Adani Ports & SEZ Limited - Strong performance - Antique

- Standalone revenue increased by 42.6% YoY (QoQ increase of 2.6%) to INR9.15bn. The company reported SEZ revenue of INR1.3bn during the quarter as compared to revenue of INR487m in 3QFY12. The revenue was 2% higher than our estimates of INR8.95bn.

- Standalone EBITDA increased by 38% YoY from INR4.6bn in 4QFY12 to INR6.4bn in 4QFY13. EBITDA margins declined from 72.2% in 4QFY12 to 69.9% in 4QFY13 mainly due 69% YoY increse in other expenditure to INR467m. Operating expenses as percentage of sales increased from 20.1% in 3QFY12 to 22% in 4QFY13. The adjusting for SEZ income margins would have been ~65% in 4QFY13 compared to ~70% in 4QFY12.

- Depreciation cost increased by 26.7% YoY to INR972m. Net interest cost increased by 321% on YoY basis to INR1.25bn due to funding of capacity expansion.

- Adjusted net Profits increased by 17.3% YoY (QoQ marginal decline of 2.5%) to INR4bn translating into EPS of INR2, in line with our estimates of INR2.1. Profits are adjusted for INR700.1m extraordinary income from divestment of equity of subsidiaries in Australia. The company divested entire holding in Adani Abbot Point in Australia to promoter company Abbot point Port Holding Pte ltd, Singapore for AUD235.7m.

- On consolidated basis, the company reported revenue growth of 16.15% YoY to INR10.3bn. The company has not consolidated Abbot Point numbers during the quarter so numbers are not comparable. EBITDA increased by 60.9% YoY to INR6.3bn with stable margins of 60.9%. Adjusted net profits increased by 60.6%YoY (QoQ decline of 8%) to INR3.49bn, translating into EPS of INR1.7. Reported net profit at INR7.1bn was significantly higher mainly due to profit on sale of Abbot Point of INR4.19bn.

Valuation and outlook

- At CMP of INR152, the stock is trading at 14.8xFY14e and 11.4xFY15e earnings and P/BV of 4.4xFY13e. We have revised our estimates considering Abbot Point sale for FY14 with 18% revenue decline to INR48.4bn. We have reduced EBITDA by 20% to INR32.5bn while maintained profit estimates at INR18.6bn. The sale consideration Abbot Point port was in line with our ealier valuation of INR5 per share. The company enjoys a unique combination of port and SEZ and operates one of the deepest draft ports in India with an advantageous location and high degree of scalability. We expect re-rating in valuation with de-leveraging of balance sheet and value company at 15xFY15e with target price of INR180 (previous INR165).

Source : Equity Bulls

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