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Mundra Port and SEZ (MSEZ)
Infrastructure
Strong operations continue. MPSEZ reported strong 1QFY12 revenues of Rs5.3 bn,
up 27% yoy primarily on strong volume growth (up 20%). Net PAT of Rs2.3 bn was up
20% yoy, broadly in line. Volume growth was led by (1) coal, up 43%, likely led by
progress on Adani power plant and (2) container, growth of 23%. The port continued
to outperform the sector - jumps to 5th rank (from 7th in FY2011) among major ports in
terms of volume handled. Retain BUY.
Strong results driven by volume growth - in line with estimates; continues to outperform sector
Revenues up 27% yoy led by strong volumes. MPSEZ reported 1QFY12 standalone revenues
of Rs5.3 bn recording a strong 27% yoy growth, marginally (about 3%) ahead of our estimates.
The strong revenue growth was primarily led by higher volumes - up 20% yoy.
EBITDA margin at 68.5%; broadly in line. EBITDA margin declined by about 110 bps yoy to
68.5% (our estimate of 68%). The margin decline was led by higher operating expense (150
bps) and employee cost (40 bps) as percent of sales. The margin decline was partly
compensated by lower other expenses as percent of sales.
Net PAT up 20% yoy, in line with estimates. MPSEZ reported a net PAT of Rs2.5 bn in
1QFY12, up 20% yoy - broadly in line with our estimate. The company has availed a MAT credit
benefit of Rs528 mn in the quarter leading to a low reported effective tax rate of 6.3%.
Strong volume growth led by bulk (progress of Adani power) and container volumes
Strong volume growth (20%) was led by (1) strong bulk cargo growth (23% yoy), especially coal
(up 43% yoy) likely on account of the increased coal requirement for Adani’s power plant based
on progress in commissioning of the project and (2) container volumes (up 22.8% yoy) likely led by
container terminal-2. The port has outperformed the sector in terms of volume growth (major port
volumes recorded a 5.3% yoy growth in 1QFY12). The port now ranks 5th among major ports in
terms of total cargo handled - a jump of two positions (versus 7th rank in FY2011).
Retain estimates and target price of Rs175/share; reiterate BUY
Mundra port is currently trading at relatively attractive valuation of 10.4X FY2013E EV/EBITDA
(target price implies EV/EBITDA of 13X) cheaper than global ports average of 12-13X. We retain
our earnings estimates of Rs6.9 and Rs10.3 for FY2012E and FY2013E, respectively. Retain BUY
(TP: Rs175/share) on (1) reasonable valuations, (2) low leverage=low interest sensitivity, (3) good
cash flow generation and (4) strong operational asset. Key risks relate to (1) sustaining and
increasing tariffs, (2) optimal utilization of cash flows and (3) slower-than-expected SEZ area
absorption.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mundra Port and SEZ (MSEZ)
Infrastructure
Strong operations continue. MPSEZ reported strong 1QFY12 revenues of Rs5.3 bn,
up 27% yoy primarily on strong volume growth (up 20%). Net PAT of Rs2.3 bn was up
20% yoy, broadly in line. Volume growth was led by (1) coal, up 43%, likely led by
progress on Adani power plant and (2) container, growth of 23%. The port continued
to outperform the sector - jumps to 5th rank (from 7th in FY2011) among major ports in
terms of volume handled. Retain BUY.
Strong results driven by volume growth - in line with estimates; continues to outperform sector
Revenues up 27% yoy led by strong volumes. MPSEZ reported 1QFY12 standalone revenues
of Rs5.3 bn recording a strong 27% yoy growth, marginally (about 3%) ahead of our estimates.
The strong revenue growth was primarily led by higher volumes - up 20% yoy.
EBITDA margin at 68.5%; broadly in line. EBITDA margin declined by about 110 bps yoy to
68.5% (our estimate of 68%). The margin decline was led by higher operating expense (150
bps) and employee cost (40 bps) as percent of sales. The margin decline was partly
compensated by lower other expenses as percent of sales.
Net PAT up 20% yoy, in line with estimates. MPSEZ reported a net PAT of Rs2.5 bn in
1QFY12, up 20% yoy - broadly in line with our estimate. The company has availed a MAT credit
benefit of Rs528 mn in the quarter leading to a low reported effective tax rate of 6.3%.
Strong volume growth led by bulk (progress of Adani power) and container volumes
Strong volume growth (20%) was led by (1) strong bulk cargo growth (23% yoy), especially coal
(up 43% yoy) likely on account of the increased coal requirement for Adani’s power plant based
on progress in commissioning of the project and (2) container volumes (up 22.8% yoy) likely led by
container terminal-2. The port has outperformed the sector in terms of volume growth (major port
volumes recorded a 5.3% yoy growth in 1QFY12). The port now ranks 5th among major ports in
terms of total cargo handled - a jump of two positions (versus 7th rank in FY2011).
Retain estimates and target price of Rs175/share; reiterate BUY
Mundra port is currently trading at relatively attractive valuation of 10.4X FY2013E EV/EBITDA
(target price implies EV/EBITDA of 13X) cheaper than global ports average of 12-13X. We retain
our earnings estimates of Rs6.9 and Rs10.3 for FY2012E and FY2013E, respectively. Retain BUY
(TP: Rs175/share) on (1) reasonable valuations, (2) low leverage=low interest sensitivity, (3) good
cash flow generation and (4) strong operational asset. Key risks relate to (1) sustaining and
increasing tariffs, (2) optimal utilization of cash flows and (3) slower-than-expected SEZ area
absorption.
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