Q1FY20 result highlights
Key positives: Strong growth in volumes of 16% yoy
Key negatives: Adani Port guided for lower end of cargo volumes on weak Exim outlook for FY20
Impact on financials: Maintain our FY20E/FY21E estimates
Valuations & view
ADSEZ is reaping benefits of diversified cargo profile and diversified geographic presence across both the coasts. Even as container cargo continues to witness sustained growth, there has been a strong improvement in coal cargo at most of its ports, which has added to both its cargo growth as well as profitability due to improved asset utilisation. 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 13.3% volume CAGR over FY19-21E leading to EBITDA CAGR of 17.6% in port EBITDA. With capex peaking out, FCF have started to improve. ADSEZ trades at 14.8x FY20E earnings and 10.7x EV/EBITDA. Maintain Outperformer with a revised price target of Rs472, rolled over to FY21.
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.
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