ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD

Result Update (CONSOLIDATED BASIS): Q2 FY15

BUY

CMP

270.90

Target Price

300.00

DECEBMBER 9th 2014

ISIN: INE742F01042

Index Details

SYNOPSIS

Stock Data

Sector
BSE Code
Face Value
52wk. High / Low (Rs.)
Volume (2wk. Avg.)
Market Cap (Rs. in mn.)

Marine Port & Services

532921
2.00
308.90/141.00
211000
560776.55

Adani Ports & Special Economic Zone Ltd is largest

port among Indian Commercial both in bulk &
container Cargo Segments.
Consolidated total income increased by 33% to
Rs.18652.1 mn in Q2 FY15 as compared to
Rs.14071.9 mn in Q2 FY14.

Annual Estimated Results (A*: Actual / E*: Estimated)

YEARS
Net Sales
EBITDA
Net Profit
EPS
P/E

FY14A
48239.90
36039.80
17396.40
8.40
32.24

FY15E
59093.88
44289.07
21735.15
10.50
25.80

FY16E
67367.02
50108.56
24880.16
12.02
22.54

Shareholding Pattern (%)

Consolidated EBIDTA increased by 24% to Rs.

12605.3 mn in the current quarter as compared to
Rs. 10132.7 mn in corresponding quarter last year.
The consolidated Net profit for the current quarter
increased by 68% to Rs 5735.2 mn, as compared to
Rs 3418.3 mn in corresponding quarter last year.
Consolidated cargo handled by the company was
35.18 MMT in Q2 FY15, an increase of 25%, over
corresponding quarter last year.
The Mundra port registered a 8% growth in Q2FY15
compared to 4% aggregate cargo growth at all major
ports.
Consolidated cargo handled by the company was
69.01 MMT in H1FY15, an increase of 26%, over
corresponding to same period last year.
Adani Ports awarded as Emerging Company of the
Year by Economic Times.

1 Year Comparative Graph

Consolidated total income increased by 11% to

Rs.32955.9 mn in H1FY15 as compared to
Rs.29751.6 mn in H1FY14.
The consolidated PAT for the current half year
increased by 50% to Rs 11415.2 mn, as compared to
Rs 7593.3 mn in corresponding last half year.

ADANI PORTS & SEZ LTD

S&P BSE SENSEX

Net Sales and PAT of the company are expected to

grow at a CAGR of 23% and 17% over 2013 to 2016E
respectively.

PEER GROUPS

CMP

MARKET CAP

EPS

P/E (X)

P/BV(X)

DIVIDEND

Company Name

(Rs.)

Rs. in mn.

(Rs.)

Ratio

Ratio

(%)

270.90
620.00
173.95
398.25

560776.55
15354.10
84094.40
60039.40

8.40
7.53
6.37
13.01

32.24
82.46
27.31
30.61

6.40
4.47
5.99
1.25

50.00
12.00
0.00
90.00

Adani Ports & SEZ Ltd

Global Offshore Services Ltd
Gujarat Pipavav Port Ltd
Great Eastern Shipping Company

Analysis & Recommendation - BUY

Consolidated total income increased by 33% to Rs.18652.1 mn in Q2 FY15 as compared to Rs.14071.9 mn in the
corresponding quarter last year and consolidated EBIDTA increased by 24% to Rs. 12605.3 mn in the current
quarter as compared to Rs. 10132.7 mn in corresponding quarter last year. The consolidated Net profit for the
current quarter increased by 68% to Rs 5735.2 mn, as compared to Rs 3418.3 mn in corresponding quarter last
year. Consolidated cargo handled by the company was 35.18 MMT in Q2 FY15, an increase of 25%, over
corresponding quarter last year. Adani ports at Mundra handled 26.57 MMT cargo in Q2 FY15 thereby continuing
its leadership as the largest commercial port in India. The company had a robust quarter with growth of all major
cargo categories and the company continues to maintain continue to maintain its volume at high level
performance in their port business. The company is focusing on leveraging the benefits through their pan India
presence and integrated logistics business. We expect that the company surplus scenario is likely to continue for
the next three years, will keep its growth story in the coming quarters also. Hence, we recommend BUY for the
Adani Ports & SEZ Ltd with target price of Rs. 300.00 for medium to long term investment.
QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Results Updates- Q2 FY15,
Months

Sep-14

Sep-13

% Change

Net Sales

16551.20

11498.80

43.94

Net Profit

5735.20

3418.30

67.78

2.77

1.65

67.78

12605.30

10132.70

24.40

EPS
EBITDA

Consolidated net profit jumps to Rs. 5735.20 million against Rs. 3418.30 million in the corresponding quarter
ending of previous year, an increase of 67.78%. Revenue for the quarter rose by 43.94% to Rs. 16551.20 million
from Rs. 11498.80 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 2.77 a share during the quarter, registering 67.78% increased over previous year period.
Profit before interest, depreciation and tax is Rs. 12605.30 million as against Rs. 10132.70 million in the
corresponding period of the previous year.

Break up of Expenditure

Break up of
Expenditure
Operating Expenses

Rs. in Mn
Q2 FY15

Q2 FY14

%
Change

4509.70

3303.80

37%

Employee Benefit
Expenses
Depreciation &
Amortization Expense
Foreign Exchange
(Gain) / Loss (net)

626.90

361.30

74%

2323.50

1828.10

27%

231.80

(263.80)

Other Expenses

678.40

537.90

26%

Latest Updates

Consolidated cargo handled by the company was 35.18 MMT in Q2FY15, an increase of 25%, over
corresponding quarter last year. Adani ports at Mundra handled 26.57 MMT cargo in Q2FY15. The Mundra
port registered a 8% growth in Q2FY15 compared to 4% aggregate cargo growth at all major ports. Also, in
case of containers, the Mundra port handled 0.67 Million TEUs in Q2FY15 as against 0.56 Million TEUs in
corresponding quarter last year resulting in a 18% growth as compared to growth of 9% aggregate growth in
container volumes at all the major ports.

Consolidated cargo handled by the company was 69.01 MMT in H1FY15, an increase of 26%, over
corresponding to same period last year.

Adani Ports awarded as Emerging Company of the Year by Economic Times and also awarded Private Port
of the Year and Container Terminal of the Year at The Gateway Awards 2014 conducted by Indias premier
magazine Maritime Gateway.

COMPANY PROFILE
The Adani Group is one of Indias leading business houses with revenue of over $9.4 billion. Founded in 1988,
Adani has grown to become a global integrated infrastructure player with businesses in key industry verticals resources, logistics and energy. The integrated model is well adapted to the infrastructure challenges of the
emerging economies.
Adani Ports & Special Economic Zone (APSEZ) - a part of Indias leading infrastructure conglomerate the Adani
Group - is Indias largest multi-port operator. APSEZ is the only private sector port operator with presence across
six ports in India. The companys aim is to increase annual cargo handling capacity from 112.8 million MT in
2014 to 200 million MT by 2020.
The Group protects biodiversity in ecologically sensitive areas like Mundra and undertakes initiatives to reduce
CO2 emissions.
Resources means obtaining coal from mines and trading; in future it will also include oil and gas production.
Adani is developing and operating mines in India, Indonesia and Australia as well as importing and trading coal
from many other countries. Currently, it is one of the largest coal importers in India. It also have extensive
interests in oil and gas exploration. Extractive capacity is scheduled to 200 MMT per annum by 2020.
Logistics denotes a large network of ports, Special Economic Zone (SEZ) and multimodal logistics - railways and
ships.
Adani owns and operates five ports Mundra, Dahej, Hazira, Goa and Visakhapatnam in India. The Mundra Port,
which is the largest port in India, benefits from deep draft, first-class infrastructure and SEZ status. It recently
crossed the 100 MMT mark of cargo handling in a year. Adani is also developing ports at Kandla and Ennore in
India.
Energy involves power generation & transmission and gas distribution.
Adani is the largest private thermal power producer in India. The Company power generation capacity is
expected to increase from current 8,620 MW to 9,280 MW.
Currently, the Company developing six power projects across Gujarat, Maharashtra, Rajasthan and Madhya
Pradesh.

FINANCIAL HIGHLIGHT (CONSOLIDATED)

(A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at March 31st, 2013 -2016E

SOURCES OF FUNDS
Shareholder's Funds
Share Capital
Reserves and Surplus
1. Sub Total - Net worth
2. Minority Interest
Non Current Liabilities
Long term Borrowings
Deferred Tax Liabilities
Other Long term Liabilities
Long term Provisions
3. Sub Total - Non Current Liabilities
Current Liabilities
Short term Borrowings
Trade Payables
Other Current Liabilities
Short Term Provisions
4. Sub Total - Current Liabilities
Total Liabilities (1+2+3+4)
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets
Tangible assets
Intangible assets
Capital Work in Progress
a) Sub Total - Fixed Assets
b) Goodwill on consolidation
c) Non-current investments
d) Deferred Tax Asset
e) Long Term loans and advances
f) Trade Receivable
g) Other non-current assets
1. Sub Total - Non Current Assets
Current Assets
Current Investments
Inventories
Trade receivables
Cash and Bank Balances
Short-terms loans & advances
Other current assets
2. Sub Total - Current Assets
Total Assets (1+2)

FY13A

FY14A

FY15E

FY16E

4034.90
59927.80
63962.70
1423.10

4168.20
83512.80
87681.00
1436.70

4168.20
103555.87
107724.07
1623.47

4168.20
128436.03
132604.23
1720.88

102575.00
5529.70
5938.60
1042.50
115085.80

112884.10
6744.70
7335.90
3690.20
130654.90

153522.38
7419.17
8142.85
3431.89
172516.28

165804.17
7938.51
8875.71
3637.80
186256.18

4047.00
1693.50
21383.30
3000.50
30124.30
210595.90

4055.50
2648.00
17042.40
3253.10
26999.00
246771.60

13786.45
2965.76
51256.42
2635.01
70643.64
352507.47

11856.35
3262.34
59457.45
2845.81
77421.94
398003.24

112179.30
1241.80
29512.10
142933.20
403.50
770.80
243.90
11510.50
815.80
3683.40
160361.10

130035.40
1190.90
20248.30
151474.60
403.50
574.80
1.00
30928.00
5043.00
3906.60
192331.50

166090.07
1357.63
23892.99
191340.69
25996.60
592.04
1.01
25360.96
4286.55
3515.94
251093.79

191003.58
1479.81
25326.57
217809.97
27296.43
615.73
1.11
29418.71
4586.61
3621.42
283349.97

1445.10
979.50
7200.20
8305.50
17471.50
14833.00
50234.80
210595.90

59.40
1694.40
9232.60
5139.20
32399.00
5915.50
54440.10
246771.60

22854.60
1863.84
16157.05
16440.12
35638.90
8459.17
101413.68
352507.47

25140.06
2012.95
19065.32
19070.54
39467.18
9897.22
114653.27
398003.24

Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn)

FY13A

FY14A

FY15E

FY16E

Description
Net Sales

15m
35766.30

12m
48239.90

12m
59093.88

12m
67367.02

Other Income

2644.40

6836.30

7178.12

7465.24

Total Income

38410.70

55076.20

66271.99

74832.26

Expenditure

-12006.50

-19036.40

-21982.92

-24723.70

Operating Profit

26404.20

36039.80

44289.07

50108.56

Interest

-5418.40

-9767.60

-11232.74

-12468.34

Gross profit

20985.80

26272.20

33056.33

37640.22

Depreciation

-4219.70

-6494.80

-8443.24

-9794.16

Profit Before Tax

16766.10

19777.40

24613.09

27846.06

Tax

-1230.80

-2367.40

-2707.44

-2812.45

Profit After Tax

15535.30

17410.00

21905.65

25033.61

Extraordinary Items

853.00

0.00

0.00

0.00

Minority Interest

-156.10

-13.60

-170.50

-153.45

Net Profit

16232.20

17396.40

21735.15

24880.16

Equity capital

4006.80

4140.10

4140.10

4140.10

Reserves

59927.80

83512.80

103555.87

128436.03

Face value

2.00

2.00

2.00

2.00

EPS

8.10

8.40

10.50

12.02

Quarterly Profit & Loss Statement for the period of 31st Mar, 2014 to 31st Dec, 2014E
Value(Rs.in.mn)

31-Mar-14

30-Jun-14

30-Sep-14

31-Dec-14E

Description
Net sales

3m
11158.60

3m
12616.40

3m
16551.20

3m
15558.13

Other income

1729.20

1687.40

2100.90

1995.86

Total Income

12887.80

14303.80

18652.10

17553.98

Expenditure

-4531.30

-4399.80

-6046.80

-5756.51

Operating profit

8356.50

9904.00

12605.30

11797.48

Interest

-736.30

-1709.10

-3830.60

-3294.32

Gross profit

7620.20

8194.90

8774.70

8503.16

Depreciation

-1351.60

-1758.70

-2323.50

-2439.68

Profit Before Tax

6268.60

6436.20

6451.20

6063.48

Tax

-963.80

-665.90

-688.70

-733.68

Profit After Tax

5304.80

5770.30

5762.50

5329.80

-6.80

-90.30

-27.30

-25.94

Net Profit

5298.00

5680.00

5735.20

5303.87

Equity capital

4140.10

4140.10

4140.10

4140.10

Face value

2.00

2.00

2.00

2.00

EPS

2.56

2.74

2.77

2.56

Minority Interest

Ratio Analysis
Particulars

FY13A

FY14A

FY15E

FY16E

8.10

8.40

10.50

12.02

EBITDA Margin (%)

73.82%

74.71%

74.95%

74.38%

PBT Margin (%)

46.88%

41.00%

41.65%

41.33%

PAT Margin (%)

43.44%

36.09%

37.07%

37.16%

33.43

32.24

25.80

22.54

ROE (%)

24.30%

19.86%

20.34%

18.88%

ROCE (%)

17.96%

20.79%

19.18%

19.31%

Debt Equity Ratio

1.67

1.33

1.55

1.34

EV/EBITDA (x)

24.22

18.66

15.55

13.85

Book Value (Rs.)

31.91

42.34

52.03

64.04

P/BV

8.49

6.40

5.21

4.23

EPS (Rs.)

P/E Ratio (x)

Charts

OUTLOOK AND CONCLUSION

At the current market price of Rs.270.90, the stock P/E ratio is at 25.80 x FY15E and 22.54 x FY16E
respectively.

Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.10.50 and
Rs.12.02 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 17% over 2013 to 2016E
respectively.

On the basis of EV/EBITDA, the stock trades at 15.55 x for FY15E and 13.85 x for FY16E.

Price to Book Value of the stock is expected to be at 5.21 x and 4.23 x respectively for FY15E and FY16E.

We recommend BUY in this particular scrip with a target price of Rs.300.00 for Medium to Long term
investment.

INDUSTRY OVERVIEW
Industry Structure:
Ports:
Indian Scenario: India has around 7,517 Km of natural coastline with 13 Major Ports and 187 non-major and
intermediates ports operating in eastern and western coasts of the country.
Indian seaports have played a pivotal role in the development of maritime trade and economy. Indian seaports
act as gateways to the International trades and accounts for over 95% of India's total cargo volumes and 70% in
terms of value. Backed by increased need for import energy commodities like coal and crude oil as well as
increase in containerization level, cargo volumes at Indian seaport will continue to grow in future.
Indian ports sector saw tremendous growth in capacity in last 10 years. The capacity of seaports increased from
258 MMTPA in FY 2000 to more than 1,250 MMTPA in FY 2013.
Major ports in India handled about 555 MMT in FY 2013-14, registering a meager growth of 1.8% as compared to
545 MMT in FY 2012-13. Cargo traffic at non-major ports in Gujarat grew by 8% from 294 MMT in FY 2012-13 to
310 MMT in FY 2013-14 and accounts for more than 70% of the total cargo handled by non-major ports in India.
(Source: GMB Report).
Mundra Port become the first commercial port in India to achieve the milestone of handling 100 MMT of cargo,
thereby joining the elite club of global ports who have reached this milestone. Mundra port ranks 1st in term of
total cargo handled in FY 2013-14 in India, amongst Commercial Port.

Special Economic Zone:

The Special Economic Zone Policy was framed in April, 2000 with an objective to increase the exports, attract
Foreign Direct Investment and to accelerate the economic growth of the country. The company's
Multiproduct SEZ at Mundra is the largest notified SEZ in the country with notified area of 6456.3349 Hectares.
Exports from Mundra SEZ upto March, 2014 was about Rs. 9193 crore (cumulative). Mundra SEZ with its multimodal connectivity including road, rail, sea port and airport is expected to attract more and more investments in
the coming years.
Further, based on approval from Government of India (GoI), company has set up a Free Trade Warehousing Zone
(FTWZ) in an area of 168.41 Hectares at Mundra. The development activities in the FTWZ SEZ have been
initiated.

Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients investment decision based on this document.

Firstcall India Equity Research: Email info@firstobjectindia.com

C.V.S.L.Kameswari
U. Janaki Rao
B. Anil Kumar
M. Vinayak Rao
C. Bhagya Lakshmi
G. Amarender

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