Tuesday, June 26, 2012

Gateway Distriparks Sees Morgan Stanley Buy

Gopinath Pillai,
Chairman, Gateway Distriparks Ltd.
By Associate Editor:
11:58 PM IST, Tuesday, 26th June 2012:

Gateway Distriparks Ltd (BSE: 532622, NSE: GDL) counter in BSE on Tuesday witnessed a large buy of 9.50 lakh shares by the leading FII, Morgan Stanley Asia (Singapore) Pte.

The deal, executed at Rs. 131 a share, was disclosed at Bombay Stock Exchange after trading hours on Tuesday.

The buy quantity by Morgan Stanley makes up a 0.88% stake in the leading logistics player. However, it is likely an accumulation for this FII, as it had bought 2.30% of GDL at a rate of Rs. 151.26 during March end, as reported earlier by StockExplain News.

On Tuesday, the FII has pumped in Rs. 12.45 crore for the additional stake. There were no identifiable counterparty sellers, offloading above 0.50% stake.

If Morgan Stanley hasn’t transacted in the counter since that earlier identified buy, its stake in Gateway Distriparks now stands at 3.18%, which makes it the third largest non-promoter investor behind FID Funds Mauritius, Life Insurance Corporation of India, and Norges Bank’s Government Pension Fund Global.

GDL has heavy institutional investor participation of 44.78%, dominated by Foreign Institutional Investors at 27.40%.

Total institutional stake showed an up-tick of 1.59% even in the latest Q4 Share Holding Pattern, mainly due to the heightened interest from Domestic Institutional Investors whose stake increased by 1.92%, and was moderated only by a slightly lower FII stake during that quarter.

Other large investors in the counter are Indea Capital, IDFC Premier Equity Fund, Bajaj Allianz Life Insurance, Swiss Finance Corporation, Reliance Capital Trustee Company, DSP Blackrock India TIGER, and ICICI Lombard General Insurance.

On the fundamental side, Gateway Distriparks had an impressive year in FY’12 with consolidated revenue up by 36.21%, and consolidated net profit rising by an identical 36.47%.

However, the stock had encountered significant selling pressure in the first three months of the current fiscal, tumbling from a 52-Week High of Rs. 159.90 during March end to Tuesday’s low of Rs. 126.

Even on Tuesday, despite being nearer to its 52-Week Low of Rs. 117.55, and despite Morgan Stanley’s significant buy, the Gateway stock closed in red, at Rs. 126.95, down by 2.87%.

One trouble-spot in the multimodal logistics company’s performance is that standalone revenue has been falling sequentially for all the four quarters of FY’12, while standalone net profit has also been slipping continuously in a similar pattern during the same period.

Gateway Distriparks is now relying more on its subsidiaries in rail/road based Inland Container Depots (ICD), and Cold Chain Storage & Logistics, to perform, rather than relying on its original growth engine of port-based Container Freight Stations (CFS) business.

Both these unlisted subsidiaries - Gateway Rail Freight Ltd and Snowman Logistics Ltd - were inorganically acquired and later expanded with equity participation from large investors like Blackstone, World Bank arm IFC, & Mitsubishi, and as such are not wholly owned subsidiaries of Gateway Distriparks Ltd.

In FY'12, while standalone sales was only 27.72% of consolidated sales, standalone net profit was still 60.47% of consolidated bottomline, thereby showing the better margins of the standalone operation, but which has been on a downtrend for the last year.

It remains to be seen whether Tuesday’s accumulation by Morgan Stanley will signal the counter for a reversal in fortunes from its recent downfall. Further cues will come shortly from the Q1 Share Holding Pattern and Q1 financial results.