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UBS Investment Research
Adani Enterprises
Decline in coal trading margins, though
v olume growth remains robust
Event: Q1FY12 PAT below UBS and consensus estimates
AEL reported revenues of Rs96bn (+63% y/y), operating profit of Rs11.7bn (+35%
y/y; UBS-e Rs12.6bn) and pre-ex PAT of Rs5.7bn (+10% y/y; UBS-e Rs6.9bn,
consensus Rs7.3bn). Results were below estimates due to lower margins in the coal
trading business and losses in other business segments (other than port and power).
Impact: Coal trading margins decline, though volumes are robust (+ 23%)
Q1 coal trading volumes rose 23% y/y to 10mt (UBS-e 37mt in FY12, FY11
33.5mt). Coal EBITDA margins were 6.8% (8.8% in FY11). EBITDA/t declined
4% y/y (25% q/q) to Rs350/t. It was significantly higher in last two quarters
(Q3/Q4- Rs495/467)- the impact of rising coal prices disproportionately impacting
selling and purchase prices seems to have reversed in Q1 (FY12 UBS-e Rs372/t).
Action: Loss reported in agri, real estate and others segments
Though revenue growth in agri/other businesses was impressive at 58/158% y/y,
segmental EBIT was negative at Rs33/232m. Real estate segment posted a EBIT
loss of Rs61m (real estate business is currently in the development phase, with
Shantigram project being launched recently and construction works going on at the
BKC project). All these businesses combined comprise less than 10% of SOTP.
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.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Adani Enterprises
Decline in coal trading margins, though
v olume growth remains robust
Event: Q1FY12 PAT below UBS and consensus estimates
AEL reported revenues of Rs96bn (+63% y/y), operating profit of Rs11.7bn (+35%
y/y; UBS-e Rs12.6bn) and pre-ex PAT of Rs5.7bn (+10% y/y; UBS-e Rs6.9bn,
consensus Rs7.3bn). Results were below estimates due to lower margins in the coal
trading business and losses in other business segments (other than port and power).
Impact: Coal trading margins decline, though volumes are robust (+ 23%)
Q1 coal trading volumes rose 23% y/y to 10mt (UBS-e 37mt in FY12, FY11
33.5mt). Coal EBITDA margins were 6.8% (8.8% in FY11). EBITDA/t declined
4% y/y (25% q/q) to Rs350/t. It was significantly higher in last two quarters
(Q3/Q4- Rs495/467)- the impact of rising coal prices disproportionately impacting
selling and purchase prices seems to have reversed in Q1 (FY12 UBS-e Rs372/t).
Action: Loss reported in agri, real estate and others segments
Though revenue growth in agri/other businesses was impressive at 58/158% y/y,
segmental EBIT was negative at Rs33/232m. Real estate segment posted a EBIT
loss of Rs61m (real estate business is currently in the development phase, with
Shantigram project being launched recently and construction works going on at the
BKC project). All these businesses combined comprise less than 10% of SOTP.
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.
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