In our view, it is a sturdy manifestation of inside drivers like market share features (500bps in FY21 in Container), new delivery traces, cargo diversification, improved hinterland, and cargo stickiness, amongst others; & exterior components such because the rise in enterprise commerce.
By Edelweiss Securities
Regardless of the pandemic enjoying havoc in FY21, Adani Ports & SEZ (APSEZ) managed to report 11% quantity development (2% natural development). In our view, it is a sturdy manifestation of inside drivers like market share features (500bps in FY21 in Container), new delivery traces, cargo diversification, improved hinterland, and cargo stickiness, amongst others; & exterior components such because the rise in enterprise commerce.
The agency acquired a 25% stake in Krishnapatnam port (KPTL) for a worth of INR28bn (20% increased than preliminary deal) in FY21. That is possible so as to add ~INR18/share to SoTP. We anticipate APSEZ’s FY22 volumes to remain sturdy led by the acquisition and robust enterprise momentum. Keep ‘BUY’.
Fourth quarter marks certainly one of finest quarters; container quantity spikes. APSEZ reported volumes of 26MT (up 40% YoY) in Mar-21. Adjusting for KPTL, quantity development is eighteen–19%, though on a beneficial base. Even so, a robust sequential restoration is encouraging. For Q4FY21, volumes stood at 73MT, up 27% YoY (natural development of ~10%). APSEZ recorded cargo of 247MT (up 11% YoY) for FY21. This comes after a 27% YoY dip in quantity within the first quarter, which means a robust quantity restoration of ~25% over the stability 9 months. We reckon KPTL recorded ~20MT in cargo in H2FY21, which means APSEZ logged 2–3% natural quantity development. Whereas the amount combine isn’t obtainable, container volumes (7.2mn TEUs) recorded sturdy 16% YoY development, led by Mundra volumes (5.65mn TEUs, up 18% YoY).
Acquisition of 25% stake at slight premium, however value-accretive. APSEZ has acquired the remaining 25% stake in KPTL; it now owns 100%. The acquisition worth is Rs 28bn, which places the KPTL fairness worth at Rs 110bn as towards ~Rs 80bn earlier. However, it provides Rs 18 per share to our SoTP. APSEZ has rotated KPTL in lower than 12 months with a robust 1,500bp EBITDA margin enchancment and a discount in debt value.
Not too long ago, KPTL obtained the CRZ clearance for the third part of growth at an funding of INR120bn over the following few years. This might elevate KPTL’s general capability by ~300MT cargo.