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Showing posts sorted by date for query ADANI. Sort by relevance Show all posts
Showing posts sorted by date for query ADANI. Sort by relevance Show all posts

Saturday, August 3, 2013

NTPC: SAFER & BEST PICK IN POWER SECTOR !!!

Scrip Code: 532555 NTPC
CMP:  Rs. 129.85; Buy at current levels and Accumulate at every dipps. Medium to Long term Target: Rs. 170.00; STOP LOSS – Rs. 119.45; Market Cap: Rs. 1,07,067.35 Cr; 52 Week High/Low: Rs. 175.50 / Rs. 126.55
Total Shares: 824,54,64,400 shares; Promoters: 618,40,98,300 shares – 75.00 %; Total Public holding: 206,13,66,100 shares – 25.00 %; Book Value: Rs. 88.89; Face Value: Rs. 10.00; EPS: Rs. 15.30; Dividend: 40.00 %; P/E: 8.48 times; Ind. P/E: 11.74; EV/EBITDA: 6.68
Total Debt: Rs. 47,338.33 Cr; Enterprise Value: Rs. 1,38,260.04 Cr.

NTPC INDIA LTD: The Company was founded in 1975 and is based in New Delhi, India. NTPC Limited engages in the generation, distribution, and sale of bulk power to state power utilities in India. It generates power from coal, gas, hydro, and liquid fuel sources. The company also undertakes consultancy and turnkey project contracts that comprise engineering, project management, construction management, and operation and maintenance of power plants. In addition, it engages in the oil and gas exploration, and coal mining activities. The Company’s other business includes providing consultancy, project management and supervision, oil and gas exploration, and coal mining. The Company has nearly completed execution two projects: Lata Tapovan hydro electric project (171 mega-watts (MW)), located in Chamoli District of Uttarakhand and Rammam Hydro Electric Project, Stage III (120 MW) located in Darjeeling District of West Bengal and West Sikkim District of Sikkim. The company has approximately 39,174 Megawatts of installed capacity. Company had five subsidiaries: NTPC Electric Supply Company Limited, NTPC Vidyut Vyapar Nigam Limited, NTPC Hydro Limited, Kanti Bijlee Utpadan Nigam Limited and Bhartiya Rail Bijlee Company Limited. NTPC is locally compared with Adani Power Ltd; TATA Power Ltd; Reliance Power Ltd; GVK Power and Infra; Jaiprakash Power ventures; Gujarat Industries Power Company Ltd; PTC India Ltd and CESC Ltd and globally its is compared with Aboitiz Power Corp of US; Abu Dhabi National Energy Co of UAE; Beijing Jingneng Thermal Power Co Ltd of China; Boguchanskaya GES OAO of Russia; Duke Energy International Geracao Paranapanema SA of Brazil; Eden Energy Ltd from Australia;  Electric Power development Co., Ltd of Japan; The Chuqoku Electric Power Company Incorporation of Japan; Hokkaido Electric Power Company Incorporated of Japan.

Investment Rationale:
NTPC has been allocated four coal mines by the Ministry of Coal (MOC) with an aggregate reserve of 2bn tonnes. Two of these mines are in Chhattisgarh and two are in Orissa. A total of 14 mines were allocated with estimated reserves of 8bn tonnes & production capacity of 159mt p.a that should support 32000WMs. The previously, NTPC had been allocated six coal blocks, namely Pakri‐Barwadih, Chatti‐Bariatu, Kerandari, Dulanga, Talaipalli and Chatti‐Bariatu (S), the production pegged from these mines was to the tune of 73m tonnes p.a (or 11000MWs) and the mining was to start in 2010. In 2012, three of the blocks, namely, Chatti Bariatu, Chatti Bariatu (S) and Kerandari were de-allocated on the grounds of a substantial delay in development. Subsequently, they were reallocated to NTPC. The company is yet to start producing from these mines and the total expenditure incurred on mine development till March 2013 was to the tune of Rs. 1200 Cr which is 10% of the total cost. NTPC, however, is expected to start production from its Pakri‐ Barwadih mine from FY14E. The first year production will be close to 2m tonne, which is then expected to scale up to 40m tonnes by the end of 2017. Even if the production ramps up from Pakri‐Barwadih, the Koderma‐Hazaribagh‐Banadag‐ Shivpuri‐Tori railway line, which will carry the output, is getting delayed. However, once these mines get operationalised, the company will earn regulated returns on their investments too. NTPC’s wholly owned subsidiary NTPC Vidyut Vyapar Nigam Ltd has bagged a contract to supply 300Mw round the clock power to Kerala State Electricity Board. The Power Purchase Agreement between NTPC Vidyut Vyapar Nigam Ltd and Kerala state State Electricity Board is estimated to be around 7 billion units of power supply sourced by the former from Chhattisgarh during the contract period. NTPC reported Q1FY14 Revenue at Rs. 15,383 Cr a decline of 3% yoy and EBITDA improved by 15.4% yoy to Rs. 4064.40 Cr due to lower fule expenses. Company reported its PAT which declined 2.6% yoy to Rs. 2,326.3 Cr. However, NTPC has added 500MW in Q1FY14 and expects to add about 1.87 GW in FY14  .  

Outlook and Valuation:
NTPC is targeting captive mining of about 37mmt by FY17 in a bid to secure its fuel supply position. Production at Pakri Barwadih mine (15 million tonnes, located in Jharkhand) is expected to commence in FY14. Even though NTPC imports 6% of its coal requirements, the full pass-through of costs insulates the company from the risks of a depreciating INR. Further, even as the 28% of its borrowings are in foreign currency, complete pass-through provides relief here too. A strong balance sheet provides comfort, its current cash holding is around Rs 70,000 Cr and leverage low at 0.7x. NTPC has outlined 10GW of capacity addition over FY14-FY17, lending strong visibility to growth. The company looks better placed to achieve it commissioning schedules as compared to its private power producers who are still struggling with their capacity addition plans. The company is targeting coal imports of around 16 mmt in FY14, of which orders have already been placed for 7mmt. Further, the project for an inland waterway at Farakka of 2,100 MW is expected to become operational in Q1 of FY14. NTPC has recently signed two models Fuel Supply Agreement with Coal India and expects to sign another FSA for 9 GW capacity for which coal were supplied through MOU’s earlier. NTPC can have PAT CAGR of around 6% over FY13-FY16. At the CMP of Rs. 129.85, the stock is trading at a P/E of 10.47 x FY2014E and 10.06 x FY2015E respectively. Earnings per share (EPS) of company for FY14E and FY15E are seen at Rs. 12.40 and Rs. 12.90 respectively, in my view the Fair Value of NTPC comes at Rs. 170 valuing Standalone Company at Rs. 155/share and valuing its subsidiaries & JV’s at Rs. 15/share and valuing OTSS bonds at Rs. 8/share. One can buy at current levels and accumulate NTPC  at every dips with a target price for Medium to Long term investment of Rs. 170.00 which represents 30% upwards from CMP Rs. 130.00.

KEY FINANCIALSFY13FY14EFY15EFY16E
SALES ( Crs)65,673.9072,004.0074,753.7080,434.10
NET PROFIT (₹ Cr)9,493.3010,238.8010,623.6011,225.60
EPS ()11.5012.4012.9013.60
PE (x)12.4011.5011.1010.50
P/BV (x)1.501.401.301.20
EV/EBITDA (x)8.608.909.209.00
ROE (%)12.4012.3011.9011.70
ROCE (%)7.806.305.505.80

I would buy NTPC LTD with a price target of  170.00 for Medium to Long term target. 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 ₹ 119.45 on every purchase(Why Strict stop loss of 8 % ?) - Click Here

READ HERE TO KNOW MORE ON LONG TERM INVESTING - CLICK HERE

VIEW THE POWER POINT PRESENTATION ON

Sunday, January 13, 2013

ADANI PORT & SEZ : GRAB GREAT BUSINESS AT GREAT PRICE !!!

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
TOTAL165.80

KEY FINANCIALSFY11FY12FY13EFY14E
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.


READ HERE TO KNOW MORE ON LONG TERM INVESTING - CLICK HERE

VIEW THE POWER POINT PRESENTATION ON

Tuesday, December 13, 2011

MUNDRA PORT & SEZ : A Value Pick !!!

Scrip Code: 532921 MUNDRAPORT
CMP:  Rs. 129.00; Buy at Rs. 120 - 125 levels. Short term Target: Rs. 140, Medium term Target – Rs. 181; STOP LOSS – Rs. 118.70; Market Cap: Rs. 25,843.78 Cr; 52 Week High/Low: Rs. 170.45 / Rs. 110.00
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. 21.42; Face Value: Rs. 2.00; EPS: Rs. 5.45; Div: 45.00 % ; P/E: 23.66 times; Ind. P/E: 19.43; EV/EBITDA: 19.95.
Total Debt: Rs. 3303.01 cr; Enterprise Value: Rs. 29,146.79 Cr.

Mundra Port and Special Economic Zone LTD: The Company was incorporated in 1998 as Gujarat Adani Port Limited and renamed as Mundra Port and Special Economic Zone Ltd in July 2006, based in Ahmedabad, India. Mundra Port & SEZ Ltd engages in the development, operations and maintenance of Mundra port & port based related infrastructure facilities – including multi product special economic zone in India. The company’s port related services include cargo handling and other value added port services. It handles bulk, liquid and containerized cargo, single point mooring, storage, and transportation of cargo by road, rail and pipeline. MPSEZL is in process 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. Mundra Port and SEZ ltd is compared with Rizhao Port Co. ltd; Shenzhen Chiwan Wharf Holdings Ltd. Mundra Port and Special Economic Zone Ltd is a subsidiary of Adani Enterprises Limited from September 2010.    

Investment Rationale:
MPSEZ has approved the change in name of the Company from 'Mundra Port and Special Economic Zone Limited' to 'Adani Port and Special Economic Zone Limited' which would be changed at some later date subject to approval by the Registrar of Companies -Gujarat and subject to the approval of Shareholders of the company. India's port capacity lags behind from rapidly rising demand. This comes at a time when traffic for coal, crude oil/POL, and container is set for a sustained period of high growth. It is expected that MPSEZ to benefit from the supply shortage due to its surplus capacity and advantageous location. Mundra Port is among the largest beneficiaries of an increasing demand-supply mismatch in India’s port capacity. MPSEZ’s competitive advantages and attractive location plus connectivity provides a strong visibility of traffic for MPSEZ. It is noted that 90 % of MPSEZ’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. Adani Group has ambitious plans for its three key business verticals – power, coal and logistics and with the inter-linkages between them will drive MPSEZ’s future investment and growth plan. MPSEZ has started handling coal for Tata power’s Ultra Mega Power Project in Q2FY12 (2 million tonnes handled in the current quarter). This has led to the coal volumes surging to 5.13 million tonnes growing more than 60 % YoY. MPSEZ has entered into port service agreements with Adani Power (for 4,620 MW) and Tata Power (for 4,000 MW) for transporting imported coal from Indonesia and Australia to their respective power plants. These power plants, when fully operational would require about 30 metric per annum of coal cargo to be handled at Mundra port (peak estimated by FY15E of 35 million tonnes). It is estimate that MPSEZ to handle 11 million tonnes of coal in FY12 at the new coal terminal for both Adani Power and Tata Power. While coal is already used as a firing fuel at more than 100GW of all power plants in India, the cumulative capacity of all-India’s power plants is set to rise by another 125GW+ over FY11 to FY17, such demand for power has led to rapid reforms in the power sector, the coal industry has not had equally big reforms, it is expected that the demand for coal will rise rapidly, though the supply will not rise as fast as demand will lead to demand for imported coal. Levy of MAT in the beginning of FY12 will lead to additional cash outflow in tax. However, the company is claiming MAT credit for the same such that the P&L impact will be neutralised. Mundra port currently has a theoretical cargo handling capacity of 165mn tonnes, though the actual usage might be limited to 135mn tonnes. Theoretically, the two single point mooring systems (SPMs) at Mundra can handle 50mn tonnes in total, but the respective refinery capacity itself limits overall requirement to 20mn tonnes pa. Hence, whenever the IOC and HP-Mittal refineries at Panipat and Bhatinda, respectively, are expanded, the SPM capacity should be able to handle the incremental volumes up to a maximum of 50mn tonnes in total. It is learned that the port’s capacity is set to expand to >200mn tonnes by FY15. Mundra port would be generating more than enough free cash flow from FY12F, which it could deploy for green field port opportunities both in and out of India. MPSEZ has already ventured for a few projects within India as well as acquired a coal-handling terminal in Australia. The slowdown in global trade has already hit container traffic throughout ports sharply. It is expected that EXIM container traffic across all ports to rebound at a CAGR of around 12.4% over FY10-12F and look for container traffic to reach 10.4mn TEU by FY12F. Given the limited options available elsewhere on India’s west coast, a 25 % - 30 % CAGR in container traffic at Mundra over the next 3-4 years is expected.

Outlook and Valuation:
Despite been in a capital intensive business, the debt situation for MPSEZ is very comfortable. 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. It is believed that MPSEZ to generate around Rs. 1360 Cr of Free Cash Flow p.a. from FY12F, and MPSEZ is one of the few infrastructure companies in the country to do so. This allows MPSEZ to benefit from rising port opportunities both in and outside of India without too much of balance-sheet risk. While newer opportunities will likely to be ROE-dilutive. Mundra Port and SEZ has fallen by 21 % in last one month versus the fall of 8 % in the broader market Nifty, despite of strong operational performance of the company. Now the stock trades at attractive valuation of Price to Earnings of 16.29 x FY13E and RoE of over 20 %. Three year average historical one year forward P/E for MPSEZ is 22. In case of EV/EBIDTA multiple, it trades at 11.90 times FY13E, which seems to me undervalued in context of the healthy operating margin of 65 % with strong operational & free cash flows. Average historical one year forward EV/EBIDTA for MPSEZ for the last 3 years is 15. The valuation of the stock on SOTP (sum‐of‐the‐parts) basis, with the Mundra Port business comes at Rs. 181. In my view Mundra Port could report EPS in FY13E of Rs. 7.70 / sh. I would buy Mundra Port & SEZ LTD for the medium term with a price target of Rs. 181 and for the SHORT TERM PLAYERS it could be Rs. 140.00

Business Subsidiary FY13E Value Per Share (in Rs.)
Mundra Port 136.00
Value of SEZ 19.00
Adani Petronet Dahej Pvt Ltd 7.10
Mormugao Port 1.20
Abbot Point Coal Terminal 4.00
Hazira Port 6.60
Vizag Port 2.00
Adani Logistics Ltd 5.00
TOTAL180.90

KEY FINANCIALS FY11 FY12E FY13E
SALES (Rs. Crs) 2,000.10 2,581.80 3,391.60
NET PROFIT (Rs. Crs) 893.00 1,083.30 1,549.30
EPS (Rs.) 4.50 5.40 7.70
PE (x) 26.90 22.20 15.50
P/BV (x) 5.50 4.60 3.70
EV/EBITDA (x) 19.40 15.50 11.90
ROCE (%) 13.90 16.30 20.20
RONW (%) 22.3022.50 26.60
I would buy MUNDRA PORT AND SEZ LTD with a price target of Rs. 140 for the Short term and Rs. 181 for the medium term target. 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. 118.70 on every purchase.

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

Sunday, January 23, 2011

MUNDRA PORT & SEZ : A VALUE BUY

Scrip Code: 532921 / MUNDRAPORT
CMP:  Rs. 140.00; Buy at Rs.130 - Rs.135; Target: Rs. 176.00; Market Cap: Rs. 28,047.51 cr. 52 Week High/Low: Rs. 185.25 / Rs. 114; Total Shares: 200,33,94,100 shares; Promoters : 163471449 shares – 77.22 %; Total Public holding :48206111 shares – 22.77 %; Book Value: Rs. 17.41; Face Value: Rs. 2.00; EPS: Rs. 3.89; Div: 40 %. P/E: 35.98 times; Ind P/E: 23.14; EV/EBITDA: 28.00

Total Debt: Rs. 3,706.25 cr; Enterprise Value: Rs. 30,671.84 cr

Mundra Port and Special Economic Zone (MPSEZ) is one of India’s leading private ports with a current cargo handling capacity of 70mt. In addition, the company will install another 65mt of cargo handling capacity in the next 12 months. Moreover, MPSEZ has 24,000 acres of land, of which 16,000 acres have been notified as SEZ land.

Well set to benefit from expected rise in external trade Mundra Port and SEZ’s (MPSEZ) port infrastructure is amongst the best in India, which should help it capitalise on the expected rise in external trade. In the next few years, sharp rise in coal traffic will help MPSEZ post a 35% CAGR in traffic handled at the port over FY10−FY13E, which will lead to a 35% CAGR in its revenues over this period. It is also expect land sale in the SEZ area to pick up, although clarity on the tax treatment for the SEZ remains an overhang. The March ’12 target price stands at Rs 175/sh, which comprises Rs 122/sh for the Mundra port, Rs 34/sh for the SEZ, Rs 10/sh for other port concessions and Rs 8/sh for liquid investments and cash. Potential opportunities for port development in India and international geographies can lead to further value creation. Initiate BUY for MPSEZ. Port capacity will nearly double over next one year: MPSEZ’s port infrastructure is one of the best in India with deep draft, excellent road/rail connectivity, proximity to north India (as against Mumbai-based ports) and a large storage area. Currently, MPSEZ has a handling capacity of 70mn tonnes (mt) with a 15mt single point mooring (SPM), 25mt bulk and 30mt container cargo capacities. It will add another 65mt in the next 12 months—50mt of the integrated coal terminal and a 15mt SPM facility (referred to as SPM-II). We are also building in another 110mt capacity to be added over the next decade. Rise in coal, crude imports to drive near-term traffic growth: MPSEZ will commission its 50mtpa integrated coal terminal in Q4FY11. This will cater to the coal import requirement of Tata Power (for its 4,000MW Mundra UMPP) and Adani Power (4,620MW Mundra power plant). In addition, MPSEZ will handle crude imports to be used for the 9mtpa Guru Gobind Singh refinery (GGSRL), expected to be commissioned in H2FY12. These imports (coal and crude) will account for a sizable portion (39mtpa) of incremental traffic at the port. SEZ land sale to pick up in H2: MPSEZ has 24,000 acres of land, of which 16,000 acres have been notified as SEZ land. In addition, another 8,000 acres of land are in various stages of transfer. While MPSEZ has not seen any sale of SEZ land in H1FY11, It is understood that it is looking to consummate sales of 240 acres in H2FY11. A key risk on the SEZ business is the potential removal of tax concessions for SEZ developers and units under the proposed Direct Tax Code. It has revenue/earnings CAGR of 35 % & 30 % over FY10-FY13E; the Mar ’12 SOTP-based target price stands at Rs 175/sh.  A key upside risk can come from value creation in new port projects that MPSEZ is exploring in India and overseas. Downside risks can emanate from any changes in the tax rules for SEZ developer and units.
Valuation matrix 
(X) Times FY 10 FY 11 (e)FY 12 (e)FY 13 (e)
P / E @ CMP43.732.423.220.0
P / E @ TARGET52.038.627.723.8
EV / EBITDA @ CMP28.023.516.012.9

Monday, November 2, 2009

Mundra Port and Special Economic Zone

Market Details as on 31st October, 2009.
Total Shares Issued – 400678820 shs of Rs. 10 each.
Shares Issued at IPO- 40250000 shs at Rs. 440 Nov 2007.
Promoters Holdings- 324719561 shs -81.03%.
Market Capitalization- Rs. 20047.96 cr.
Current Market Price – Rs. 500.35.
Book Value per Share- Rs. 73.44, Earning per Share- Rs. 14.91, Dividend- Rs.3/sh.
Price to Earning Ratio – 33.56, Industry P/E- 42.20, Price to Book- 6.81 times.
52 Week – High- Rs. 705, Low- Rs. 253.65.
200 Daily Moving Average- Rs. 478.25.
Total Debt – Rs. 2313 cr, Total Reserve- Rs. 2541.78 cr

FINANCIALS:-As on 30th September 2009
Total Income Rs.337.33 cr v/s Rs. 303.78 cr (YOY), Net profit increased 56 % to Rs. 174.78 cr v/s 112.28 cr (YOY), half yearly Net Sales of Rs. 634.13 cr, and Net Profit of Rs. 345.54 cr posting an EPS of Rs. 8.32.

Mundra port is India’s largest private sector port promoted by Adani group.
Mundra port has notified multi-product SEZ area of 5920 hectares, from which it is currently developing the area of 130 sq km. the Co. has its own railways which handled close to 4500 rakes in yr 2008-09; has Dry Cargo Port - has handled largest container vessel- MV BAUDELAIRE (300.40 mtrs), the port now handles 6500-7000 vessels; Co. has container terminal with highest gross crane productivity of 55.24 Moves Per Hour (MPH) , highest average crane productivity of 33 MPH in country; Company has signed an agreement with Maruti Suzuki to export cars from the Auto terminal- total car exported in last 3 months of 2008-09 is 18911 cars; Co. has handled 2.2 lacs Metric Tonnes of liquid cargo.
For the financial yr 2008-09 Mundra port has handled 2171 vessels v/s 1624 in yr 2007-08. Its cargo handling capacity increased by 33.68 % to 3.60 cr tonnes.As per the records, India’s 95 % of external trade by volume & 70 % by value comes by Sea. Cargo handling volume in 12 major ports in India was at 53 cr Tonnes, while non-major ports contributed 21 cr Tonnes during 2008-09, aggregating to 74 cr Tonnes. Mundra port, the largest private sector non-major port, with a cargo capacity of around 3.6 cr Tonnes in FY09 is among the Top 10 ports in India. India needs to double its port capacity to 150 cr Tonnes by 2011-12 & would require investments worth Rs.55000 cr in that period indicating significant potential for the sector.
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