My View On GATI Limited

About The Company

The most well renowned company in courier service has been bought in to focus when news drive about the plan of the company to acquire the remaining 26.28% stake in trucking company, Kausar India through an open offer. The logistics firm, which is the sole promoter of Kausar India, currently holds 73.72% in the firm. Gati plans to de-list Kausar shares from the Delhi Stock Exchange and Ludhiana Stock Exchange Association following the acquisition. It will acquire Kausar's shares following a reverse book building process. The offer opens on March 23 and closes on March 25,

About The Company

The company has posted results for the second quarter ended 31^st Dec 2008, the financial performance of the company clearly reflects the effects of the slowdown. Gati reported a 99% decline on a YoY in net profit at Rs 14 lakh. Its net sales rose 16.7% to Rs 157.04 crore. Operating Profit Margins was down at 6.4% vs 7.54% last year second quarter. It posted a MTM loss of Rs 17.5 crore. Net profit was down mainly on account of losses in air freighter business. Losses for the first half of FY09 amounted to nearly Rs 16.4 crore.

The company has divested 11% stake for consideration of $20 million to Singapore-based Tifoi. Another $20 million was raised through convertible warranties to promoters. It had targeted a turnover of Rs.1000 crore in its next fiscal which given the financial performance for Q1 looks like a tall order.

About The Stock

The financial performance of the company is bad to say the least. It has just about “managed” to show a net profit. Any fresh investment in same or to hold the position would be a bad idea.

Disclaimer : I do not have any personal holding in this stock.