On increasing its stake in Snowman Logistics, Gateway Distriparks CMD Prem Kishan Gupta told CNBC TV18, ‘At one point we wanted to sell Snowman Logistics.’ However, now it is performing well and Gateway will increase its stake in the company as and when the cash flows allow.
Following an interaction with the senior management of Gateway Distripark, Kotak Institutional Equities slashed the Mumbai-based logistics company’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) estimates by 3 percent. The brokerage house expects the company’s container freight station (CFS) business to be under pressure. The management of Gateway Distriparks has confirmed the same in an interview with CNBC-TV18 on Wednesday, June 21.
“As far as the CFS business is concerned, the first two months have been flat. So, we don’t expect that we will go down from here because last year itself, the volumes went down in the CFS business. Also, in May and June though exports are less and imports are more, overall volumes are flat,” Chairman and Managing Director of Gateway Distriparks Prem Kishan Gupta said.
About pricing pressure, Gupta said: “We don’t see any pricing pressure as of now. But going forward, if the volumes come down i.e. the EXIM cargo comes down then everyone will get their market share and then there will be stiff competition.”
Elaborating, the CMD said Gateway Distriparks is not expecting any uptick in the CFS business from here. The company would like to maintain the current volumes and margin, he noted.
“The competition intensity has been there for many years now, because there are too many CFSs and trade has not grown to that level. I think we have come to a level where I mean anything lower than this may have an impact on all the CFS operators,” Gupta highlighted.
‘Increase stake in Snowman Logistics’
Snowman Logistics is our business and people have been saying that it is our investment, Gupta noted, adding, “At one point of time where we wanted to sell it, the deal could not be consummated because of COVID-19.”
Since then, we have been performing well in Snowman Logistics, he said. The Gateway Distriparks CMD said the company will increase its stake in Snowman as and when the cash flows allow.
Shares of Gateway Distriparks settled 0.88 percent lower at Rs 72.80 apiece in trade today (June 21). The stock hit a 52-week high at Rs 76.60 on June 19 after Citi gave a ‘buy’ rating on the counter as the valuations looked attractive. The brokerage firm has a target price of Rs 90, which suggests an upside of 24 percent from today’s closing.
Gateway Distriparks will continue to maintain its market share in key markets and Faridabad Terminal will also start double stacking in 4-5 months, Citi said in its report.
