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Essar Ports (ESRS.BO; Rs103.65; Analyzed Not Rated)
Takeaways from Mumbai - Essar Ports presented at our India Investor
Conference in Mumbai. Below are key takeaways:
Second-largest private port company - Essar Ports is India's second-largest
private port company with a capacity of 88mtpa. It has two operational ports at
Vadinar (58mtpa) and Hazira (30mtpa) in Gujarat, on the western coast of India.
The company is also adding 70mtpa capacity at Salaya, Paradip and Hazira by
FY14. A part of the $15bn Essar group, it primarily caters to the bulk cargo
requirements (coal, iron ore, POL) for the group's expansion plans.
What's New - For FY12, the company envisages a capex of ~Rs21bn to take its
capacity addition plans forward. Management expects revenues of ~Rs12bn with
EBITDA margins of ~71-75% and PAT of Rs1.5-1.75bn in FY12. Once the ports
are commissioned, Essar Ports intends to get the debt refinanced at lower
interest costs. UCO Bank has refinanced the debt for the Hazira port with no
principal repayment for the first three years, helping Essar Ports reinvest the
cash flows towards equity for its proposed expansion. Essar Ports is also
increasing its economic interest in the Hazira and Paradip ports.
Group expansion plans for captive cargo - Essar Ports has clear visibility of
revenues for its proposed expansion: (1) Essar Oil is increasing its capacity to
18mtpa by Oct'12 and to 20mtpa by mid-FY13 (2) Essar Power is setting up
~3100MW power plants in Salaya based on imported coal (3) Essar Steel has
increased its capacity at Hazira to 9.6mtpa. Of its proposed 158mtpa capacity,
Essar Ports has ~75mtpa cargo tied up with these companies under take-or-pay
agreements. The company has seen merchant rates trending up over the last
year and also plans to increase its third-party cargo to ~40% of its overall
volumes once the capacity expansion is completed.
Way Forward - The company is setting up tankage facilities at Vadinar and is in
talks with traders for ramping up third-party cargo. Forest clearances are pending
at Salaya and Paradip, which are expected to be commissioned by March 2013.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Essar Ports (ESRS.BO; Rs103.65; Analyzed Not Rated)
Takeaways from Mumbai - Essar Ports presented at our India Investor
Conference in Mumbai. Below are key takeaways:
Second-largest private port company - Essar Ports is India's second-largest
private port company with a capacity of 88mtpa. It has two operational ports at
Vadinar (58mtpa) and Hazira (30mtpa) in Gujarat, on the western coast of India.
The company is also adding 70mtpa capacity at Salaya, Paradip and Hazira by
FY14. A part of the $15bn Essar group, it primarily caters to the bulk cargo
requirements (coal, iron ore, POL) for the group's expansion plans.
What's New - For FY12, the company envisages a capex of ~Rs21bn to take its
capacity addition plans forward. Management expects revenues of ~Rs12bn with
EBITDA margins of ~71-75% and PAT of Rs1.5-1.75bn in FY12. Once the ports
are commissioned, Essar Ports intends to get the debt refinanced at lower
interest costs. UCO Bank has refinanced the debt for the Hazira port with no
principal repayment for the first three years, helping Essar Ports reinvest the
cash flows towards equity for its proposed expansion. Essar Ports is also
increasing its economic interest in the Hazira and Paradip ports.
Group expansion plans for captive cargo - Essar Ports has clear visibility of
revenues for its proposed expansion: (1) Essar Oil is increasing its capacity to
18mtpa by Oct'12 and to 20mtpa by mid-FY13 (2) Essar Power is setting up
~3100MW power plants in Salaya based on imported coal (3) Essar Steel has
increased its capacity at Hazira to 9.6mtpa. Of its proposed 158mtpa capacity,
Essar Ports has ~75mtpa cargo tied up with these companies under take-or-pay
agreements. The company has seen merchant rates trending up over the last
year and also plans to increase its third-party cargo to ~40% of its overall
volumes once the capacity expansion is completed.
Way Forward - The company is setting up tankage facilities at Vadinar and is in
talks with traders for ramping up third-party cargo. Forest clearances are pending
at Salaya and Paradip, which are expected to be commissioned by March 2013.
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