Kesar Terminals - Strong Multibagger

Kesar Terminals and Infrastructure Ltd. is in the business of tanking, warehousing, storage of liquid and logistics. The company has bulk liquid chemical terminals at Kandla, Gujarat , with a combined capacity of 127,000 Kilo Litres. The primary revenues of the company are through hire / rental income for providing liquid storage tanks and other related services. The demand for storage facility for bulk liquids are dependent on the export / import of chemicals and petrochemicals in the country. To have such storage facilities, availability of land near existing ports is very important and in that context, Kesar Terminals and Infrastructure Ltd. seems to be better placed as they are one of the early players in this business to have setup storage facilities near Kandla Port.

The company faces competition from other ports like Mundra, Dahej and Pipavav which can affect liquid cargo traffic at Kandla Port and in turn can have an impact on Terminaling charges. The company have various proposals for expansion and diversification like a container freight station (CFS) and Bulk Liquid terminal at Pipavav Port, Gujarat. It has also planned for dry cargo warehousing and Bulk Liquid Terminal facilities at Kakinada, Andhra Pradesh.

At current market capitalisation, the stock is trading at less than 11 PE. The growth in profits has been stupendous in the past four years and for its growth rates the current PE looks low. However I would like to wait and see the impact of moderation in tank terminal-ling charges on the financial performance of the company (as mentioned in its annual report) before coming to a conclusion.

With booming economic growth expected in the future for India and with so much of Import / Export of chemicals / petrochemicals happening the country, the demand for such liquid storage facilities should be healthy. This is definitely a stock to be watched out for but would prefer to take a neutral view at current market valuations.

Kesar Terminals and Infrastructure Ltd. is in the business of bulk liquid terminals at Kandla, Gujarat. The growth rate in profits has been excellent so far but somehow I’m  taking an optimistic view on the valuations at CMP of  RS 325.