Gateway Distriparks Rights issue (July 2020) review

Published on Tuesday, July 28, 2020 by Dilip Davda

• The company is engaged in providing integrated inter-modal logistics services.
• GDL mulls reducing debt with the proceeds of this rights offer.
• Suffered setback in FY20 due to higher provisions for depreciation and finance cost.
• Cash surplus / risk savvy investors may consider parking of funds at their own risks.

ABOUT COMPANY:

Gateway Distriparks Ltd. (GDL) is an integrated inter-modal logistics service provider, providing cargo transportation, handling, storage, and other-related facilities and services in India. It's Subsidiary, Gateway Rail Freight Limited, is authorized to operate container trains on the railway network established by the Indian Railways. The Company, along with its Subsidiaries, operates six container freight stations, four rail-linked inland container depots, and one domestic terminal. GDL also operate a fleet of 31 train-sets, along with 531 trailers.

ISSUE DETAILS:

To part finance its repayment/prepayment of certain borrowings (Rs. 113.28 cr.) plans, GDL is coming out with a rights issue of 16107859 equity shares of Rs. 10 each at a fixed price of Rs. 72 per share to mobilize Rs. 115.98 cr. It is offering 4 shares for every 27 shares held as on 24.07.2020. Post allotment, shares will be listed on BSE and NSE. Issue opens for subscription on 30.07.20 and will close on 13.08.20.

Issue is solely lead managed by ICICI Securities Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue.

Post issue, GDL's current paid up equity capital of Rs. 108.73 cr. will stand enhanced to Rs. 124.84 cr. It is likely to spend Rs. 2.70 cr. for right issue process. With this offer, the company is looking at a market cap of Rs. 898.82 cr., while based on its last quote of Rs. 79.20 per share (BSE closing of 28.07.20), the market cap stands at Rs. 988.7 cr. Prima facie issue appears fully priced.

FINANCIAL PERFORMANCE:

On a consolidated basis, for the last two fiscals, GDL has posted turnover/net profits of Rs. 443.39 cr. / Rs. 361.26 cr. (FY19) and Rs.1309.56 cr. / Rs. 109.40 cr. (FY20). Lower profits for FY20 attributed to higher depreciation (Rs. 133.29 cr. v/s Rs.32.56 cr. on y-o-y basis) and finance cost (Rs. 102.63 cr. v/s Rs. 12.80 cr. on y-o-y basis).

OTHER DETAILS:

Scrip of GDL turned ex-split on 23.07.2020. Its last cum-right quote as on 22.07.20 was Rs. 91.25 per share and on ex-split basis it was Rs. 87.00 (at the close of the day). The scrip last traded at Rs. 79.20 per share (as on 28.07.20) and has marked last 52 weeks high/low of Rs. 137.60 / Rs. 71.01.

CONCLUSION:

As this issue appears fully priced on Prima Facie basis, cash surplus - risk savvy investors may consider parking their fund at their own risk. (Other).