FORTUNE INTERFINANCE LTD (FIFL)

Transcription

1 FORTUNE INTERFINANCE LTD (FIFL) Company:. Dream Big Think Fortune Face Value (`): 10 Book Value (`): 9.78 (2009#) Target (`): 55 Return: 15% Time Horizon: 6 Months Market Cap (`): 20,113 mn* Market Cap ($): 447 mn** Date: 24 th August 2010 Note: *Market Cap assumed at IPO price of ` 48; **USD/INR assumed at ` 45; # Year ending 31 st December 1

2 Index Issue Highlights Company Profile Segment Presence Industry Analysis SWOT Analysis Income Statement Balance Sheet

3 Issue Highlights Objective of the Issue Issue Size (` mn) 4,375-5,000 Repayment of Loan (` mn) 3,000 Price Band (`) Offer Date 23 rd Aug 2010 Close Date 26 th Aug 2010 Investment in Capital Expenditure (` mn) 825 Investment in Capital Equipment (` mn) 287 Face Value (`) 10 Lot Size 130 General Corporate Purpose (` mn) 888 Issue Composition Book Running Lead Manager Total Fresh Issue *(mn shares) Kotak Mahindra Capital Company Ltd. IDFC Capital Ltd. QIB (mn shares) Retail (mn shares) Name of the Registrar Karvy Computershare Pvt. Ltd. Source: Draft Prospectus; Note: *At the Upper band of ` 48 3

4 Company Profile Board of Directors (GPPL) was incorporated in 1992 to build, construct and operate port at pipavav. The company is promoted by APM Terminals, one of the largest container terminal operators in the world. GPPL is the developer and operator of APM Terminals Pipavav. The port is into multi-cargo and multi-user operations. It is mainly involved in port handling and marine services for container cargo, bulk cargo and LPG cargo. It also operates a Container Freight Station (CFS). Name Per Jorgensen Prakash Tulsiani Pravin Laheri Luis Miranda Dinesh Lal Designation Chairman M.D. Non-Exec Director Non-Exec Director Non-Exec Director Our Recommendation Post-Issue Shareholding Pattern FIFL recommends Subscribe to the public issue of. We believe that the company will improve its operating profit margins and will reduce its debt burden in the coming years. We valued the stock over 2Y (FY11E) forward book value of ` 17.8 with a P/B multiple of We have a price target of Rs 55 on the stock over a time horizon of 6 months. Promoter Institutional Investors Public Others 42% 1% 27% 30% Source: Draft Prospectus, FIFL Research 4

5 Segment Presence Revenue Distribution (%) GPPL is the operator of Pipavav port of Gujarat. The port is located near the Gulf of Khambat which helps it to serve imports from and exports to middle east, Asia, Africa, USA and Europe. Container Cargo Bulk Cargo Marine Services Land related Revenue Others 3% 1% 3% The port accepts vessels with upto 14.5 metre draught and has four berths with a total length of 1,075 metres used for handling bulk and containerized cargo. It also has an LPG berth with a service deck of 65 metres. It has a present capacity to handle 0.60 mn TEUs* of container Cargo and 5 mn tonnes of bulk cargo p.a. 45% 48% Container Handling Capacity at Gujarat & Maharashtra Ports Dry Bulk Cargo Handling Capacity at Gujarat & Maharashtra Ports Mn TEUs Mn tonnes FY 09A FY10E FY 11E FY12E FY13E FY14E FY15E 0 FY09A FY10E FY11E FY12E FY13E FY14E FY15E Source: Draft Prospectus, CRISIL Research, FIFL Research; Note: *Twenty-foot equivalent unit (TEU) 5

6 16.9% 2002A 16.7% 2003A 17.6% 2004A 13.7% 2005A 10.5% 2006A 15.0% 2007A 30.5% 2008A 4.6% 2009A 8.7% 2010A Industry Analysis Bulk Cargo Traffic at major & Non Major Ports Mix of Cargo Handled at Gujarat Ports Major (in mn MT) Non Major (in mn MT) FY06A FY07A FY08A FY09A FY10A FY15E Petroleum Oil Lubricants Fertilizer Cement & Clinker Others 9% 2% 6% 7% Container Coal Iron Ore 4% 15% 57% Annual Container Traffic Growth Rate Total Traffic Handled at India Ports Growth Rate (%) Major Ports(in mn tonnes) Non Major Ports (in mn tonnes) 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% FY06A FY07A FY08A FY09A FY10A Source: Draft Prospectus, CRISIL Research, FIFL Research 6

7 Strengths SWOT Analysis Weaknesses Strategic Location: APM Terminals Pipavav is the closest port in the west coast (in road distance) from New Delhi, compared to Mundra port and JNPT. It is strategically located in the Gulf of Khambhat to tap the import-export trade from the middle east, Asia, Africa, USA and Europe. Favourabe Oceanic Condition: The wave height in the harbour does not exceed 0.5 metres at the berth and the water current is between 2.5 to 3 knots during peak tidal condition. These conditions favour navigation of the ships day and night throughout the year. Infrastructure: The port can accept vessels with drought upto 14.5 metres. It has four berths with a total length of 1,075 metres for handling bulk and containerised cargo. It also has a LPG berth with a service deck of 65 metres. Opportunities Commercial Flexibility: APM Terminals Pipavav is not covered by the regulatory purview of the tariff authority of major ports and thus has the flexibility to determine its own tariff at the ports. Strong Promoter Group: GPPL is promoted by APM Terminals which is one of the largest container terminal operator. It gets the technological knowledge from its promoter group. Debt Burden: The company has a huge debt burden which is putting pressure on its PAT margins. Capacity: GPPL is not operating at its full capacity. The average berth occupancy at the container terminal of the port was 38.6% in It handled 3.4 mn tonnes of bulk cargo in 2009 against a total capacity of 5 mn tonnes. Continued Loss: Even after 8 years of commencement of operation the company is yet to report profit. Threats Heavy Competition: There are nearly 13 main ports in Gujarat. Thus the level of competition is fairly high. And more over with the Govt. of India s plans to come up with more 25 ports across the country the situation is going to be tougher. Source: FIFL Research 7

8 Income Statement Particulars (` mn) 2007A 2008A 2009A 2010E 2011E 2012E CAGR Revenue 1,516 1,673 2,191 2,934 3,621 4,148 22% YoY Gr (%) 12% 10% 31% 34% 23% 15% - Total Expenditure 1,407 1,546 1,751 2,113 2,571 3,028 - Operating Profit ,050 1,120 59% Margin(%) 7% 8% 20% 28% 29% 27% - Other Income EBITDA ,139 1,147 36% (-) Depreciation EBIT (29) (-) Interest , Exceptional Items PBT (457) (672) (1,176) (556) (67) (28) -43% (-) Tax provision PAT (460) (676) (1,177) (556) (67) (28) -43% Margin(%) -30% -40% -54% -19% -2% -1% - EPS (Diluted) (1.10) (1.61) (2.81) (1.33) (0.16) (0.07) -43% Cash EPS (0.45) (0.73) (1.71) Source: Draft Prospectus, FIFL Research 8

9 Balance Sheet Particulars (` mn) 2007A 2008A 2009A 2010E 2011E 2012E Equity Share Capital 3,455 3,455 3,149 4,190 4,190 4,190 Reserve & Surplus 1, (70) 3,332 3,265 3,237 Net worth 4,535 3,803 3,079 7,522 7,455 7,427 Secured Loan 5,889 6,571 10,559 7,559 5,701 5,369 Unsecured Loan Total Debt 6,168 7,415 10,891 7,891 6,032 5,701 Capital Employed 10,703 11,218 13,970 15,413 13,487 13,128 Fixed Assets 6,034 8,589 12,712 13,948 13,578 13,689 Capital W.I.P. 3,032 1, Investments Net Current Assets (922) (1,392) Total Assets 10,703 11,218 13,970 15,413 13,487 13,128 Ratio Analysis Key Ratios 2007A 2008A 2009A 2010E 2011E 2012E EBITDA (%) 16% 26% 23% 30% 31% 28% ROCE (%) -4% -6% -8% -4% 0% 0% RONW (%) -10% -18% -38% -7% -1% 0% Sales/Total Assets (x) EV/Sales (x) EV/EBITDA (x) P/E (x) (36.15) (298.72) (716.36) P/BV (x) BV (`) Source: Draft Prospectus, FIFL Research 9

10 FORTUNE INTERFINANCE LTD (FIFL) Dream Big Think Fortune Team Name Designation Phone Rajendra K Agarwal Director rk.agarwal@fifl.co.in Abhishek Agarwal Director a.agarwal@fifl.co.in Sushil Sanganeria Branch Head s.sanganeria@fifl.co.in Santosh Kr. Singh Senior Technical Analyst sk.singh@fifl.co.in Sumit Nandy Research Analyst s.nandy@fifl.co.in Rajesh Kumar Research Analyst r.kumar@fifl.co.in Praveen Rajput Senior Dealer p.rajput@fifl.co.in Disclaimer: All measures have been taken to provide the most exhaustive and accurate information in this report. The information and materials are however, subject to change without prior notice. Fortune Interfinance Limited (FIFL) does not claim the accuracy, adequacy or completeness of this information and materials and expressly disclaims liability for any errors or omissions or delays in updating this information and materials. This service is not intended to be any form of an investment advertisement, investment advice or investment information and has not been registered under any securities law of any foreign jurisdiction and is only for the information of any person in any jurisdiction where it may be lawful to offer such a service. In no event shall Fortune Interfinance Limited be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with this site or use thereof or inability to use by any party, or in connection with any failure of performance, error, omission, interruption, defect, delay in operation or transmission, computer virus or line or system failure. Regd & Corp Office: 19, British Indian Street, Ground Floor, Flat No.2&3, Kolkata Tel: /1154, Fax: Branch Office: 304, Bharat Chambers, Baroda Street, Masjid Bunder (E), Mumbai Tel: Fax: Member: National Stock Exchange of India Ltd & Bombay Stock Exchange Ltd, SEBI Regd No. INB (NSE-Capital Market Segment) INF (NSE- Derivative Market Segment) INB (BSE-Capital Market Segment)