Kotak Institutional Equities has maintained a "BUY" rating on Gateway Distriparks (GRFL), targeting a fair value of Rs 82 against a prevailing market price of Rs 68. The transport and logistics operator has demonstrated resilience amidst headwinds, outpacing subdued expectations driven by robust cold chain execution while the core rail segment wrestles with margin compression. With market share stabilizing and further upside anticipated from the soon-to-be-commissioned Dedicated Freight Corridor (DFC) to JNPT, GRFL remains well-placed despite tepid sector momentum. However, issues in land acquisition and a lackluster uptick in underlying trade volumes temper long-term capex appetite.

Kotak Institutional Equities Issues Confident Buy Call on Gateway Distriparks

Sound Underperformance Overcame Expectations GRFL’s Q1FY26 results exceeded the street’s muted forecasts, registering a 3% and 6% beat on top line and EBITDA, primarily driven by strong quarter-on-quarter momentum in its cold chain unit, Snowman Logistics. While aggregate rail and CFS turnover and EBITDA saw double-digit year-on-year growth, a low base effect related to last year’s Red Sea disruptions was at play. Still, margin expansion in the pivotal rail division proved capped, hindered by increased running costs due to a swelling share of empties as export flows diminished.
Share Gains in Key Regional Markets
The company’s grip on market share remains solid:

In NCR, GRFL holds 16–17% share.

Ludhiana market share is 27%—flat sequentially, but up significantly from 23% two quarters prior.

The Uttarakhand share is stable at 37%, up from 30% over the same period last year.

Such resilience is commendable amid a lack of recovery signal in end markets. GRFL’s confidence in achieving double-digit volume growth for FY2026 hinges on the base effect and a docile competitive environment.

Performance Metrics: Margins, Growth, and Market Dynamics

Rail and CFS Operating Highlights - Rail throughput delivered a 14% year-on-year expansion, remaining stable quarter-on-quarter at just above 93,000 TEUs. - CFS volumes increased by 5.5% over the year after periods of flat growth. - However, Rail revenue per TEU and EBITDA per TEU dipped to Rs9,100 due to higher empty repositioning, while CFS EBITDA bounced back to Rs1,500 per TEU—a normalized level for the business.
Key Financial Table (FY2025-2027E)

Valuation Upside and Catalysts

Attractive Valuations Amidst Uncertain Growth GRFL currently trades at a compelling ~11.7x EV/FCF on a forward basis, increasingly attractive in light of prospective modal gains from the upcoming DFC-JNPT link. The research house’s Sum of the Parts (SoTP) methodology—rolling forward to June 2027E EV/EBITDA—nudges the fair value target up to Rs82 per share.
Upcoming Triggers: The DFC Factor
The next tangible catalyst lies in DFC commissioning to JNPT by March 2026. While management refrained from providing specifics on expected market share gains from this infrastructure upgrade, it acknowledged 75–80% of NCR port-directed cargo is already rail-borne—a limiting factor for outsized incremental upside.

Capital Allocation and Investment Outlook

Muting Asset Growth Amid Structural Hurdles With land acquisition progressing slowly in Jaipur and logistical hurdles in transferring land from GDL to Snowman Logistics unresolved, incremental capex remains disciplined. The readiness of both market and regulatory landscape will dictate the pace of terminal additions. Persistent headwinds in container trade limit the scope for aggressive asset expansion.

Shareholding and Price Action

Dramatic Stock Price Correction Creates Entry Point The stock has fallen sharply in the preceding 12 months, declining 39%. This correction, when gauged against the steady operational performance and improving margin outlook, presents a favorable risk-reward setup for long-term investors.
Major Shareholder Breakdown:

Promoters: 32.3%

Foreign Portfolio Investors: 8.4%

Mutual Funds: 37.4%

Banks, Financial Institutions: 1.6%

Retail: 17.2%

Others: 3.1%

Investor Takeaways: Maintain Buy and Watch for DFC-driven Upside

Summary Call Kotak Institutional Equities’ "BUY" verdict signals confidence in GRFL’s ability to capture logistical tailwinds and defend market ground. The Rs82 target implies substantial upside from current levels. While terminal expansion may pause pending regulatory clarity and demand revival, efficient capital management, margin normalization in key segments and the high operating leverage from core rail operations provide an attractive medium-term bet for both value and growth-conscious investors.