Saturday, August 4, 2012

Buy stocks of Adani Ports & SEZ; target Rs 145

Adani Ports & SEZ Ltd:-

"Adani Ports & SEZ Ltd handled consol volume of 22.5 MMT (Abbott 3.3 MMT) that led to consol revenue is Rs 1,028 crore and PAT is Rs 276 crore that is impacted by high interest costs of Rs 325 crore. Abbott port recurred losses of Rs 130 crore inQ1FY13 and reveals that income from Abbott port is not sufficient to pay interest obligation for overseas assets in Q1FY13."

"Adjusted Standalone Q1 PAT, Rs 290.6 crore (SEZ land sale to JV AICTPL, Rs 160 crore and forex loses of Rs 32.2 crore) is below to our expected PAT of Rs 308 crore. Standalone cargo volume 17.42 MMT (+15.4%, YoY) is in line to our expectation and realization of Rs 327/ Ton (-3.4%. YoY) led to port revenue of Rs 569 crore below our estimates. EBITDA grew to Rs 472 crore (+30%, YoY) and margins improve by 650 bps."

"We revise our estimates to Rs 6.3 and Rs 9.3 from Rs 7.0 & Rs 10.1 for FY13E and FY14E. We cut the full year cargo volume estimates to 79.1 MMT (-7%) from 85 MMT due to lower demand of imported coal from the coal sector. We retain “BuY” on APSEZ with TP of Rs 145 (from Rs 163) based on 1.) strong operating cashflow of ~Rs 2500 crore supported by 60% fixed revenue contracts 2.) ramp up of new capacities on Dahej, Hazira & Mormugao 3.) better EBITDA margins in the industry," says KRChoksey research report.

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