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Allcargo + CONCOR + Gateway Logistics Update

September 5, 2007

Kotak Sec Research is bullish on the prospects of Indian Lgistics Sector and Stocks. Here are some noteworthy points from the Logistics Conference Centrum – 2007.

Indian ports handled 6 mn TEUs in FY07. Container traffic may touch 30 mn TEUs by 2016.Currently, 68% of the cargo that can be containerized is being containerized. With growing awareness of the benefits of containerization this will go up to the international standards of 75% to 80%.

Rail transportation is cheaper than road.For handling 20 mn TEUs, we need 190 trains per day as against 40 trains currently. Dedicated expressway connectivity to the port needed. We need 4-5 hub ports with 16 mtrs draft.

Kotak believes that the growth in the Indian economy and increasing penetration of containerization would lead to faster growth in the handling of containers in the country. Currently, we handle about 6 mn TEUs. If we are to handle 30 mn TEUs, it calls for huge growth in opportunities for logistics service providers. Thus, positive on the logistics stocks.

Allcargo Global Logistics will report EPS of Rs.56.5 and Rs.70.8 in CY07E and CY08E, respectively. At Rs.889, the stock trades at 12.6x CY08E earnings. Kotak maintains BUY on Allcargo with a price target of Rs.1346, which provides 52% upside potential.

Gateway Distriparks Ltd [GDL] will report EPS of Rs.8.2 and Rs.10.7 in FY08E and FY09E, respectively. At Rs.132, the stock trades at 12.3x FY09E earnings. Kotak maintains BUY on GDL with a price target of Rs.180, which provides 37% upside
potential.

Container Corporation of India [Concor] will report EPS of Rs.126.7 and Rs.149.3 in FY08E and FY09E, respectively. At Rs.2214, the stock trades at 14.8x FY09E earnings. Kotak maintains BUY on Concor with a price target of Rs.3000, which provides 36% upside potential.

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