Aug 07, 2012, 05.44 PM IST | Source:

Buy Adani Ports; target Rs 180: KRChoksey

KRChoksey is bullish on Adani Ports and Special Economic Zone and has recommended buy rating on the stock with a target of Rs 180 in its February 7, 2012 research report.

KRChoksey is bullish on Adani Ports and Special Economic Zone and has recommended buy rating on the stock with a target of Rs 180 in its February 7, 2012 research report.

'Adani Port & SEZ recorded its Q3FY12 results in line with our expectations with Topline of Rs 655 Crs (v/s estimate of 643 Crs ~ +2% variance). Topline grew 11.5% sequentially and 45.4% y-o-y. Bottomline was in line with our expectations at Rs 311 Crs (v/s estimate of 324 Crs ~ -4% variance), the difference was largely on the back of higher than expected finance cost of Rs 78.3 Crs v/s Rs 46.4 Crs in Q2FY12. The company handled cargo volumes of 16.6 MT v/s 16.8 MT in Q2FY12 & 12.4 MT in Q3FY11, however higher realizations owing to favorable product mix resulted in a 11.5% topline growth. APSEZ recorded Rs 52 Crs of revenues from the SEZ Biz in the current quarter. The company leased 30 acres of land in Q3FY12.'

'Volume growth for the current quarter was subdued however; growth in topline was on the back of higher realizations owing to superior cargo mix with sequentially larger contribution from high realization Fertilizer, Container & Minerals segment. Average blended realizations for Q3FY12 improved to around Rs 360/Tonne v/s Rs 350/Tonne in Q2FY12. APSEZ handled 48.48 MT of cargo in 9MFY12 v/s 37.62MT handled in same period last year with a growth of 28.9% outperforming the sector wherein major ports registered an average cargo growth of a meager 2.7% y-o-y. Crude volumes were up 17% y-o-y at 12.11MT v/s 10.36MT handled in 9MFY11, Container volumes increased 22% y-o-y to 13.25 MT v/s 11.08 MT. Dry cargo continued to perform well as the volumes grew by 43% y-o-y to 23.13 MT v/s 16.18MT whereas Bulk Cargo grew by 33% yoy to 35.23 MT v/s 26.54 MT.'

'APSEZ's 60 mtpa coal terminal commissioned in FY11 is expected to attract huge volumes as Adani Power & Tata Power commence operations at their 4620 MW and 4000 MW facilities in Mundra. Tata Power has already started importing coal from Q4FY11. APSEZ handled 4.52MT of Coal in the current quarter, we expect the company to cater to an estimated coal traffic of 10 MMT for Adani Power and Tata Power in FY12. APSEZ is currently trading at a PE of 26x FY12E & 17.5x FY13E earnings and at an EV/EBIDTA of 18.5x FY12E & 13.5x FY13E. However, if we consider the growth factor, PEG of the company stands at 0.35x FY13E, which justifies high multiple. We retain our 'BUY' recommendation on APSEZ with a price target of Rs 180/share based on SOTP valuation, a potential upside of 25.8% from current levels,' says KRChoksey research report.

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