Q3FY19 result highlights
Key positives: Strong growth in coal and container cargo. Improved volume performance at Dhamra.
Key negatives: Weak performance of Adani Logistics.
Impact on financials: Upgrade in FY19E earnings by 23.7% mainly due to higher other income, lower tax and lower net MTM loss on fx debt. No material change in FY20E earnings.
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 cargo CAGR of 13.3% over FY18-20 leading to CAGR of 17.6% in port EBITDA. With capex density peaking out, FCF have started to improve. ADSEZ trades at 14.8x FY20E earnings and 10.7x EV/EBITDA. Maintain Outperformer with a price target of Rs450.
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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