Gati - Focus On Efficiency Improvement: Prabhudas Lilladher

Prabhudas Lilladher Report

We visited GATI Ltd.’s Super hub located at Bhiwandi having 0.15 million square feet facility and also interacted with the hub head. This newly launched hub has increased GATI’s overall volumes and scale of package handling. Management expects-

1. market share gains with higher cross docking capacity,

2. reduced delivery time and

3. costs reduction for customer.

Over FY21-23 revenue/Ebitda compound annual growth rate stood at 14.5%/60.6%, however, revenue /Ebitda compound annual growth rate was flat/-2% between FY18-23. Management expects more than 15% volume growth (reported 17.3% in FY23) after operationalising super hubs at

1. Farukh nagar, Gurugram (Q3 FY22);

2. Nagpur (Q2 FY23),

3. Bhiwandi, Mumbai (Q3 FY23),

4. Guwahati (Q3 FY23).

Margins continue to remain challenging in the near term due to lower utilisation of hubs, competitive intensity and commissioning of Indore, Pune and Cochin hubs in Q2 FY24 and Bangalore and Hyderabad hubs in Q1 FY24.

However, improvement will be seen in two-three years post progress in utilisation of these super hubs. The transit hub has huge growth potential in terms of addressable market, in our view.

We are constructively positive on the business, while it takes some time to reflect in overall financials

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