Gati Limited

CMP = 111

Gati Limited is a pioneer in the express distribution, supply chain solutions, e-commerce & cold chain logistics. Gati has transformed the logistic industry in India with many a path breaking revolutionary initiatives that paved the way to an organized logistic industry. Gati started operations in 1989 as a door-to-door cargo company, a division of Transport Corporation of India (TCI).  It became a separate company in 1994. Over the years company has grown its extensive network across India providing deliveries to 19000 pincodes, covering 672 out of 676 districts in India by using different modes of transports ie. Road, Rail, Air & Sea. It also offers specialized logistics services and it is currently among the top  players in the E-commerce logistics business. It has a strong market presence in the Asia Pacific region and SAARC countries with offices in China, Singapore, Hong Kong, Thailand, and Nepal.

https://www.youtube.com/watch?v=Pot9krQzF7k

Gati is an end-to-end logistics solutions provider with following business structure.

E-Commerce Logistics and Fulfilment Services

http://www.gaticonnect.com/

Gati E-connect is the e-Commerce Logistic Solutions vertical of Gati Ltd. It is first integrated e-Commerce logistic solutions provider in India. Gati's e - Commerce solutions come with the expertise to achieve complex needs in managing customised  e-tailing logistics solutions. Leveraging its extensive express logistic  network, strong e-fulfilment capabilities and innovative supply chain technologies. Gati’s e-Commerce logistics has built a capacity to deliver more than 80,000 packages per day.

https://www.youtube.com/watch?v=zKtJkQrRZ_s

Quick facts 

• Pan-India presence to deliver to a wide customer base
• Delivery  capability  to  handle  shipments  ranging  from  0.5kg  to 1 ton
• IT and Automation Solutions
• Dedicated Customer Care Center
•  ‘One Ship Model’ setup for end-to-end delivery 
• Door step delivery backed by blend of bikers, drivers and franchises growing regularly.
• Capability to handle large volume with greater operational efficiencies and flexibility.

Express Logistics

http://www.gati.com/

Express distribution is time sensitive movement of commercial packages on door-to-door delivery concept and Gati is a pioneer in developing this concept in India more than 25 years back. This division of Gati is the most preferred Express Distribution and Supply Chain Solutions provider because of its ability to handle every distribution need of its customer. An intrinsic network that spans the length and breadth of India Gati-KWE has a reach of more than 99% of the districts in India. A large fleet of more than 5000 vehicles and an assured space across 32 airline sectors ensures that all couriers,  cargo and shipments are delivered in time at the right place. 

Express distribution division of GATI has over 5000 clients from industry sectors such as Pharma, FMCG, Engineering, Auto ancillary, Textiles & IT hardware. Express distribution division has a combined fleet of 5000 vehicles and a warehousing capacity of 3.3 mn. sq. ft.

https://www.youtube.com/watch?v=RyOliosedmg

Quick facts 

• Unmatched multi-model network
• Door pickup & Door delivery
• Well-developed  network and  optimised route planning system
• Operates in 32 airline sectorsExpertise in handling high value shipments & perishable goods
• 24/7/365 service level monitoring system 
• Online tracking, sms and e-mail updates of shipments in transit

Cold Chain Logistics

http://gatikausar.com/

Gati Kausar is a subsidiary and cold-chain arm of Gati Limited. It is the longest established cold-chain company in India, with 30 years of expertise in the cold-chain distribution business. Gati Kausar offers customised solutions for temperature sensitive shipments including consumer foods, pharmaceuticals, retail and agri-food sectors.

Gati Kausar innovative cold-chain transportation solution, strengthened by cutting edge technology,and a vast fleet of refrigerated vehicles equipped with advanced climate-control systems ensures that perishable products are delivered in a fresh, healthy and potent state to retailers and end consumers.

The state of  art modern refrigerated units, established reefer network, temperature controlled vehicles, IT infrastructure and experienced team helps them offer the right solution for every customer need.

Quick facts 

• ISO 9001:2008 and FSSAI certified company.
• HACCP procedures for safety and prevention of contamination.
• State-of-the-art modern refrigerated units from France and USA  Containers with insulation to withstand the harsh India climate zones.
• Tamper-proof  vehicles  to  mitigate  pilferage  risk  Unmatched  Infrastructure and Network.
• Fleet  comprising  of  close  to  180  refrigerated  vehicles  load  capacity from 1.3 tonnes to 24 tonnes, temperature range from +25 o C to -25 o C.
• Transporting  approximately  2,00,000  tonnes  annually unmatched network, covered over 300 districts in India.
• IT  capabilities,  Modern  Vehicle  Tracking  System,  Data  loggers  to  monitor in-transit conditions throughout the journey.
• In  house  capabilities,  In-house  dedicated  solutions  team,  reefer trucking team and refrigeration team In-house workshop, with inventory of approximately 3000 SKUs.             

Investment Rationales

Long outstanding FCCB issue with Goldman Sachs is recently resolved . It has enabled the company to expand its business activities like strategic investment, demerger, fund raising and business expansion without any restriction.  It has also resulted significant decline in debt.

Gati maintains its the market leadership position in express distribution in the non documents market with ~19% market share. The logistics industry in India is expected to grow at CAGR of 16 -20 % in the coming years.

Gati with its widespread reach and warehousing capabilities is well  positioned to seize these opportunities rising due to implementation of GST 

Gati is fully integrated multi-modal logistics player with a comprehensive pan-India network, it is clear beneficiary of business shift from unorganised to organised players after the implementation of GST from last quarter.

The demand for warehousing is expected to grow at an annual rate of 10 % and  Gati with its widespread reach and warehousing capabilities is well positioned to seize these opportunities.

Gati has fleet size of 5,000 trucks , 200 reefer trucks, 76 warehouses and over 6,000 trained work force with a widespread network managed by multi-modal capabilities, technology supported expertise makes Gati the most prefered one-stop solutions provider for all logistic requirements from warehousing, freight forwarding, supply chain solutions, temperature controlled solutions, B2C couriers and fulfilment  centres.

Gati has partnership with major global player Kintetsu World Express for express distribution business & supply chain solutions and with Kauser for cold-chain  distribution and solution. It give world wide access in business and related technology.

Gati Kausar has immense potential for growth opportunities rising  in the agri, food and pharma sector.

Conclusion 

Gati is ready to capture  the strong opportunity unfolding in the Indian logistics landscape because this sector will remain backbone of every development rising due to GST,  e-commerce, infra, housing and in agri sector. 

In the past stock was unable to participate any market rally due to pending FCCB issue. The issue was settled in last quarter but that time most of the transport and logistic stocks came under pressure due to initial hiccups while implementation of GST. Now transport and logistic will pickup the growth momentum and it will remain the main beneficiary. Gati at cmp Rs 111 is providing decent investment opportunity ( 1 year -  4 years) for short as well as for long term. It can be bought +/ - 10% from cmp.