Result Update: Adani Port and Special Economic Zone (APZ) - BUY - TP Rs.485 - Kotak

Consolidated volume was reported at 47.61 mn tonnes (vs. 43 mn tonnes QoQ and 41 mn tonnes YoY) which reflects (1) strong growth in containers (+29% YoY) (2) rebound in coal (+13% YoY) and crude (+10% YoY) volumes and (3) healthy contribution from subsidiary ports. Consolidated revenue from operations increased to Rs 26.9 bn (+20% YoY) with strong Ebidta margin of 66%. Consequently, the company reported PAT of 10.01 bn vs. our expectation of Rs 9.7 bn. Management has guided for further improvement in EBIDTA margin and strong cash flow generation going forward.

We expect the company to report 11% volume CAGR over FY17 to FY20E, sustain the current level of EBIDTA margin and further improve its balance sheet with strong free cash flow generation of over Rs 12/13 bn per annum. Company also intends to scale-up its logistics and dredging businesses which will be value additive and complement the port business of the company. Recommend BUY (from Accumulate) with an increased TP of Rs 485 (from Rs 440).

Shares of ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD. was last trading in BSE at Rs.437.6 as compared to the previous close of Rs. 448.2. The total number of shares traded during the day was 138853 in over 1673 trades.

The stock hit an intraday high of Rs. 450 and intraday low of 433.3. The net turnover during the day was Rs. 61361542.

Source : Equity Bulls

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