Adani Ports & SEZ - Healthy operational performance - Abbot Point transferred to promoters - Kotak

Adani Ports & SEZ's (APSEZ) standalone Q4FY13 adjusted PAT (including income from divestment of Abott Point and non cash forex/derivative gain) of Rs 4.9 bn was ahead of our ~Rs 4.4bn estimate. EBITDA margin came in at 71.3% (+100 bps YoY) amidst inline ~23 million tonne volumes. Ebidta expanded due to favourable volume mix, SEZ sales and the decline in operating costs The Abbot Point asset sale was concluded at AUD 235 mn (cashflow expected in Q1FY14) at par.

With the entire capex for the port completed and reduction in Abbot Debt from the balance sheet, APSEZ is gearing for next phase of expansion through inorganic growth. We also highlight other important positives for the company such as (1) strong volume pick-up at Dahej, start of Hazira (3) strong power generation at Tata & Mundra and possible compensatory tariff, (4) recent security clearance from the home ministry and (5) pick-up in container cargo (CT3) on constrained west-coast capacity. Mundra port continues to grow ahead of peers with we estimating total cargo for the company to surpass 100MT in FY14. Recommend 'Accumulate' with an increased TP of Rs 172 based on (1) Strong growth in business, (2) deleverage of BS, (3) resilient competitive advantage, (4) strong cash flows and (5) reasonable valuations.

Source : Equity Bulls

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