In our view, this can be a sturdy manifestation of inner drivers like market share positive aspects (500bps in FY21 in Container), new delivery traces, cargo diversification, improved hinterland, and cargo stickiness, amongst others; & exterior components such because the rise in enterprise commerce.
By Edelweiss Securities
Regardless of the pandemic enjoying havoc in FY21, Adani Ports & SEZ (APSEZ) managed to report 11% quantity progress (2% natural progress). In our view, this can be a sturdy manifestation of inner drivers like market share positive aspects (500bps in FY21 in Container), new delivery traces, cargo diversification, improved hinterland, and cargo stickiness, amongst others; & exterior components such because the rise in enterprise commerce.
The agency acquired a 25% stake in Krishnapatnam port (KPTL) for a worth of INR28bn (20% greater than preliminary deal) in FY21. That is possible so as to add ~INR18/share to SoTP. We anticipate APSEZ’s FY22 volumes to remain strong led by the acquisition and robust enterprise momentum. Keep ‘BUY’.
Fourth quarter marks one in all finest quarters; container quantity spikes. APSEZ reported volumes of 26MT (up 40% YoY) in Mar-21. Adjusting for KPTL, quantity progress is eighteen–19%, though on a beneficial base. Even so, a robust sequential restoration is encouraging. For Q4FY21, volumes stood at 73MT, up 27% YoY (natural progress of ~10%). APSEZ recorded cargo of 247MT (up 11% YoY) for FY21. This comes after a 27% YoY dip in quantity within the first quarter, which suggests a robust quantity restoration of ~25% over the steadiness 9 months. We reckon KPTL recorded ~20MT in cargo in H2FY21, which suggests APSEZ logged 2–3% natural quantity progress. Whereas the quantity combine isn’t accessible, container volumes (7.2mn TEUs) recorded sturdy 16% YoY progress, led by Mundra volumes (5.65mn TEUs, up 18% YoY).
Acquisition of 25% stake at slight premium, however value-accretive. APSEZ has acquired the remaining 25% stake in KPTL; it now owns 100%. The acquisition worth is Rs 28bn, which places the KPTL fairness worth at Rs 110bn as towards ~Rs 80bn earlier. Nonetheless, it provides Rs 18 per share to our SoTP. APSEZ has rotated KPTL in lower than 12 months with a robust 1,500bp EBITDA margin enchancment and a discount in debt value.
Not too long ago, KPTL acquired the CRZ clearance for the third section of enlargement at an funding of INR120bn over the subsequent few years. This might raise KPTL’s total capability by ~300MT cargo.