Logistic company Gateway Distriparks received board approval to raise up to Rs 150 crore through various modes, including rights issue.
The board has given nod to raising funds by way of rights issue, Qualified Institutions Placement and on preferential allotment basis, an issue of GDRs, ADRs, FCCBs, FCEBs and any other securities.
It also approved constituting a committee of directors and authorising the panel to determine all matters including calling a general meeting of the members of the company in connection with issue of securities.
Appointment of ICICI Securities as the sole lead manager for the fund raising activities, was also approved by the board.
Meanwhile, the logistic company reported better Ebitda in Q4FY20 as rail margins surprised positively. Warehousing was considered an essential service and was not materially impacted by the lockdown.
Dedicated Freight Corridor (DFC) phase-wise commissioning should begin by H1FY22 and will be a game changer. Q1FY21 port volumes are likely to be lower on year and in turn impact its volumes.
The company expects revenues, volumes to fall and income from logistics services to be driven by piled up goods in Q4FY20. The company successfully managing working capital requirement, is a positive surprise.
Thanks to efficient financial management, it’s debtor days are down 51% on year and contributed in generating free cash flow to repay debt.
The company aims to reduce debt from Rs 700 crore to lower than Rs 400 crore. Over the last 4 years investors had lost confidence in Gateway management as business profitability especially in railways saw a sharp decline.
The company’s volume trends underperformed the industry leader Container Corp (ConCor). The last 12 months have seen rail volumes growing faster and margin improvement. This business momentum continuing could be a re-rating trigger as lost confidence is gradually built up.
GDL’s rail business and cold chain business continue to fare well in the current environment owing to being categorized in essential services. The CFS business may remain under pressure in FY2021 while gradually improving in FY2022.
We believe GDL’s deleveraging plan along with healthy profitability in the rail division should gradually drive net earnings growth during FY2022.
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