Adani Ports made a net profit of Rs. 1072 crore.
Adani Ports and Special Economic Zone (APSEZ) posted a 16.09% drop in consolidated net profit at 1,072.38 crore for the quarter ended Q1FY23 compared to 1,277.99 crore in the same period last year. However, Q1 PAT climbed 4.72% from 1,024 crore in the preceding quarter. The growth was double-digit sequentially. Approximately 70% of revenues are contributed by its port operations. The remainder is led by harbour, logistics, and others, which account for 11%, 7%, and 5%, respectively.
Strong growth with inorganic acquisition
There was a higher realisation that bulk volume lifted operational performance. The revenues remained flat YoY at 4638 crore. As margins expanded, absolute EBITDA increased 13% to 3006 crores. However, PAT de-grew 19% to 1072 crore due to a forex loss of 1201 crore. The strong organic growth was coupled with the efficient incorporation of inorganic acquisitions. APSEZ, by integrating logistics operations both vertically and horizontally, has built a strong moat around the business.
As APSEZ embarks on becoming India’s largest integrated transport utility company by 2030, it is strengthening its capabilities in all logistics segments. It will offer end-to-end service to its customers, thereby capturing a higher wallet share and also making the cargo sticky in nature. DFC connectivity to Mundra (medium-term normalization) to provide faster port evacuation and transit time.
The management expects thermal and coking coal volumes to grow in FY23 in spite of comfortable thermal coal inventory levels in power plants. Construction on 4.5 million square feet of warehousing capacity has begun in Mundra, Moraiya, Ranoli, and Palwal. GPWIS cargo volumes have doubled YoY to 3.11 MMT and APSEZ has ordered more trains under the framework (total order count at 37) Gangavaram NCLT approval is expected to be completed by the current The quarter following which the numbers would be consolidated with APSEZ, beginning April 1, 2021.The management is not seeing any slowdown in any segment and expects its run rate of 30 MMT per month to continue in FY22.
During Q1, the management took a price hike, renegotiated contracts with its customers, and expects the same to flow from Q2 onwards Overall, the management has guided for a 1 to 1.5 pp incremental rise in EBITDA margins in the medium to long term. In spite of strong growth in its rail Exim volumes, the management is still keen on the Concor acquisition as it expects higher penetration and more Exim movement going forward. The management would soon come up with its strategy around last-mile logistics.
Valuations:
The company has an EPS of Rs. 5.08 for the period ended June 30, 2022 as compared to Rs. 6.40 for the period ended June 30, 2021. The ROCE and ROE stood at 11.2% and 14.7%, respectively. The stock is trading at a P/E of 37.1x and a 5-year P/E of 19.6x. The EBITDA multiple is 19.9x and has an interest coverage ratio of 3.14x. The price to book ratio is at 4.69x. The scrip was trading at Rs.850, up by 1.46% on Friday.
