Price band Rs42-48, Not Rated

Gujarat Pipavav Port Ltd (GPPL), India’s first private sector port, has multi-cargo and multi-user operations with exclusive right to develop and operate APM Terminals Pipavav (ATP) until September 2028. GPPL recorded revenues of Rs2.2bn during CY09 compared to Rs1.7bn in CY08. In CY09, GPPL’s operating profit margin was 20.1%, significantly higher compared to 7.6% in CY08, owing to higher utilization rates.

APM Terminals Pipavav, strategically located at the entrance of the Gulf of Khambat is an all-weather port providing significant logistics and cost advantage to shipping lines that service both Mumbai and the developing northern and north-western region of India. These regions currently generate 66% of the total container throughput in India.

GPPL has the right to develop ~1,561 acres of land at APM Terminals Pipavav (~485 acres already developed). The company plans to develop the balance land for further expansion of their port operations, increase cargo volumes and sub-lease to third parties.

GPPL has the ability to manage a well diversified portfolio of cargo facilities, which helps avoid dependence on any one particular commodity, lowering seasonality.

Container traffic at non-major ports is expected to witness a CAGR of 26.4% from 13mn tonnes in FY09 to 43mn tonnes in FY14 as per Crisil. This would be mainly driven by recovery in international trade and containerization of bulk exports. Additionally, the total traffic of coal at Indian ports is expected to witness a CAGR of 7.2% from 91.9mn tonnes in FY09 to 130mn tonnes in FY14. Coal accounts for 44% of the bulk cargo commodity, which is handled at the ATP. As per the Government of Gujarat, six power plants would be commissioned close to ATP by FY12 which would increase coal traffic at the port.