Friday, October 9, 2009


……….Good Long Term Pick

Company Background:
GDL, a leading provider of port related logistics support services in India, promoted by three business groups based in Singapore and a business group in India. It operates container freight station (CFS) on a pan India basis with strategic locations at Jawaharlal Nehru Port Trust (JNPT), Chennai, Vizag and Kochi.

Investment Rationale:
With pan India presence, the Company caters to the West coast traffic, demand from the Northern hinterlands as well as the east coast traffic

The customer base of the Company includes large FMCG companies like HUL, ITC etc and large organized retail chains like Pizza Hut, KFC etc

The top line and profitability of the rail business are likely to improve with improvement in the utilization level of rakes, lower operating expenses, opening of two additional Inland Container Depots(ICDs) and strong growth of rail logistics

The Company has strong track record of dividend payment

Key Risks:
Transport and handling costs could increase with the spike in fuel costs

Any delay in setting up of dedicated rail freight corridors in Mumbai-Delhi, Delhi-Kolkata sectors, would dilute the attraction in its rail business.

The Bombay port (JNPT) accounts for around 75% of GDL’s business. Thus, any downturn or regulatory changes at JNPT could be detrimental to the Company’s growth prospects.

Increase in container traffic vis-à-vis creation of capacity at the ports could lead to congestion at ports which would result in decline / delay in the through put handled by the Company.

To see full report: GDL