Mundra Port a long-term story: Chakraborty

Amitabh Chakraborty, President, Equity Business at Religare Securities is bullish on port business. He believes that Mundra Port is a long-term story and substantial upside is left in that and there is a demand supply mismatch in the port from the million tonne capacity point of view.     

Chakraborty told CNBC-TV18, “We are very bullish on the port, if one takes some statistics about 12% CAGR upto FY10, that’s estimate. So the demand for the port is 1,250 million tonne and the capacity creation would be towards 1,500 million tonne but the normal capacity utilization is about 70%. There is a demand supply mismatch in the port from the million tonne capacity point of view.

Mundra is located very strategically; if one considers Delhi to Mumbai and Delhi and Mundra, it’s about 206 km less travel or Delhi to Pipavav it is 66 km less traveling if one sails his trip through Mundra.

The depth is also higher than other ports to the extent of 30-32 meter so the large vessel can come in. Also they have 15,000 acre in SEZ and it’s likely to increase another 15,000 acre. If one sees all these positives and given the demand for the port capacity Mundra is very strategically placed. At Rs 440 IPO at about Rs 1000, one is getting Rs 15 EPS estimated for the next year, it has to be fine tune, it is 70 times but it is a long-term story.

If one sees the SEZ even at Rs 1,000 profitability we are talking about 681 million sq. ft i.e. equivalent to 15,000 acre. So we are talking about Rs 68,000 crore, market cap from the SEZ itself. But SEZ is not something, which is coming today. So it’s a long-term story and substantial upside is left.      

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