Adani Port & SEZ - Cargo growth drives top-line, consol margins disappoints - Prabhudas Lilladher

Cargo growth drives top-line: Standalone port revenues grew by 25% YoY and 31% QoQ to Rs7.7bn, led by 16% QoQ volume growth at Mundra to Rs20.43mt. SEZ revenues for the quarter stood at (Rs11m) on account of a reversal as against SEZ revenues of Rs2.04bn in Q1FY13. On a consolidated basis, volumes increased by 17% QoQ led by increase in volumes at Dahej as well as due to trial operations beginning at Hazira. On a consolidated basis, volumes increased by 19% YoY and 2% QoQ to Rs10.4bn.

- Consolidated margins disappoint: Margins on a standalone basis stood strong at 72.2% despite no income from SEZ sales. However, at a consolidated level, margins disappointed on account of higher-than-expected costs at the subsidiary level. Margins on a consolidated basis stood at 63.8% largely led by newer ports operating at lower utilizations leading to lower fixed cost absorption.

- Volume break-up: Volumes at Mundra port was led by coal cargo which increased from 4.5mt in Q1 to 7mt in Q2FY13. Tata's coal imports increased to 1mt from 0.3mt in Q1FY13, while Adani's imports increased from 2.75mt to 3.3mt for the same period. Other cargo categories at Mundra remained status quo. On a consolidated basis, volumes at Dahej increased from 1.26mt in Q1FY13 to 1.7mt in Q2FY13 and Hazira contributed marginally as the company commenced trial runs there ahead of schedule.

- Valuations: Our SOTP for the company stands at Rs165, of which 76% is contributed by the Mundra asset, 8% contributed by Abbot Point and the remaining by the SEZ as well as the other Indian ports. We maintain 'BUY' on the stock.

Source : Equity Bulls

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