector. He had worked in Relianceand Great Eastern before joining AllCargo. He is a CharteredAccountant.

Mr. Prakash Tulsiani, Executive Director & COO

Having served as the MD of Gujarat Pipavav Port and COO of Gateway Terminals, Mr. Tulsiani brings with substantial leadership experience in the ports industry. He has more than three decades of experience.

Exhibit 26: MTO segment contributes the highest to revenue Exhibit 27: P&E segment contributes the highest to EBIT

Source: Company, MOSL

83 77 79 81 85 84

7 7 8 8 6 7 9 10 12 11 8 9

CY09 CY10 FY12 (15M) FY13 FY14 FY15

MTO CFS P&ERevenue share (%)

30 39 39 49 59 51

41 38 37

38 36

29

30 23 24 13 5 20

CY09 CY10 FY12 (15M) FY13 FY14 FY15

MTO CFS P&EEBIT share (%)

Allcargo Logistics

12 January 2016 21

Exhibit 29: Geographical revenue break-up for AGLL (% share)

Exhibit 30: Allcargo CFS and ICD locations

India 26%

Africa 0%

America 25%

Far East 16%

ANZ 2%

Europe 25%

Mediterranean 5%

Allcargo Logistics

12 January 2016 22

Exhibit 31: Key timelines for AllCargo Logistics Year MTO CFS P&E and others 1993 Incorporated on August 18, 1993 as a private limited company - Allcargo Movers (India) Pvt Ltd. Started as(a) cargo handling

operator at Mumbai port, (b) a shipping agency house and (c) provided freight forwarding services 1994 Appointed as agents of ASIA Lines Ltd. a Mauritian Shipping

Line 1995 Entered into LCL consolidation as agent of ECU Line in

Mumbai and Delhi 1998 Obtained MTO licence from the Government of India in June

1998 2001 Made strategic investments in ECU Line - Mauritius and

Middle East (Dubai). 2002 Acquired 50% stake in ACM Lines (Pty) Ltd. 2003 Entered into a JV with Transworld Logistics & Shipping

Services Inc Started CFS at Kroploi near JNPT

2004 Commissioned 2nd phase of its JNPT CFS

2005 In June, acquired 33.8% stake in ECU Line Commissioned 3rd phase expansion JNPT CFS

2005 On December 8, changed company name to Allcargo Global Logistics Pvt Ltd.

2006 PE firm New Vernon acquired 6.42% in Allcargo for INR600m (@~3x sales)

2006 In Jan-06, hiked stake in ECU Line to 49.9% with an option to increase further

2006 Listed on BSE and NSE in June 2006 In Jun-06, fully acquired ECU Line. With ECU Line revenues

4.3x of Allcargo, it became the world's No.2 NVOCC LCL firm, after Vanguard.

2006 In Dec-06, acquired freight forwarding arm (air and custom clearance) of Thomas Cook - Hindustan Cargo for ~INR89m

2007 In Apr-07 started Chennai and Mundra CFS

2008 Acquired P&E division of Transindia Freight

2008 In Feb-08, Blackstone took 10.38% stake through equity shares, FCCDs and warrants for ~INR2.4b (valued AllCargo at INR23b, 30% premium to then share price)

2009 In Sept-09, Blackstone increases stake to 14.99% by converting warrants. 2009 Started 1st ICD at Pithampur Started operations in 3PL 2010 In April, raised USD23.5m via QIP 2010 Acquired Hong Kong based NVOCC's for USD22m (operating

profit of USD3.6m): (1) 75% stake in Shanghai based and (b) 100% stake for Ningbo based.

2011 Started ICD at Dadri in JV with Concor

In Apr-11, acquired MHTC Logistics

2011 Changed its name to Allcargo Logistics Ltd. 2012 Started 2nd CFS at JNPT port 2013 Through ECU Line acquired US based Econocaribe consolidators

for ~USD50m 2013 Through ECU Line acquired 75% stake in Netherlands based FCL

Marine Source: Company, MOSL

Allcargo Logistics

12 January 2016 23

Financials and valuations

Consolidated – Income Statement (INR Million) Y/E March FY12 (15M) FY13 FY14 FY15 FY16E FY17E FY18E Total Income from Operations 42,804 39,263 48,594 56,288 61,886 68,256 74,880 Change (%) 49.5 -8.3 23.8 15.8 9.9 10.3 9.7 Operational Cost 28,645 27,194 34,281 39,622 43,563 48,047 52,710 Personnel Expenses 6,095 5,634 7,290 8,566 9,418 10,388 11,396 Other Expenses 2,825 2,873 3,111 3,346 3,679 4,057 4,451 Total Expenditure 37,565 35,701 44,681 51,534 56,660 62,492 68,557 EBITDA 5,238 3,562 3,913 4,754 5,724 6,422 7,268 Margin (%) 12.2 9.1 8.1 8.4 9.2 9.4 9.7 Depreciation 1,337 1,474 1,755 1,574 1,578 1,617 1,655 EBIT 3,901 2,088 2,159 3,180 4,146 4,805 5,612 Int. and Finance Charges 644 414 563 535 507 417 327 Other Income 452 662 365 526 227 359 490 PBT bef. EO Exp. 3,709 2,335 1,960 3,171 3,865 4,748 5,775 EO Items 0 0 0 0 -39 0 0 PBT after EO Exp. 3,709 2,335 1,960 3,171 3,826 4,748 5,775 Income tax 734 512 416 700 842 1,045 1,271 Tax Rate (%) 19.8 21.9 21.2 22.1 22.0 22.0 22.0 Minority + Associate share 132 126 51 73 87 105 126 PAT 2,844 1,697 1,493 2,399 2,897 3,598 4,379 Change (%) 71.4 -40.3 -12.0 60.6 22.0 22.9 21.7 Margin (%) 6.6 4.3 3.1 4.3 4.7 5.3 5.8

0.0 0.0 0.0 0.0 0.0 0.0 0.0 Consolidated - Balance Sheet (INR Million) Y/E March FY12 (15M) FY13 FY14 FY15 FY16E FY17E FY18E Equity Share Capital 260 252 252 252 504 504 504 Total Reserves 14,638 15,604 17,679 18,826 21,107 24,254 28,083 Net Worth 14,899 15,857 17,931 19,078 21,611 24,758 28,588 Minority Interest 311 433 463 221 221 221 221 Deferred Liabilities 924 1,172 1,284 1,354 1,354 1,354 1,354 Total Loans 7,653 7,267 9,921 6,133 5,133 4,133 3,133 Capital Employed 23,788 24,728 29,599 26,786 28,319 30,466 33,296 Gross Block 16,358 18,850 20,528 20,244 20,744 21,244 21,744 Less: Accum. Deprn. 3,801 5,163 7,094 8,283 9,861 11,477 13,132 Net Fixed Assets 12,557 13,687 13,434 11,961 10,883 9,767 8,612 Goodwill on Consolidation 4,580 4,602 9,051 8,655 8,655 8,655 8,655 Capital WIP 854 139 236 302 332 367 402 Total Investments 1,071 1,859 1,902 894 894 894 894

Curr. Assets, Loans&Adv. 9,369 9,641 11,675 12,648 15,852 19,989 24,891 Inventory 125 111 114 117 128 142 155 Account Receivables 3,576 3,825 5,715 6,476 7,120 7,852 8,615 Cash and Bank Balance 1,341 1,382 1,647 1,738 3,857 6,759 10,377 Loans and Advances 4,327 4,324 4,199 4,318 4,747 5,236 5,744 Curr. Liability & Prov. 4,815 5,429 6,938 7,928 8,550 9,458 10,411 Account Payables 3,338 3,536 4,661 5,744 6,315 6,965 7,641 Other Current Liabilities 1,094 1,275 1,674 1,557 1,712 1,888 2,071 Provisions 383 619 602 627 524 605 699 Net Current Assets 4,555 4,212 4,737 4,720 7,302 10,531 14,480 Deferred Tax assets 171 228 238 253 253 253 253 Appl. of Funds 23,788 24,728 29,599 26,786 28,319 30,466 33,296

Allcargo Logistics

12 January 2016 24

Financials and valuations Ratios Y/E March FY12 (15M) FY13 FY14 FY15 FY16E FY17E FY18E Basic (INR) EPS 11.3 6.7 5.9 9.5 11.6 14.3 17.4 Cash EPS 16.6 12.6 12.9 15.8 17.9 20.7 23.9 BV/Share 59.1 62.9 71.1 75.7 85.7 98.2 113.4 DPS 0.8 0.7 0.8 1.0 1.2 1.5 1.8 Payout (%) 8.0 13.0 14.8 12.5 12.5 12.5 12.5 Valuation (x) P/E 19.3 15.8 12.9 10.6 Cash P/E 11.7 10.3 8.9 7.7 P/BV 2.4 2.1 1.9 1.6 EV/Sales 0.9 0.8 0.6 0.5 EV/EBITDA 10.7 8.3 6.8 5.4 Dividend Yield (%) 0.5 0.7 0.8 1.0 Return Ratios (%) RoE 17.0 11.0 8.8 13.0 14.4 15.5 16.4 RoCE 17.3 11.5 9.5 13.4 15.9 17.6 19.1 Working Capital Ratios Debtor (Days) 30 36 43 42 42 42 42 Creditor (Days) 43 47 50 53 53 53 53 Working Cap. Turnover (Days) 27 26 23 19 20 20 20 Leverage Ratio (x) Net Debt/Equity (x) 0.5 0.4 0.5 0.3 0.1 -0.1 -0.2

Consolidated - Cash Flow Statement (INR Million) Y/E March FY12 (15M) FY13 FY14 FY15 FY16E FY17E FY18E OP/(Loss) before Tax 3,710 2,335 1,960 3,171 3,826 4,748 5,775 Depreciation 1,337 1,474 1,755 1,574 1,578 1,617 1,655 Interest & Finance Charges 551 370 532 492 280 58 -163Direct Taxes Paid -930 -634 -373 -478 -842 -1,045 -1,271(Inc)/Dec in WC -1,353 -22 -195 113 -462 -327 -331CF from Operations 3,315 3,522 3,680 4,872 4,380 5,050 5,666 Others 153 -278 -572 -573 0 0 0 CF from Operating incl EO 3,468 3,244 3,107 4,300 4,380 5,050 5,666 (inc)/dec in FA -5,991 -1,896 -1,290 -442 -530 -534 -536Free Cash Flow -2,524 1,348 1,817 3,858 3,850 4,516 5,131 (Pur)/Sale of Investments 1,014 52 -237 1,218 0 0 0 Others -414 88 -2,665 -1,028 227 359 490 CF from Investments -5,391 -1,757 -4,192 -252 -303 -175 -46Issue of Shares 0 0 0 0 0 0 0 (Inc)/Dec in Debt 3,009 -563 2,732 -2,509 -1,000 -1,000 -1,000Interest Paid -556 -538 -586 -550 -507 -417 -327Dividend Paid -530 -74 -222 -310 -363 -451 -549Others -90 -271 -575 -589 -87 -105 -126CF from Fin. Activity 1,834 -1,446 1,350 -3,957 -1,958 -1,973 -2,002Inc/Dec of Cash -89 41 265 91 2,119 2,902 3,618 Opening Balance 1,430 1,341 1,382 1,647 1,738 3,857 6,759 Closing Balance 1,341 1,382 1,647 1,738 3,857 6,759 10,377

RECENT INITIATING COVERAGE REPORTS

REPORT GALLERY

Allcargo Logistics

12 January 2016 26

Disclosures This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.

MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business.

MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents.

Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412

There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues

Disclosure of Interest Statement ALLCARGO LOGISTICS Analyst ownership of the stock No Served as an officer, director or employee No

A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes

Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.”

Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Kadambari Balachandran Email : kadambari.balachandran@motilaloswal.com Contact : (+65) 68189233 / 65249115 Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

Motilal Oswal Securities Ltd Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025

Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com