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Adani Enterprises Ltd.
Firing on all cylinders led by
power; Coal margin top $10/tn
4Q Cons. Rec. PAT +169%YoY; Raise EPS and PO; Buy
ADE 4Q Cons. Rec. PAT Rs9.3bn +169%YoY (+11% BofAMLe) on lower fuel
cost in power & finance costs, consolidation of port and coal margins @ $10/tn
+77%YoY. Key drivers of 4Q EBITDA growth were 42% by port, 36% by power
and 29% coal imports. We up FY12-13E EPS by ~4-5% to factor in 11-12%
higher coal volumes. We raise PO to Rs705 (Rs697) to factor in EPS hike and on
roll-forward despite hike in cost of equity by 25bps to factor-in rising 10-year bond.
Buy ADE on EPS CAGR of 50% over FY11-13E and catalysts: 1) 3x scale-up in
its IPP to 6.6GW by FY13E, 2) 1.9x revenues at MSEZ on doubling of port traffic
& pick-up in SEZ and 3) execution of 200mtpa coal mining contracts, makes ADE
one of the few large coal plays in India.
All major segments drive 2.6x PAT in FY11
ADE's transformation in its business model to annuities with high-margin / RoE
(29% / 22% by FY13E), is visible in FY11 with 2.4x EBITDA aided by 1) scale up
of high margin IPP business, 2) consolidation of port and 3) robust coal margins
@Rs451/tn ($10/tn) +31%YoY accompanied by 17% growth in coal volume. Agri
business also did well with 64%YoY EBIT on 69%YoY growth in revenue.
Hike PO on coal; Scale-up across verticals; execution key
Our PO comprises 38% from coal businesses, 27% from Port & SEZ and 24%
from IPP. As ADE enters new areas to create scale, risk is execution as funding
risk has reduced post-QIP. However, we take comfort in its track record (6x
revenues over FY03-11), decent execution at Mundra Port and power plants,
resale of power, leadership in coal trade and promoters’ entrepreneurial acumen.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Adani Enterprises Ltd.
Firing on all cylinders led by
power; Coal margin top $10/tn
4Q Cons. Rec. PAT +169%YoY; Raise EPS and PO; Buy
ADE 4Q Cons. Rec. PAT Rs9.3bn +169%YoY (+11% BofAMLe) on lower fuel
cost in power & finance costs, consolidation of port and coal margins @ $10/tn
+77%YoY. Key drivers of 4Q EBITDA growth were 42% by port, 36% by power
and 29% coal imports. We up FY12-13E EPS by ~4-5% to factor in 11-12%
higher coal volumes. We raise PO to Rs705 (Rs697) to factor in EPS hike and on
roll-forward despite hike in cost of equity by 25bps to factor-in rising 10-year bond.
Buy ADE on EPS CAGR of 50% over FY11-13E and catalysts: 1) 3x scale-up in
its IPP to 6.6GW by FY13E, 2) 1.9x revenues at MSEZ on doubling of port traffic
& pick-up in SEZ and 3) execution of 200mtpa coal mining contracts, makes ADE
one of the few large coal plays in India.
All major segments drive 2.6x PAT in FY11
ADE's transformation in its business model to annuities with high-margin / RoE
(29% / 22% by FY13E), is visible in FY11 with 2.4x EBITDA aided by 1) scale up
of high margin IPP business, 2) consolidation of port and 3) robust coal margins
@Rs451/tn ($10/tn) +31%YoY accompanied by 17% growth in coal volume. Agri
business also did well with 64%YoY EBIT on 69%YoY growth in revenue.
Hike PO on coal; Scale-up across verticals; execution key
Our PO comprises 38% from coal businesses, 27% from Port & SEZ and 24%
from IPP. As ADE enters new areas to create scale, risk is execution as funding
risk has reduced post-QIP. However, we take comfort in its track record (6x
revenues over FY03-11), decent execution at Mundra Port and power plants,
resale of power, leadership in coal trade and promoters’ entrepreneurial acumen.
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