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Gati Limited is engaged in providing distribution and supply chain solutions. to customers across
diverse industry verticals. Gati has a strong market presence in the Asia Pacific region and SAARC
countries. The Company has offices in China, Singapore, Hong Kong, Thailand, Nepal and is planning
to foray into other markets.
Valuation Analysis
Earnings Per Share – Basic (Rs. ) 1.11 2.70 4.72 4.21 3.35
Other long term liabilities and provisions 12.60 19.18 30.44 44.78
Additional Investment
On august 25, 2007 GATI acquired 52.96% equity stake in ‘Kausar’ India Ltd, a Delhi-based
company.
Without disclosing the sum, GATI on December 2, 2016 invested in cloud-based software
solutions company ‘Brown Tape’ to develop a unique single-window solution to customers
by integrating its established pan-India logistics network and Brown Tape’s multi-channel
order management platform.
In 2012, GATI signed an agreement with Kintetsu World Express Inc.(KWE) to set up a joint
venture in which the Japanese company will invest Rs. 267.7 crore for a 30% stake.
In 2013, GATI invested 250 crore for setting up 4 lakh sq ft warehouse space in India.
1. Return on equity
ROE or RONW indicates the amount of profit which the company generates on the capital invested
by the equity shareholders. When calculating the ROE on a consolidated basis, the numerator is
profit after tax and after minority interest and share of associates. The denominator is the net
worth (i.e. share capital + reserves & surplus). This is because net worth in the denominator
represents the capital employed ‘only by the shareholders’ of the company. ROCE measures the
overall profitability of the company’s operations while ROE draws attention to the return generated
by the owners (i.e shareholders) on their investment in the business. A company may operate with a
very healthy ROCE but it may not add much value to a shareholder if most of the income generated
is used up in servicing the company’s debt (i.e. interest charges).
ROE = PAT (profit after tax) / net worth (share capital+ R&S)
Ex:- for financial year 2015-16, net worth= 563.51 and PAT= 49.23
Efficiency Analysis
A high EPS indicates high profitability. If the profitability goes down, so does the EPS. On the other
hand if the number of outstanding shares increases, it negatively impacts the EPS unless the
profitability rises proportionately. For this reason, companies carefully plan the issuance of fresh
equity.
EPS= PAT (profit of loss after tax) – Dp ( dividend paid to preference shareholder)/ no.
of equity shareholders.
As equity share capital is Rs.175500000 and face value of each share is 100, therefore
Companies operating with high long term debt to equity on their balance sheets are vulnerable to
economic cycles. In times of slowdown in economy, companies with high levels of debt find it
increasingly difficult to service the interest on their borrowings as profit margins decline. We believe
that long term debt to equity ratio higher than 0.6 – 0.8 could affect the business of a company and
its results of operations.
Gati’s average long term debt to equity ratio over the last 3 financial years has been 0.33 times
which indicates that the Company operates with close to zero debt.
= 1460.03 cr / 17.55 cr
= 83.19: 1
The ideal ratio is 1:1. It indicates long term liability payment capacity. Therefore Gati’s D/E ratio is
quite good.
4. Dividend History
The Company has maintained a dividend yield of 1.44 % over the last 5 financial years.
Dividend per share= dividend given to equity shareholder / no. of equity shares
= 1386000 / 1755000
= 0.7897 rupees
Announcement Date Effective Date Dividend Type Dividend(%) Remarks