Q2FY20 result highlights
Key positives: Container volumes grew by 11% yoy in Q2FY20
Key negatives: Downward revision of guidance for volumes and EBITDA growth for FY20
Impact on financials: Downgrade our FY20E/FY21E estimates by 7%/2% on account of weak Q2 volumes.
Valuations & view
ADSEZ is reaping benefits of diversified cargo profile and diversified geographic presence on both the coasts of India. As the container cargo continues to be strong, coal and liquid cargo are expected to improve in H2 due to increased off take from key clients. ADSEZ’s earnings should also be supported by sustained water front and land monetization incomes at Mundra and Dhamra over the next 3-5 years. We expect 10.2% volume CAGR leading to EBITDA CAGR of 15.1% in port EBITDA over FY19-21 and expect free cash flows to improve based on limited capex. ADSEZ trades at 15.1x FY21E earnings and 10.9x EV/EBITDA. Maintain Outperformer with a revised price target of Rs466.
Adani Ports and Special Economic Zone Limited is an India-based port infrastructure company. The Company is engaged in the business of developing, operating and maintaining the Port and Port-based related infrastructure facilities, including Multi product Special Economic Zone (SEZ). Its segments include Port and SEZ Activities, and Others. Its Others Segment mainly includes Aircraft Operating Income and Services. The Company also provides logistics and infrastructure that moves goods from the port to customers. Its port services include marine, handling intra-port transport, storage, other value-added and evacuation services for a range of customers, primarily terminal operators, shipping lines and agents, exporters, importers and other port users. The categories of cargo handled at the Company's ports are bulk, containers and crude oil. It operates approximately 10 ports/terminals spread across over five states of India, including Gujarat, Goa, Andhra Pradesh, Tamil Nadu and Odisha.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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