Accumulate Adani Ports; target of Rs 161: PLilladher

'Mundra reported lower-than-expected revenues during the quarter on account of flat sequential volumes. Higher realization per tonne (+5% QoQ) on account of higher proportion of fertilizer volumes, led to port revenues increasing 4% QoQ in a amid flat volumes (-1%) in Q3 FY12. Aided by contribution from the SEZ side, where a new lease (~30 acres with Anupam MHI) was signed during the quarter, revenues increased 11% QoQ and 53% YoY to Rs6.91bn in Q3FY12. EBITDA margins for the quarter were slightly higher-than-expected at ~69.7%, an improvement of 340bps QoQ and ~100bps YoY. However, interest cost was sharply (+70%) higher QoQ at Rs783m on account of a loss of ~Rs483m on derivative contracts (owing to the sharp depreciation in the rupee) during the quarter compared to a loss of ~Rs14 cr in Q2 FY12. Consequently, PAT stood at Rs3.1 bn, a growth of 36% YoY and 14% QoQ.'

'The disappointment on the volumes front emanated from the coal and crude segments where volumes declined by 12% and 31%, respectively, on a sequential basis. Q3 witnessed a fall in volumes due to delay in commencement of HMEL refinery volumes which witnessed trial runs last quarter. Higher imported coal prices, coupled with a depreciating rupee, led to lower coal imports during the quarter. However, a strong pickup in fertilizer volumes (+47% QoQ) along with a continued growth in the container volumes (+7% QoQ) made up for the fall in the coal and crude segments, resulting in an overall flat throughput (-1% QoQ) at ~16.6mt for Q3FY12. Going forward, management expects coal volumes to start inching up again with a rebound in demand from Adani Power.'

'We have moderated our volume assumptions, going forward, to factor in a slower pickup in coal volumes at Adani and Mundra UMPP. We continue to value MPSEZ on a DCF basis, whereby, our SOTP value now stands at Rs161/ share. Our estimate of a 21% CAGR in volumes over FY12-14, coupled with an expectation of strong free cash flow generation, going forward, leads us to retain our positive stance on the stock. We maintain 'Accumulate',' says Prabhudas Lilladher research report.   

Public holding more than 90% in Indian cos

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