Adani Ports - Leader in ports

I am not an analyst, hence I do not have detailed insights however I do believe there are good times ahead for the company given the government focus on transport and industry.

Comments are invited from the ones who are tracking it.

Adani Ports is among the leading ports in India. The company has doubled its revenue in the last 5 years, though 2015 showed a marginal decline closer to 10%. However it seems to have gained momentum back going by last 9 months results. Also given the government focus on increasing transport and ports, I believe Adani Ports is well positioned since most of its ports are near Gujarat which is the central location for sea ways.

At a PE of 16, Company is not expensive and I believe there is low downside from here…max of 20%. I have invested at Rs.217 and have only invested half percent of my portfolio in Adani ports, I will look to add more once available below 200.

Adani Port: Cmp 258

Superb BO with huge volumes and that too after7 months long distribution and consolidation. Also, huge long positions added in FNO side indicates that scrip is all set to do 290+ and I strongly feel we will be there by Aug series itself. Suggesting to go long stop 243. Target 290.

In the medium term much higher target around 350+ will be achieved.

@krish

Target is definitely 320 + . Only concern is the Bank Nifty which has dragged the markets down and has broken down crucial support zone. Can drag the index down further.

Adani Port superb move today…did 272. More to come as said.

Superb Long addition today also. Huge increase in OI and delivery based volumes. As FNO data suggests…seems all set to hit the target.

@krish Seems more of short covering. Shorts are liquidating their position.

@Finrahul9 Yes that is one of the reason. Above 280…shorts will get squeezed even more desperately.

2 fundamental observations-

The debt of the company has increased substantially in the past 3 years and second the promoters have pledged around 39%of their holding.

Also the fno data suggests that there are no new long positions getting built up. Only the old investors exchanging hands, so the price might have difficulty going up.

As and when the economy picks up, Adani Ports will gain from the country growth. Its more of a wait and watch at the current time, 200-220 levels would be great opportunity for the ones who has the patience to hold for 3-5 years.

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HDFC Mutual Fund’s star fund manager Prashant Jain has made a surprise move by buying shares of Adani Ports and Special Economic Zone. Known for his banking picks, Jain aggressively added Adani Ports in some of his schemes last month. The fund house invested Rs 242 crore in the stock when Adani shares were quoting between Rs 200 and Rs 232.

Adani Ports is targetting a fourfold increase in capacity to 100 milion tonnes at its Dhamra port over the next four years. Adani’s Ennore and Vizhinjam ports are currently under construction and will start operations in October and December respectively. It currently has 8 operating ports. Adani is also one of the pre-qualified bidders in Bhavanapadu Port in Andhra Pradesh.

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CMP - 267

Review of Sep’16 Results - Adani Ports cargo volumes continued to surge in a weak trade scenario on account of expanding market share as its smaller ports clocked robust spurt—YoY growth of 56% handling 14.7MT while consolidated volume at 43MT was up 17% (container volumes jumped 30%).

Volume growth momentum is expected to sustain as Kattupali scales up, CT-4 is commissioned at Mundra and new service liners commence operations. As cargo mix has shifted in favour of containers and other high-value cargo, average realizations have also increased. This, coupled with INR650mn incentive income and INR1.9bn service income for development of CT-4, led to a strong EBITDA margin beat—66% versus 63% estimated. Reduction in interest cost by INR400mn and healthy treasury income resulted in PAT at INR10.9bn surging 60% YoY.

Net debt down by INR13bn on reduction in working capital

In line with management’s earlier guidance of pruning loans and advances to related parties, APSEZ has cut the exposure by INR10bn. This helped prune net working capital and reduce net debt by INR13bn in H1FY17 and targets to eliminate them completely by FY17 end.

Few highlights of conference calls

  • Demerger process of Kattupali on track and should get completed by year end.

  • The company is targeting 4MT of coastal cargo and is on track to achieve the same. Margin profile for coastal movements is similar to EXIM cargo.

  • Hazira port is averaging 30-40k TEUs and the company expects an increase in these
    volumes.

  • Agri, iron & steel and minerals registered double digit growth.

  • Kattupali, Dhamra and Hazira are the fastest growing ports. Dahej and Dhamra expected to handle fertiliser cargo from Q3FY17.

  • On the bid for green field port in Dhamnapadu in Andhra Pradesh, the company is still awaiting outcome.

  • It operationalised berth 3 at Dhamra port and 3 new services started at Mundra port. At Hazira, the company added Far East to Mediterranean lines.

  • Maersk has shifted from Chennai to Katupalli. Management stated that Katupalli can be hub for auto.

  • Ennore ports likely to be operationalised in Q4FY17 and containers at Dhamra likely to start from Q4FY17.

  • Adani Logistics is the largest private rail operator in India and the company has
    expanded to warehousing and providing end-to-end solutions to various costumers like
    Maruti, Wilmar, Hero, Aditya Birla etc. The company perceives robust volumes in
    logistics business.

  • Terminal volumes jumped 21% YoY.

  • Capex is being done at Hazira and partly at Mundra. Management stands by its capex
    guidance of INR30bn. Net finance cost for the company reduced by INR3.43bn since March 2016.

  • On the group leverage, management stated that long-term debt at the group level is at
    INR 760bn, EBITDA at INR240bn and therefore debt to EBITDA at 3.15 is comfortable
    considering the nature of business.

  • Strategy for the next 2-3 years will be focus on coal, container and crude, coking coal
    and coastal traffic.

Strong pipeline of projects; expansion on the radar

The company has a strong portfolio of 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.

Potential Risks

Uncertainty in traffic at ports: Since cargo at ports is contingent on international trade, any
slowdown in it could affect Mundra Port as well.

Regulatory changes regarding SEZs: The existing SEZ policies and benefits outlined by the
government to promote exports are relatively new and are being continuously reviewed.
Any changes in the form of reversal of current tax benefits to units under the SEZ umbrella
will significantly undermine incentives for industries to setup units in the SEZ, hampering
current plans of land sale. Land parcel sale at the SEZ is yet to pick up.

Huge debt can work against the company if growth in economy doesnt take off.

Disclosure - Constitutes only 0.25% of my portfolio. Will look to increase weightage to 1% if the stock becomes available at 220-180.

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Annual Report of FY 2016-17
http://www.adaniports.com/docs/download/AR2017

Heavy promoter buying for last couple of months. Any big news/order expected ?

Source : BSEINDIA

Disc : Do not hold this stock

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Expect more such news from Australia. They dont want Adani and so they will make propaganda clippings untill all the ppl gets convinced.

Adani completes acquisition of Kattupalli port. Has 97% stake. The port is located 35 kilometers north of Chennai

what is the tax rate for Adani Ports.

Disclosure - Recently Invested

The Company Got in principle approval for â‚ą1000 crores for capex - positive News