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Sunday, January 13, 2013


Scrip Code: 532921 ADANIPORTS

CMP:  Rs. 131.70; Buy at current levels.

Medium term Target: Rs.145 ; Long term Target: Rs. 165; STOP LOSS – Rs. 121.16; Market Cap: Rs. 26,384.70 Cr; 52 Week High/Low: Rs. 157.75 / Rs. 105.65
Total Shares: 200,33,94,100 shares; Promoters : 155,25,38,715 shares –77.50 %; Total Public holding : 45,08,55,385 shares – 22.50 %; Book Value: Rs. 26.05; Face Value: Rs. 2.00; EPS: Rs. 7.47; Div: 50.00 % ; P/E: 17.63 times; Ind. P/E: 20.97; EV/EBITDA: 16.93.
Total Debt: Rs. 5,137.69 Cr; Enterprise Value: Rs. 31,522.39 Cr.

Adani Port and Special Economic Zone LTD: The Company was incorporated in 1998 and is based in Ahmedabad, Gujarat- India. It was earlier known as Gujarat Adani Port Limited and later named as Mundra Port and Special Economic Zone Ltd. In January 2012 the company was renamed as Adani Port and Special Economic Zone Ltd. Adani Port and Special Economic Zone Ltd is a subsidiary of Adani Enterprises Limited from September 2010. The company engages in the development, operations and maintenance of multi product special economic zone and related infrastructure in India. The company through its Mundra port located in Gulf of Kutch, India provides cargo handling & other value-added port related services. It operates port infrastructure facilities of bulk cargo at Dahej, Gujarat, handles bulk, liquid and containerized cargo, single point mooring, storage, and transportation of cargo by road, rail and pipeline. APSEZL is near completion of setting up coal cargo terminals at Murmugao Port, Goa. The company is also developing a non- LNG multi-user, multi-cargo port facilities at Hazira under the sub-concession route The company also operates container trains on specific railways routes; and provides multi-model cargo storage and logistics services through the development of inland container depots at various locations. It operates a fleet of approximately 2517 vessels. In addition, APSEZL provides non scheduled (passenger) services through its aircrafts. Adani Port and SEZ ltd is compared with Essar Port & Gujarat Pipavav Port locally & Globally with Meiko Trans Co. Ltd  & Azuma Shipping co. ltd of Japan; Rizhao Port Co. ltd; Shenzhen Chiwan Wharf Holdings Ltd.

Investment Rationale:
Adani Port is the largest private Port in Indian with No.2 position in container cargo. Adani Port’s market share in all India cargo i.e. Mundra + Pipavav + Major Ports has moved up from 14.4 % in H1FY12 to 17 % in H1FY13. Due to weak macro’s it faced a slowdown in container cargo growth to 16 % YoY v/s 25 % in the last quarter. Adani ports during the quarter commenced the trial runs at Hazira Port & CT-III (ahead of its schedule in Q2FY13) taking the overall operational portfolio across 4 ports. Abbot point recorded cargo volumes of 3.67MT, Dahej recorded cargo volumes of 1.2 mn tons & Hazira (trial runs) recorded cargo volumes at 0.11 MT in Q2FY13. Adani Ports has handled 47.88 MT at all the ports under their management during H1FY13 recording a growth of 24 % year on year. Dahej port has handled 3MT in H1FY13 with a positive APAT generation in H1FY13. CT-3 has also commenced operations in Aug-12 which has raised the container handling capacity of CT-3 from 2.5mteu to 4.3mteu. Hazira port has also commenced trial runs during the quarter, commercialization is expected from FY14E. APSEZ delivered solid Q2 performance by reporting standalone EBITDA at Rs. 485 Cr up at robust 28% year on year, led by high volumes in cargos. It’s EBIDTA margins stood at 69.5 % marginally up by 5.10 % year on year. The company posted revenues at Rs. 698 Cr up by 18.7 % year on year led by volume beat, as cargo volumes at 20.4MMT grew at a healthy rate of 15 % year on year. The Dry bulk segment (9.9 mt) grew at robust 41 % year on year, while the container cargo (6.2 mt) grew by 16 % year on year. APSEZ posted blended realization of Rs. 342/tone. Its’ APAT came at Rs 370 Cr up by 35.9 % year on year with significantly higher other income at Rs. 97.3 Cr which includes Rs 50 Cr of SEZ income. On Consolidate basis - Its revenue came at Rs. 1020 Cr up by 19 % year on year led by outperformance by Mundra port. Adani ports in Q2FY13 handled overall cargo of 25.7mn which included 3.67mt at Abbot Point and 1.5mt at Dahej port. EBITDA came in at Rs. 64o Cr up by 24.5 % year on year with a sharp decline in EBITDA margins at 62.6 %. APAT came in at Rs. 275 Cr down by 4 % year on year led by higher other income of Rs. 75.1 Cr. Overall implied EBITDA of other subsidiaries stood at Rs. 120 Cr down by 27 % quarter on quarter. ADSEZ reported a strong increase in standalone net debt by Rs. 1850 Cr from Mar 31, 2012 levels to Rs. 6450 Cr at H1FY13, Simultaneously the money deployed in short-term Loans & Advances has raised sharply by Rs. 1050 Cr to Rs. 1220 Cr raising questions on wasteful deployment of resources. We await clarifications on the nature of advances.

Outlook and Valuation:
ADANI PORT is among the largest beneficiaries of an increasing demand-supply mismatch in India’s port capacity. APSEZ’s competitive advantages and attractive location plus connectivity provides a strong visibility of traffic for APSEZ. It should be noted that 90 % of APSEZ’s estimated traffic comprises of coal, crude oil, and container. Of this, coal and crude oil are not likely to see any impact from global macro concerns, while container traffic should continue to benefit from the shortage of capacity on India’s west coast. Based on the SOTP valuation method the value APSEZ comes at Rs. 165 per share, implying an upside of 25.28 % from current levels. The value of Mundra Port (core operating asset of APSEZ) comes at Rs. 119 per share, constituting 72 % of total value of APSEZ. Mundra Port, given its strategic positioning & diversified mix of cargo & is expected to deliver strong volume growth. The company having delivered a strong track record of maintaining superior realization & margin has emerged as the preferred port due to superior infrastructure which facilitates faster transit of cargo, thereby reducing the overall cost of handling for logistic companies and end users. Amongst other projects, Dahej and Abbot Point (Australia) are already operational and gaining further traction. Despite been in a capital intensive business, the debt situation for ADSEZ is at very comfortable level. The stable cash flows from assured cargo and minimum working capital investment would be very important for the company to make more capex in the future for growth. At the current market price of Rs. 131.70, the stock is trading at a PE of 29.26 x FY13E and 18.41 x FY14E respectively. The company can post Earnings per share (EPS) of Rs. 4.50 in FY13E and Rs. 7.30 in FY14E. The SOTP (sum‐of‐the‐parts) valuation of Adani Port & Sez comes at Rs. 165. One can buy APSEZ with medium term target of Rs.145 & a Long term target price of Rs. 165.00.

SOTP Valuation :-

Business SubsidiaryValue Per Share (in Rs.) 
Mundra Port119.00
Value of SEZ16.00
Adani Petronet Dahej Pvt Ltd 5.80
Mormugao Port2.00 
Abbot Point Coal Terminal12.00
Hazira Port4.00
Vizag Port2.00
Adani Logistics Ltd5.00

SALES (Rs. Crs)2,000.013,270.804,026.805,231.30
NET PROFIT (Rs. Crs) 943.501,094.80913.201,464.50
EPS (Rs.)4.705.404.507.30
PE (x)26.1022.5027.0016.80
P/BV (x)5.905.104.503.70
EV/EBITDA (x)21.1020.0016.6012.90
ROE (%)24.7024.3017.6024.10
ROCE (%)14.7010.607.909.20

I would buy ADANI PORTS & SEZ with a price target of Rs. 145 for medium term & Rs. 165 for long term. As I always say, I am a long term believer in markets & I do respect the markets and will keep a strict stop loss of 8 % or Rs. 121.16 on your every purchase. 

*As the author of this blog I disclose that I do hold ADANI PORT AND SEZ LTD in my investment portfolio.




  1. Wow!! Comprehensive, Now if only I had this when I was doing a paper on Adani SEZ last to last year.

    I seriously seriously appriciate the blog. Its doing something meaningful.

  2. HI ,
    I have being writing on ADANI PORT formally know as MUNDRA PORT from its IPO just click my rest of the post related with ADANI PORT here - ADANI PORT

  3. Wealth of useful information.Congrats!

    A news on ADANI PORT -

    Adani to acquire DHARMA PORT company in Odisha for a valuation of $1 billion or Rs.5500.

    Dhamra Port is a 50:50 JV between L&T and TATA STEEL.

    The buy will likely benefit Adani to have a presence in the eastern region as its earlier attempt to acquire Chennai port terminal was rejected due to security issues.
    Apart from that, the port is also outside the Union government’s control and is free to set its own rates, unlike those under Union government’s control for which rates are set by Tariff Authority for Major Ports.

    Dharma Port Company Ltd has been awarded a concession by Government of Orissa to build and operate a port north of the mouth of river Dhamra in Bhadrak district on BOOST (Build, Own, Operate, Share and Transfer) basis for a total period of 34 years including a period of 4 years for construction. The lease period may be renewed or extended for two additional periods of 10 years each on mutually agreed terms and conditions.

    The location of Dhamra is in close proximity to the mineral belt of Orissa, Jharkhand and West Bengal and its deep draft is suitable for large vessels making it the most cost-effective and efficient port on the Eastern coast of India.

    The port is primarily used to import coal and limestone, and for the import and export of iron ore.

    In the initial phase, DPCL has constructed two fully mechanised berths with an annual capacity of 25 Mn tonnes for handling imports of various types of coal as well as limestone and exports of iron ore. So far this calendar year, DPCL has only handled 4 Mn tonnes of cargo, including that for Tata Steel.

    The port will eventually comprise 15 terminals with an annual capacity of 85-100 Mn tonnes.

    Adani Ports was planning to add to its port capacity. Late last year it was said to buy stake in India’s second biggest cargo handler by volume – Visakhapatnam port.

    Last year in June, Standard Chartered PE (Mauritius) II Ltd invested R130 Cr in Karaikal Port Private Limited for a minority stake.

    Then in May, Port of Antwerp International invested R175 Cr in Essar Ports Ltd. through GDRs.


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  6. Dear Visitor,
    Would like to appreciate the effort of the webmaster for creating such a wonderful blog which is very helpful for the visitors.
    Would like to add few notes here like if we are trading in stock tips specially in NSE and BSE which are one of the most popular stock exchanges of the world then we need to take care of the few things like
    1. Always trade in limit
    2. Do not make tade on emotional basis
    3. Always try to get professional support before taking risk in stock market
    4. Rely on professional research rather than speculation.

    This is for sure if we follow above 4 points then we can always stay in good profit.

  7. Hello Bhavik

    What is your view of the valuation at the current levels? Have you done a similar valuation recently to see if the current value is worth it?


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