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UBS Investment Research
Adani Enterprises
R obust performance in coal trading
Pre-ex PAT up 72% YoY to Rs8.6bn, operating profit increases 93% YoY
AEL reported Q4 revenues of Rs90.2bn (+9% y/y), operating profit of Rs14.8bn
(+93% y/y, UBS-e of Rs12.6bn) and pre-ex PAT of Rs8.6bn (+72% y/y).
Operating results were ahead of our and consensus estimates led by robust
performance of the coal (higher volumes and realizations) and agri (higher
margins) businesses. PAT was higher than our estimates (Rs5.1bn, consensus
estimate of Rs6.3bn) also due to lower tax outflow. Reported PAT at Rs9.3bn was
higher due to exceptional items pertaining primarily to Mundra Port.
Robust coal volumes (+ 20% y/y); High EBITDA/t led by good realizations
Q4 coal trading volumes rose 20% YoY to 12mt (FY11 33.5mt, UBS-e 30mt).
Coal EBITDA margins were at 8.8%, both in Q4 and FY11 (lower than UBS-e of
9.4% for FY11). Q4 EBITDA/ton at Rs467/t was higher than our estimate of
Rs440, led by significantly higher realizations of Rs5,299/ton (Rs4,045/t in
9mFY11). AEL seemed to have benefitted from continued increase in coal prices.
Improvement in agri business, while other segments remained flat
Agri business revenues grew 64% y/y in FY11 with flat EBIT margins of 2.2%
(though there was a significant sequential improvement in margins in Q4).
Revenue from ‘Others’ segment (including real estate) grew 8% y/y to Rs17.4bn,
while EBIT margin declined 80bps y/y to 6.7% in FY11.
Valuation: Neutral rating with SOTP-based PT of Rs645
Though AEL is a good play on rising energy consumption in the country,
valuations limit upside in our view.
Adani Enterprises
Founded in 1988 by Gautam S Adani, Adani Enterprises is the flagship
company of the Adani Group. It has several businesses such as power generation
and trading, coal mining and trading, edible oil manufacturing, agri-logistics and
trading, real estate development, trading in metals, city gas distribution,
bunkering, and oil & gas.
Statement of Risk
The key risks that AEL is exposed to in our view include: 1) Fuel cost from
Indonesia might be higher or availability could be lower, 2) sharp decline in
merchant tariffs, 3) lack of sufficient track record of Chinese power equipment
with Indian coal, 4) execution risks across businesses, especially power and
mining, and 5) lower-than-expected efficiencies in Indian coal mining
operations.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Adani Enterprises
R obust performance in coal trading
Pre-ex PAT up 72% YoY to Rs8.6bn, operating profit increases 93% YoY
AEL reported Q4 revenues of Rs90.2bn (+9% y/y), operating profit of Rs14.8bn
(+93% y/y, UBS-e of Rs12.6bn) and pre-ex PAT of Rs8.6bn (+72% y/y).
Operating results were ahead of our and consensus estimates led by robust
performance of the coal (higher volumes and realizations) and agri (higher
margins) businesses. PAT was higher than our estimates (Rs5.1bn, consensus
estimate of Rs6.3bn) also due to lower tax outflow. Reported PAT at Rs9.3bn was
higher due to exceptional items pertaining primarily to Mundra Port.
Robust coal volumes (+ 20% y/y); High EBITDA/t led by good realizations
Q4 coal trading volumes rose 20% YoY to 12mt (FY11 33.5mt, UBS-e 30mt).
Coal EBITDA margins were at 8.8%, both in Q4 and FY11 (lower than UBS-e of
9.4% for FY11). Q4 EBITDA/ton at Rs467/t was higher than our estimate of
Rs440, led by significantly higher realizations of Rs5,299/ton (Rs4,045/t in
9mFY11). AEL seemed to have benefitted from continued increase in coal prices.
Improvement in agri business, while other segments remained flat
Agri business revenues grew 64% y/y in FY11 with flat EBIT margins of 2.2%
(though there was a significant sequential improvement in margins in Q4).
Revenue from ‘Others’ segment (including real estate) grew 8% y/y to Rs17.4bn,
while EBIT margin declined 80bps y/y to 6.7% in FY11.
Valuation: Neutral rating with SOTP-based PT of Rs645
Though AEL is a good play on rising energy consumption in the country,
valuations limit upside in our view.
Adani Enterprises
Founded in 1988 by Gautam S Adani, Adani Enterprises is the flagship
company of the Adani Group. It has several businesses such as power generation
and trading, coal mining and trading, edible oil manufacturing, agri-logistics and
trading, real estate development, trading in metals, city gas distribution,
bunkering, and oil & gas.
Statement of Risk
The key risks that AEL is exposed to in our view include: 1) Fuel cost from
Indonesia might be higher or availability could be lower, 2) sharp decline in
merchant tariffs, 3) lack of sufficient track record of Chinese power equipment
with Indian coal, 4) execution risks across businesses, especially power and
mining, and 5) lower-than-expected efficiencies in Indian coal mining
operations.
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