mukul agrawal stocks: 100% upside! This Mukul Agrawal stock just got 2 big price targets in 2 days

NEW DELHI: Logistics stock has received two major price targets in two days. and Elara Securities, who recently visited the group-promoted company’s Farukh Nagar Surface Transhipment Center (STC), said there is potential for a strong improvement in yield ratios for Gati as revenue and margin reach their potential. .

The two brokers see the stock rise to 108 percent above its current level, but added that corporate restructuring or intensified competition in the sector could pose risks to the stock’s upside.

On an otherwise weak day, Gati’s shares traded 3.64 percent higher at Rs 138.20 on BSE.

Seasoned investor Mukul Mahavir Agrawal held a 5.69 percent stake in the logistics company on March 31. Its stake in Gati is valued at Rs 95.90 crore as of Wednesday’s price.

The company’s management maintained its expectations for FY23 of double-digit volume growth, gross margin of 29 percent and EBITDA margin of 9-10 percent.

Elara Securities said on Wednesday it has maintained its ‘buy’ rating for the stock, with a one-year target of Rs 275, valuing Gati at 30 times FY26 earnings discounted by estimates for FY23 with a WACC of 15 per cent. WACC refers to weighted average cost of capital.

The brokerage noted that the Farukh Nagar STC is spread over 1.1 lakh sq ft with 89 docks and has a capacity to handle 89 trucks at a time.

Before that, Gati operated three different hubs with a combined size of 0.8 lakh sqft. That has now been converted into one hub, leading to a 50 percent increase in volume (since inception).

“As a result, the lead time (TAT) for a truck has been reduced by 45 minutes. All inbound/outbound shipments from Delhi-NCR are now managed under one roof,” said Elara, noting that North India is one of Gati’s largest markets.

The hub of Farukh Nagar also enjoys synergy with

as it is located in the Allcargo Industrial Park. Agrawal entered the Allcargo Logistics counter by buying 3,300,000 shares or a 1.34 percent stake in the March quarter, which is valued at Rs 90 crore today.

Elara noted that in FY23, Gati plans to commission STCs in Mumbai (in July), Bengaluru (in December) and Nagpur, Indore and Hyderabad (in Q4FY23) by consolidating existing hubs in respective areas.

“These are critical to handling high volumes, as fewer docks in smaller hubs smother the express movements of parcels during peak times. Management is aiming to handle more volumes than the industry average,” the brokerage said on Wednesday.

ICICI Securities said there will be no significant increase in lease costs despite the addition of seven new sorting centers as Gati will give up old sorting centers.

Company management said the way to get to grips with MSME’s existing 3,000 customers – including many inactive customers – is through sales relationships. It does not feel particularly threatened by the increasing intensity of competition, nor from new entrants or incumbents.

Given the nature of the MSME business, management believes that technology can make little difference to the incumbents, which can make a difference to key enterprise accounts (KEA).

Delhivery recently acquired Spoton as it aims to make a deeper dent in the express logistics industry. But ICICI Securities believes there will be plenty of opportunities for everyone.

Meanwhile, the brokerage said of corporate actions: “Allcargo is also taking into account the current discount from the holding company that Gati is attracting to Allcargo – as clarified by Mr. Shashi Kiran Shetty. As value unlocking in Gati starts to happen, a revised structure will be considered. – we hope that the company action will then be a demerger rather than a merger.”

(Disclaimer: The experts’ recommendations, suggestions, views and opinions are their own. They do not represent the views of Economic Times)

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