Q3FY20 result highlights
Key positives: Agreement signed to acquire 75% stake in Krishnapatnam Port and 40% stake in Snowman Logistics, a cold chain logistics player.
Key negatives: Decline of 2% yoy of Mundra volume to 34mt
Impact on financials: Maintain our FY20E/FY21E estimates and introduce our FY22E estimates
Valuations & view
APSEZ 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 Q4 due to increased off take from key clients. APSEZ’s earnings should also be supported by sustained water front, inorganic acquisition 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 FY19-22 and expect free cash flows to improve based on limited capex. APSEZ trades at 14.5x FY21E earnings and 10.5x EV/EBITDA. Maintain Outperformer with a target price 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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