Adani Ports Q4 Preview: Port volumes, revenue seen higher but slow progress at Gangavaram an overhang

Adani port

Market estimates are projecting a year-on-year (YoY) improvement in port volumes and revenue for leading port infrastructure player Adani Ports and Special Economic Zone, which is set to report its quarterly results on May 1.

APSEZ's March quarter is likely to be tempered by challenges like limited scale-up of operations at Gangavaram Port in Visakhapatnam, along with weaker imported coal volumes and a subdued macroeconomic growth.

Brokerage estimates compiled by Moneycontrol suggest net profit may rise over 12 percent YoY, while remaining broadly flat on a sequential basis. Revenue is expected to rise by 18.5 percent YoY and 3 percent quarter-on-quarter (QoQ). EBITDA is likely to grow more than 21 percent YoY, with a modest 2 percent rise QoQ. EBITDA margin is estimated to remain steady at 60 percent, in line with the previous quarter.

Factors Behind Earnings

Both port volumes as well as realisations are projected to grow 8 percent YoY, with overall port volume for January and February higher by 4 percent on year. However, this was impacted by a low-to-high teen decline in iron ore, thermal coal, and coking coal volumes.

Container volumes is likely to have continued to expand on a low base. The limited progress at Gangavaram has weighed on APSEZ's overall performance, leading to a likely 8 percent YoY volume growth for APSEZ, including contributions from newer ports.

The Logistics Segment is expected to deliver a robust 40 percent YoY growth, driven by a ramp-up in road logistics.

The EBITDA margin is projected to improve by 190 basis points YoY, and 30 basis points QoQ, supported by higher profitability at Mundra and Haifa ports, along with gains in the logistics segment.

What to Watch in the Quarterly Show?

Investors may keep an eye on the signs of progress in volumes at Gangavaram as well as other new ports. Aside of that, any margin gain in logistics and key ports, container growth at a time of soft bulk cargo trends will be seen as positive factors.