Gujarat Pipavav Port Limited (NSE:GPPL), a ₹51.80b small-cap, is a transportation infrastructure company operating in an industry which faces the challenge of government-funding availability, opening opportunities for the private sector to provision for public infrastructure. Transport analysts are forecasting for the whole industry, a positive double-digit growth of 12.6% in the upcoming year , and an optimistic near-term growth of 28.4% over the next couple of years. However, this rate came in below the growth rate of the Indian stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether Gujarat Pipavav Port is lagging or leading in the industry.

View our latest analysis for Gujarat Pipavav Port

What’s the catalyst for Gujarat Pipavav Port’s sector growth?

Recently, investment in technology is seen as a necessity in order to support inter-modality as transport networks get more complex and crowded. Over the past year, the industry saw growth in the twenties, beating the Indian market growth of 22.3%. Gujarat Pipavav Port lags the pack with its negative growth rate of -21.7% over the past year, which indicates the company has been growing at a slower pace than its transportation infrastructure peers. Although Gujarat Pipavav Port is poised to deliver a 6.6% growth next year, moving it from negative to positive territory, it still lags its industry average rate of growth of 12.6%.

Is Gujarat Pipavav Port and the sector relatively cheap?

Transportation infrastructure companies are typically trading at a PE of 21.83x, relatively similar to the rest of the Indian stock market PE of 19.91x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 3.6% compared to the market’s 9.3%, potentially indicative of past headwinds. On the stock-level, Gujarat Pipavav Port is trading at a PE ratio of 23.44x, which is relatively in-line with the average transportation infrastructure stock. In terms of returns, Gujarat Pipavav Port generated 10.2% in the past year, which is 6.7% over the transportation infrastructure sector.

Next Steps:

If Gujarat Pipavav Port has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a transportation infrastructure industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the transportation sector. However, before you make a decision on the stock, I suggest you look at Gujarat Pipavav Port’s fundamentals in order to build a holistic investment thesis.

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

2. Historical Track Record: What has GPPL’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Gujarat Pipavav Port? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.