Earnings Update - Adani ports & SEZ (ADSEZ IN) - Healthy volume growth - CSEC Research

Healthy volume growth

- Net sales grew by 18% YoY to INR 22.3bn, driven by higher port income (+37.5% YoY). Cargo volumes were up by 15% YoY to 43 MMT in 4QFY17 due to increase in container volumes 24% YoY.

- Mundra ports cargo volumes grew by 10% YoY to 28.6 MMT, while the others Dahej grew marginally by 0.6% YoY to 1.8 MMT, Hazira grew by 22.5% YoY to 3.9MMT and Dhamra grew by 49% YoY to 5.8MMT. Realizations improved by ~2% YoY at INR 467/ton due to a price increase and better cargo mix.

- The Management guidance for FY18: Revenue growth ~16-17%, Cargo volumes ~12-14% growth and capex of INR 25-28bn. Mundra to grow ~5-7% in cargo volumes over next few years.

Valuation: The healthy growth of container and crude volumes, healthy capacity expansion plan are key positives. The stock is currently trading at PE of 16.2x its FY19E. We assign a PE of 17x to FY19E EPS, arriving at a target price of INR 378 and rate the stock as OUTPERFORMER.

Risk: Slowdown in port traffic volumes, new port development in Mundra port's vicinity, regulatory restrictions.

Shares of ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD. was last trading in BSE at Rs.357.25 as compared to the previous close of Rs. 349.8. The total number of shares traded during the day was 338593 in over 4076 trades.

The stock hit an intraday high of Rs. 359.15 and intraday low of 350. The net turnover during the day was Rs. 120690416.

Source : Equity Bulls

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