Adani Ports & Special Economic Zone (Adani Ports) is expected to report decent growth on a year-on-year (YoY) basis, but sequentially, the numbers for the December quarter may not excite the market.
Revenue is seen rising 25 percent YoY to Rs 4,753 crore, while net profit may increase by 11.8 percent to Rs 1,647.1 crore, as per the average of brokerage firm estimates taken by Moneycontrol. On an on-quarter basis, sales could decline 8.8 percent and net profit could fall 1.8 percent.
Kotak Institutional Equities has modelled comparable volume growth to be around low-to-mid-single digits, as it was impacted by the weakness in country-level demand. The consolidation of Gangavaram port from second quarter yields a higher 15 percent YoY growth in volumes.
It believes higher on-year realisations and Special Economic Zone boost will drive a 30 percent on-year growth in the port company’s revenues.
The December quarter volumes fell to 75.4 million tonnes (mnt) as compared to 86 mnt in the September and 91 mnt in June quarter, Nomura pointed out. “This indicates market share loss given volumes for major ports rose 2.5 percent quarter on quarter.”
The foreign brokerage firm sees operating margin at 55.6 percent in the quarter ended December as compared to 55.5 percent in the previous quarter and 63.7 percent in the year ago quarter. It expects EBITDA (earnings before interest, tax, depreciation and amortisation) margins to improve sequentially led by lower forex losses and potentially lower share of coal volumes. Excluding forex losses, it expects margins to improve modestly on0-quarter.
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After the recent fall in stock prices, Adani Ports is trading at 10 times FY2025 EV/EBITDA (enterprise value to EBITDA). This compares to around 10-16 times one-year forward trading range, suggesting a flat year for stock returns in a bear-case scenario, said Kotak Institutional Equities in a report dated January 26.
It has upgraded the ports company’s stock to a ‘buy’ call from ‘add’ at its current 11.5 times FY2024 EV/EBITDA.
The brokerage firm added that Adani Ports is a strong play on India’s port sector, having advantages like pricing power and prospects of privatisation. The Adani Group company also has a strong right to win in offering an end-to-end logistics offering.
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