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Saturday, August 15, 2015

69th INDEPENDENCE DAY OF MY INDIA : VANDE MATARAM !!!

                                             !! TURN ON YOUR SPEAKERS !!

{{ Maa Tujhe Salam }} 
 Freedom In The Mind, Faith In The Words.
Pride In Our Souls. Let's Salute The Nation
On This Swatantra Diwas !!
Happy Independence Day to You ALL !!!


वन्दे मातरम् सुजलां सुफलां मलयजशीतलाम् |
सस्य श्यामलां मातरम् 
शुभ्र ज्योत्स्ना पुलकित यामिनीम्
फुल्ल कुसुमित द्रुमदलशोभिनीम्
सुहासिनीं सुमधुर भाषिणीम्
सुखदां वरदां मातरम् ||



"In the attitude of silence the soul finds the path in a clearer light, 
and what is elusive and deceptive resolves itself into crystal clearness.
Our life is a long and arduous quest after Truth " - Mahatma Gandhi 


Salute the national Flag my fellow citizens, and sing the song of freedom's love. Remember how freedom was won. By fighter's struggles, sacrifice ! Pray for the lives lost in the fight. And emulate their examples. Learn to be patriotic more and do your duty with fervor.

*Credits: Ranjan Sharma- Santoor, Sarod, Tabla, Pakhawaj and Tanpura




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Thursday, August 13, 2015

CONTAINER CORPORATION OF INDIA LTD: RATNA OF YOUR PORTFOLIO !!!

Scrip Code: 531344 CONCOR
CMP:  Rs. 1610.90; Market Cap: Rs. 31,408.39 Cr; 52 Week High/Low: Rs. 1947.70 / Rs. 1200.10
Total Shares: 19,49,74,191 shares; Promoters : 12,04,82,495 shares –61.79 %; Total Public holding : 7,44,91,696 shares – 38.21 %; Book Value: Rs. 391.63; Face Value: Rs. 10.00; EPS: Rs. 50.91; Dividend: 134 % ; P/E: 31.37 times; Ind. P/E: 26.47; EV/EBITDA: 17.42x
Total Debt: ZERO; Enterprise Value: Rs. 28,816.34 Cr.

CONTAINER CORPORATION OF INDIA LTD: The Company was incorporated in 1988 and is based in New Delhi, India. Container Corporation of India Limited operates in the Railroads, line-haul operating sector. It provides multimodal logistics support services for export and import, and domestic trade and commerce in India. It primarily engages in carrier business, as well as provides freight transportation services by rail and road and providing inland transport by rail for containers, ports, air cargo complexes and cold chains. The company’s business includes three distinct activities, that of a Carrier, and container terminal operator and warehouse operator which provides various facilities, including warehousing, container parking, repair facilities, and office complexes. In addition, it operates in two divisions – EXIM & Domestic, both the divisions provides services including transit warehousing for import and export cargo; bonded warehousing, enabling importers to store cargo and take partial deliveries; less than container load (LCL) consolidation, and reworking of LCL cargo at nominated hubs; and air cargo clearance using bonded trucking. All the activities of the company revolve around this business and all its operation are in India. As of March 31, 2015, the company operated a fleet of approximately 20,247 owned and leased containers, 52 reach stackers, 17 gantry cranes, and 63 container terminals of which 13 are EXIM terminals, 35 combined container terminals and 15 domestic terminals and 13,111 wagons. CONTAINER CORPORATION OF INDIA LTD is compared to Arshiya Ltd, Kesar Terminals, Transport Corporation of India Ltd, Shreyas Shipping, Gati Ltd, Gateway Distripacks Ltd, Allcargo Logistics Limited, VRL Logistics, Snowman Logistics nationally and globally with AMERCO Inc of USA, CSX Corp of USA, SixtSE of Germany, VTG Aktiengesellschaft of Germany, Stagecoach Group Plc of United Kingdom, Northgate Plc of United Kingdom, National Express Group Plc of United Kingdom, DSV A/S of Denmark, Dazhong Transportation of China, ComfortDelGro Corporation Ltd of Singapore, CJ Korea Express Corporation of South Korea, Central Japan Railway Co of Japan, CAR Inc of China, Bangkok Metro Public Co of Thailand, Asciano Ltd of Australia, Canadian Pacific Railway Ltd of Canada, Con-way Inc of USA, Kansas City Southern of USA. 

Investment Rationale:
Container Corporation of India Ltd. (CONCOR) was incorporated in March 1988 as a Public Sector Enterprise under the Ministry of Railways with the prime objective of developing modern multimodal transport logistics and infrastructure to support the country's growing international trade. The company commenced operations on November 1, 1989, by taking over seven Inland Container Depots from the Indian Railways located at Delhi, Ludhiana, Bangalore, Coimbatore, Guwahati, Guntur and Anaparti. Since then, CONCOR has developed a vast network of container terminals at prime locations all over the country. CONCOR enjoys a near monopolistic situation in the transportation of Containerised cargo through the Indian railways. Container Corporation of India (Concor) is a mini-Ratna Central PSU. The logistics solutions provider is keen on setting up multi-modal logistics parks in nine key industrial hubs of Odisha state. At present, the company is the undisputed market leader having the largest network of 62 ICDs/CFSs in India. In addition to providing inland transport by rail for containers, it has also expanded to cover management of Ports, air cargo complexes and establishing cold-chains. The company has developed multimodal logistics support for India’s International and Domestic containerization and trade. Though rail is the main stay of the company’s transportation plan, road services are also provided to cater to the need of door-to-door services, whether in international or domestic business. The core business of the company comprises of three distinct activities, that of a carrier, a terminal operator, and a warehouse operator. The company has two wholly owned subsidiaries, M/s. Fresh and Healthy Enterprises Ltd which was set up in 2006 and CONCOR AIR set up in 2012. During the year 2012-13, company entered into a Joint Venture with State Infrastructure and Industrial Development Corporation of Uttarakhand Limited (SIIDCUL) for development of Logistics facilities in the state of Uttarakhand. The Joint Venture Company (JVC) with shareholding of 74 % and 26 % of CONCOR and SIIDCUL respectively named M/s. SIDCUL CONCOR INFRA Company Limited was incorporated on 21 March, 2013. Another Joint Venture Agreement has been signed by company with Punjab State Container and Warehousing Corporation (CONWARE) on 13 March 2013. This 51:49 Joint venture with majority shareholding of CONCOR will be creating Logistics facilities in the state of Punjab Despite the prevalent economic volatility, logistics sector is expected to record a positive growth pace. According to Ministry of Road Transport, the logistics sector is expected to cross US$200 billion by 2020. At present, the sector is worth US$125 billion. In India the cost of logistics is at 13 % to 14 % of GDP where as in developed nations, the cost falls in the range of 7 % to 8 % of GDP. Cost of logistics is a key component in the cost of any product or service. Thus cost of logistics play a very important role in determining the cost of the product offered by the manufacturer or service provider. The major drivers for logistics industry are high economic growth, growth in retail sector, high demand for consumer durables, expansion of auto and auto components sector and of course high growth of international trade. In India, Logistics sector has not been give the requisite attention by the government. Lack of infrastructure is the key drawback for the development of the logistics industry. In addition to that lack of skilled manpower and warehouse facilities are the major roadblocks for the growth of the logistics in India. Thus a large part of the industry still operates in the unorganized sector. For INDIA the Exports for the first quarter (April-June) declined 16.8 % YoY to $66.69 billion compared to the corresponding quarter value of $80.1 billion. Container volumes at major ports for the same quarter grew a mere 3 % YoY to 2 million TEUs. Consequently, Exim volumes for Concor de-grew 3 % YoY to 614353 TEUs, which is the lowest in the past five quarters. It is believed that since Concor enjoys 80 % of market share, it would be the biggest beneficiary of the expected recovery in trade scenario. With the increased capacity in terms of rakes to 256, Concor is well geared to manage higher volumes with expected recovery in trade activities. There has been a need to decongest the existing trunk routes of Howrah- Delhi on the Eastern Corridor and Mumbai-Delhi on the Western Corridor. Due to higher freight rates, coupled with pilferage at various levels, the freight share for railways declined to 30 % compared to that of roadways at 65 %. The surging need for transportation of food grains, coupled with power needs requiring heavy coal movement and booming infrastructure construction and growing international trade have led to the conception of the dedicated freight corridors along the eastern and western routes, which will also benefit CONCOR.

Outlook and Valuation:
Container Corp of India Ltd (CONCOR) is a leading rail freight transporter that is graduating to be a multimodal logistic player. CONCOR is an undisputed leader in the sector.  It is set to benefit from GDP/EXIM revival and DFCs completion that will accelerate containerization. Despite private player’s entering in 2006, it has maintained to retain its leadership in market share that can be attributed to its scale and vantage locations. Long term growth acceleration could come from its pre-emptive capex on multimodal parks. Company enjoys monopolistic situation so has a huge moat. Company has its Economic Moat (A competitive advantage that one company has over the other companies in the same industry – by Warren Buffett) expanding moats which is a very strong sign of a future Multi-bagger stock. On financial side Exim revenues contribute around 84 % of Concor’s total revenues. Exim volumes posted a CAGR of 7 % in FY10-15 with FY15 posting robust growth of 11 % YoY, thereby, hinting towards a revival. Further, container volumes at major ports grew 7 % YoY. Consequently, going ahead, driven by buoyant container volume growth at major ports, it can be expected that Exim volumes for Concor to post a CAGR of 9 % over FY15-17E. Further, as JNPT port is one of the largest volume contributors to Concor, its volumes posted growth of nearly 7 % YoY in FY15. For Q1FY16, port wise volume share from JNPT declined to 42 % as compared to 45 % in FY14. However, the decline in volume share at JNPT was compensated by an increase in share from Mundra and Pipavav port where Concor’s share stood at 25 % and 21 %, respectively. As volumes pick-up at ports, Concor focuses on Exim to improve its earnings. Concor’s revenues grew at a CAGR of 8.5 % in FY11-FY15 as container volumes remained sluggish; except 2014. However, going ahead, with an improved market share in private ports such as Mundra and Gujarat Pipavav, it can be expected that volumes to improve. Further, the government’s “Make in India” campaign will perk up trade volumes for exports. In turn, this will drive higher volumes for Concor. On the EBITDA front also, Concor can post a 21 % CAGR over FY15-17E visà- vis CAGR of 7 % over FY11-15. As EBITDA margins have remained under pressure over the years due to a steep increase in freight rates by railways, going forward, hikes will pause, thereby allowing the company to stabilise its margins. Also, introduction of double stacking and hub and spoke model for its operations is expected to provide further scope to improve margins which can be in the range of 23 % to 25 % in future. Further, introduction of PFTs is expected to improve earnings of the company in future. Consequently, PAT is also expected to post a CAGR of 18 % over FY15-17E against 7 % in FY11-15. Going ahead, with FDI in rail and projects such as dedicated freight corridor and goods and services tax (GST) on the priority list of the government, Concor’s growth and margins will recover at a faster pace. Concor faces intense competition from private operators like In logistics Solutions, Boxtrans Logistics, Gateway Distriparks and Arshiya International as private container rail business is growing gradually which forces these players to have tie-ups with Concor for shipping lines cargo to drive their Exim volumes. Most private players have also accelerated their expansions and rolling stock addition programme to get a share in the Exim business. Another comforting factor is the Healthy balance sheet of CONCOR. Concor today has a cash balance of around Rs. 2,600 Cr on its balance sheet which would yield the company around 7.5 % to 9 % per annum. Concor is of a zero debt company, with substantial cash balance and no funding issues. As GST and DFC are expected to roll out in FY17 and CY18, the near term volume growth for Concor is expected to grow at a CAGR of 9 % over FY15-17E, thereby leading to revenue & earnings CAGR of 20 % each in the same period. Also, PFTs becoming operational in due course of time are expected to add another revenue line for Concor. Further, any near term risk of adverse freight rate movement is expected to be mitigated by higher Exim volume generation. At the current market price of Rs. 1,610.90, the stock is trading at 28.61 x FY16E and about 23.90 x FY17E. Company can post Earnings per share (EPS) of Rs. 56.30for FY16E and of Rs. 67.40 for FY17E. Finally, with a strong balance sheet and superior cash flow company can be assigned P/E multiple of 25x FY17E EPS. It is expected that the company will keep its growth story intact in the coming quarters also with rationalization of haulage charges by IR or Pickup in containerized trade both in EXIM and domestic segment. It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. 

KEY FINANCIALSFY14FY15FY16EFY17E
SALES ( Crs)5,109.005,574.006,556.007,100.30
NET PROFIT (₹ Cr)950.001,048.001,097.001,310.00
EPS ()50.0053.7056.3067.40
PE (x)35.1032.4029.0024.40
P/BV (x)4.804.403.303.50
EV/EBITDA (x)28.5024.2020.5017.20
ROE (%)13.8013.7013.0014.90
ROCE (%)12.8012.0012.7018.70

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 % on every purchase(Why Strict stop loss of 8 % ?) - Click Here

*As the author of this blog I disclose that I do not hold CONCOR Ltd in my any of the portfolios.

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Disclaimer
This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.
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Monday, August 3, 2015

ADANI PORTS & SPECIAL ECONOMIC ZONE LTD : ANCHORED FIRMLY !!!

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


Scrip Code: 532921 ADANIPORTS
CMP:  Rs. 325.00; Market Cap: Rs. 67,305.93 Cr; 52 Week High/Low: Rs. 357.95 / Rs. 244.10
Total Shares: 207,09,51,761 shares; Promoters : 116,51,78,474 shares –56.26 %; Total Public holding : 90,57,73,287 shares – 43.74 %; Book Value: Rs. 55.63; Face Value: Rs. 2.00; EPS: Rs. 10.54; Dividend: 50.00 % ; P/E: 30.83 times; Ind. P/E: 29.95; EV/EBITDA: 17.86.
Total Debt: Rs. 15,155.33 Cr; Enterprise Value: Rs. 81,978.58 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 was set up as a Special Economic Zone at Mundra. Gujarat Adani Port Ltd was then merged with Mundra Special Economic Zone Ltd in April 2006 and the company was renamed as Mundra Port and Special Economic Zone Limited, to reflect the nature of business. In January 2012 the company board renamed the company 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 came with an IPO on November, 1st 2007 offering 4,02,50,000 equity shares of Rs. 10 each for Rs. 440 per share raising Rs. 1,771.00 Cr. The object of the issue were to achieve the benefits of listing on stock exchanges & to raise capital for construction and development of basic infrastructure and allied facilities in the proposed SEZ at Mundra; to utilize the funds for construction and development of a terminal for Coal and other Cargo at the Mundra Port; for contributing towards investment in Adani Petronet (Dahej) Port Pvt Ltd, Adani Logistics Ltd and Inland Container Pvt Ltd. The shares got listed on November 27, 2007 at Rs. 770 a share. The company declared split in face value of its shares from Rs. 10 to Rs. 2 on 17 May 2010. 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. Adani Ports and Special Economic Zone Limited, together with its subsidiaries, develops and operates ports and port based infrastructure in India. The company operates a port at Mundra, Gujarat; a dry bulk terminal located in Dahej, Gujarat; a bulk and container handling terminal at the port of Hazira, Gujarat; and coal handling terminals at the port of Mormugao, Goa and Visakhapatnam in Andhra Pradesh. It also operates 4 bulk terminals with 15 berths to handle dry and liquid bulk cargo, 3 container terminals with 6 berths, and 2 offshore single point mooring facilities for handling crude cargo at the port of Mundra; a dry bulk cargo terminal with 2 berths at the port of Dahej; and 1 bulk terminal with 3 berths to handle dry and liquid bulk cargo, and 1 container terminal with 2 berths to handle container cargo at the port of Hazira. In addition, the company is developing a bulk terminal located in Kandla, Gujarat; a rail corridor; and road and highway projects. Further, it offers port services, including marine, handling intra-port transport, storage, other value-added, and evacuation services for terminal operators, shipping lines and agents, exporters, importers, and other port users; and infrastructure leasing and logistics services at the Mundra Port through its surrounding infrastructure. Additionally, the company provides multi-modal cargo storage-cum-logistics services; and non-scheduled (passenger) services through its aircrafts. 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 2,517 vessels. In addition, APSEZL provides nonscheduled (passenger) services through its aircrafts. Adani Port and SEZ ltd is compared with Avia Solutions Group Ab, DP World of UAE, Gemadept Corp, Kuwait and Gulf Link Transport Company, Luka Rijeka d.d, Wesco Aircraft Holdings Inc, Isewan Terminal Services Co., Ltd of Japan, Azuma Shipping Co., Ltd of Japan, Meiko Trans Co., Ltd of Japan, Rizhao Port Co. ltd; Shenzhen Chiwan Wharf Holdings Ltd.

Investment Rationale:
Adani Ports and SEZ is a part of global Adani Group, founded in 1988, and is India’s leading business houses with revenue of over $8.7 billion. Group’s logistics division denotes a large network of ports, Special Economic Zone (SEZ) and multimodal logistics like railways and ships. Adani owns and operates three ports – Mundra, Dahej and Hazira and now Dhamra in India. The Mundra Port, which is the largest port in India, benefits from deep draft, first-class infrastructure and SEZ status. Adani is also developing ports at Mormugao and Kandla in India. India has a coastline of 7,517 kilometers (excluding the Andaman and Nicobar Islands), with a port industry that has grown dramatically. India at present has 13 Major Ports and 200 Non-major Ports with total cargo traffic tonnage handled of about 976 million metric tonnes for the fiscal year 2013 and is expected to reach 1,758 MMT by 2017. The handling capacity of the major ports in India is sufficient to match with the trade demands. The capacity of all major ports as on March 31, 2015 was 800.52 MMT against cargo traffic of 555.54 MMT handled in 2013-14. Thus the capacity utilisation is around 70 %, and as per internationally accepted norms the gap between the traffic and the capacity is usually around 30 %. The Ministry of Shipping has formulated a Perspective Plan for development of the Maritime Sector, namely, “The Maritime Agenda (2010-2020).” This Plan has estimated the traffic projections and capacity additions at the ports upto the year 2020. Based on the estimated growth, it has projected capacity of 3,130 MT by 2019-20. Since inception, Mundra Port & SEZ has posted 35 % CAGR and handled around 40 MT cargos in FY10, higher than most other major Indian ports. Also, it has hedged cargo uncertainty risk by getting into long‐term service contracts. The port is expected to continue its current growth momentum over the coming 2 to 3 years, handling around 96 MT of cargo by FY17E. Mundra is one of its kind ports. MPSEZ, under the aegis of the parent company Adani Enterprises, has been instrumental in developing a deep draft gateway port and SEZ strategically on the West coast of India with state–of‐the‐art infrastructure and capability to handle diversified cargo. Such a third generation port acting as one‐stop‐shop for export-import logistics is in unique league of ports and one of its kinds in India. The company has a strong portfolio of ports projects on the Indian west coast other than the flagship Mundra port. The projects are a mix of brown‐field port development i.e. currently at Dahej & Hazira and as terminal operator at the major ports i.e. coal terminal under development at the Murmagao port. Such projects would help the company gain a pan India presence. While the company is looking at setting up a large port on the east cost of India, it has also been scouting for opportunities to go global and has recently evinced interest in port development projects in Australia and Indonesia, in line with its long‐term strategy. ADSEZ has received the letter of award (LOA) from the government of Kerala for development of the Vizhinjam International Deepwater Project. The estimated project cost stands at Rs. 40.89 bn which includes the grant of Rs. 16.35 bn. The project will to get commission in the next four years. The Kerala state will spend additional Rs. 14.63 bn towards break water construction and Rs. 5.3 bn towards land acquisition which is around 53 hectares. The company will receive 75 % of the grant during the period of construction and 25 % once the terminal gets commissioned. The concession period of the project is 40 years with the option of 20 years further extension. Revenue share of 1 % to the Authority are expected to commence from the 15th year of COD as per the Concession Agreement and will be increased by 1 % every year. Vizhinjam port will be competing with Tuticorin, Cochin, Chennai port. The port will also compete with international port Colombo for the transhipment traffic. The first leg of Vizhinjam will try to gain market share from Cochin port due to the availability of similar hinterland for the southern Kerala cargo which contributes around 40 % of the Kerala traffic. The port is being developed as a Transhipment Hub, to cater current largest mother vessel with Design Vessel: 18000 TEU and Birth Length: 2000 Mts. The proposed site has minimal Littoral drift and as such would hardly require any maintenance dredging during the years of operation. This will result in low O&M Costs. The port has natural draught of 18.4 Mts. The key success factors of the APSEZ is the strong availability of Draft Depth and Waterfrontof Mundra and other ports handled by APSEZ, it is closest port to Northern hinterland, the cargo generation is from its parent firm, they have long term cargo contracts. This makes the APSEZ a good pick in the port sector.

Outlook and Valuation: 
Incorporated as Gujarat Adani Port Limited on May 26, 1998, commercial operations began in October 2001, post entering into concession agreement with Gujarat Maritime Board to build, operate and maintain the port for a period of 30 years till 2031 extendable by another 20 years. Adani Port is the largest private Port in Indian with No.1 position in container cargo. Adani Ports is strategically located for global trade. Situated on the northern coast of the Gulf of Kutch on the west coast of India, it provides a convenient international trade gateway to Europe, Africa, America and the Middle East. Mundra has a deep draft (12.5 - 17 meters) which enables large vessels like panamax and super post panamax carriers to dock alongside its berth. The port has the world’s largest fully mechanised coal terminal with a capacity of 60 million tonnes per annum (MTPA). The port is into providing cargo handling services for bulk, crude and container cargo. The company has also received approval to develop the adjacent port land as a multiproduct SEZ. Notification has been issued to 16,000 acres of land while the company is in talks to acquire more land to add to its SEZ portfolio. While the company is also bidding for other domestic and international port projects it has also invested in value added services like logistics support, providing container rail services and inland container depots to diversify from its core port business. APSEZ is the only private sector port operator with presence across six ports in India. The company’s aim is to increase annual cargo handling capacity from 112.8 million MT in 2014 to 200 million MT by 2020. Company has its Economic Moat (A competitive advantage that one company has over the other companies in the same industry – by Warren Buffett) and with its expanding moats indicates a very strong sign of a future Multi-bagger stock. Setting up such ports in India is not easy, acquisition and various permissions and environmental clearance to acquire land in India is a headache especailly port should be ideally located at the point where the ocean meets the river which can easily receive large vessels. Also, it costs estimately around $2.25 billion to $4.85 billion to built small ports and it takes around $8 to$12 billion to build major complex ports in India. These acts as the barriers to the entry providing Adani Port & SEZ a deep economic moat. APSEZ acquired Dhamra Port Company Ltd (DPCL), located in Odisha a JV of Tata Steel and L&T Infrastructure Development Projects (L&T IDPL) and also operates Mundra Port, Hazira Port, Dahej Port, Murmugao Terminal, kandala Terminal. The Indian ports and shipping industry plays a vital role in sustaining growth in the country’s trade and commerce. India currently ranks 16th among maritime countries, with a coastline of about 7,517 km. Around 95 % of India's trade by volume and 70 % by value takes place through maritime transport, according to the Ministry of Shipping. The Indian government continues to support the ports sector. It has allowed foreign direct investment (FDI) of up to 100 % under the automatic route for projects regarding construction and maintenance of ports and harbours. It has also facilitated a 10-year tax holiday to enterprises engaged in developing, maintaining and operating ports, inland waterways and inland ports. Moreover, Government has taken many measures to improve the efficiency of operations through mechanisation, deepening the draft and speedy evacuation. Container-handling in the 11-month period expanded 7.15 % year-over-year to 7.25 million 20-foot-equivalent units from 6.77 million TEUs in the same period of 2013-14. Containerised cargo tonnage grew 4.4 % to 109 million tons from 104 million tons. In fiscal year 2013-14, which ended in March 2014, overall cargo volumes at major ports grew 1.78 percent year-over-year to 555.5 million tonnes (MT). The Indian ports sector received FDI worth US$ 1,637.30 million in the period April 2000–February 2015, as per the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry. The ports sector was also awarded 30 projects in FY14, investing over Rs 20,000 crore (US$ 3.16 billion) which is a threefold increase over the preceding year. In FY14, coal cargo traffic grew by 20.6 per cent to 104.5 MT from 86.7 MT in FY13. With regard to commodities, there was a rise of 25 per cent in handling of fertilisers in April 2014 as against April 2013. Iron ore handling also grew by 16.8 per cent during that period. 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. The company has been clocking robust earnings of 25 % CAGR surge by cornering 2/3rd incremental cargo growth in India over the last 4 years, apart from pursuing the inorganic growth route. At 43 % capacity utilisation, benefits of some initiatives are yet to translate into earnings growth while RoEs continue to be at a robust 25 %. Based on the SOTP valuation method the value APSEZ comes at Rs. 371.82 per share, implying an upside of 14 % from current levels. The value of Mundra Port (core operating asset of APSEZ) comes at Rs. 236 per share which is around 63 % of total value. 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 and technology, which facilitates faster transit of cargo, thereby reducing the overall cost of handling for logistic companies and end users. At the current market price of Rs. 325.00, the stock is trading at a PE of 27.77 x FY16E and 22.56 x FY17E respectively. The company can post Earnings per share (EPS) of Rs. 11.70 in FY16E and Rs. 14.40 in FY17E. The SOTP (sumoftheparts) valuation of Adani Port & Sez comes at Rs. 371. It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also. 

SOTP Valuation :- 
Business Subsidiary
Value Per Share (in  ₹ Rs.) 
Mundra Port
236.00
CT3/4/5
19.00
SEZ
39.00
Adani Petronet (Dahej) Port 
16.00
Adani Mormugao Port 
3.00
Adani Hazira Port 
42.00
Adani Vizag Coal Terminal 
1.00
Ennore Container Terminal
4.00
Adani Kandla Bulk Terminal 
4.00
Dhamra Port
50.00
Adani logistics
3.00
Other Investments
24.94
Cash & cash equivalents
3.06
Less: Net Debt
73.18
TOTAL
371.82

KEY FINANCIALSFY14FY15FY16EFY17E
SALES ( Crs)4,824.006,152.007,172.108,493.10
NET PROFIT (₹ Cr)1,867.702,176.402,413.002,971.60
EPS ()8.4010.5011.7014.40
PE (x)38.9031.1028.0022.80
P/BV (x)7.706.305.304.40
EV/EBITDA (x)27.7021.9018.0014.60
ROE (%)24.6022.3020.4021.00
ROCE (%)13.9013.7013.4015.00

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 % on every purchase(Why Strict stop loss of 8 % ?) - Click Here


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Disclaimer
This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.
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Why you should have a Stop Loss of 8 % ? Click to know more. Author is also on Facebook and Click here for SHORT STORIES

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