Adani Enterprises - Value Un-Locking on The Cards; ::Edelweiss

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Adani Enterprises - Restructuring Exercise :: Edelweiss, report

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Adani Ports and SEZ - Sedate Quarter; Result Update Q3FY15 :: Edelweiss, report

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Adani Ports and SEZ - Sedate Quarter; Result Update Q3FY15 :: Edelweiss

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Positives priced in Adani Ports & SEZ ::HDFC Sec

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Adani Enterprises - Mixed Performance; Coal Mining Key; Result Update Q2FY15 :: Edelweiss, PDF link

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Technicals - Adani Enterprises, LIC Housing, Andhra Bank, NMDC, Jaiprakash Associates, Gruh Finance :: Business Line

Adani Enterprises (Rs 165.2):BUY :: Business Line

Adani Port & SEZ -Nomura

Adjusting TP, estimates for new equity issue
Recent fund-raising further
pares down gearing, while
preparing for inorganic growth

Technicals: Berger Paints, M and M Financial, Aditya Birla Nuvo, Cairn, Adani Enterprises, Asahi:: Business Line

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ADANI ENTERPRISES All eyes on coal mining:: Edelweiss

AEL’s Q2FY13 adj. PAT of INR2.3bn was in line with our estimate. Coal
trading volume at 8.8 MT was down 10% YoY but management remains
confident of 40MT coal trading and 116MT of port cargo targets. While
power business has near term challenges, domestic and overseas coal
mining would be the next trigger. Maintain ‘BUY’ with a TP of INR377.

Adani Port & SEZ Cargo growth drives top‐line, consol margins disappoints :: ::Prabhudas Lilladher

􀂄 Cargo growth drives top‐line: Standalone port revenues grew by 25% YoY and
31% QoQ to Rs7.7bn, led by 16% QoQ volume growth at Mundra to Rs20.43mt.
SEZ revenues for the quarter stood at (Rs11m) on account of a reversal as
against SEZ revenues of Rs2.04bn in Q1FY13. On a consolidated basis, volumes
increased by 17% QoQ led by increase in volumes at Dahej as well as due to trial
operations beginning at Hazira. On a consolidated basis, volumes increased by
19% YoY and 2% QoQ to Rs10.4bn.
􀂄 Consolidated margins disappoint: Margins on a standalone basis stood strong at
72.2% despite no income from SEZ sales. However, at a consolidated level,
margins disappointed on account of higher-than-expected costs at the
subsidiary level. Margins on a consolidated basis stood at 63.8% largely led by
newer ports operating at lower utilizations leading to lower fixed cost
absorption.
􀂄 Volume break‐up: Volumes at Mundra port was led by coal cargo which
increased from 4.5mt in Q1 to 7mt in Q2FY13. Tata’s coal imports increased to
1mt from 0.3mt in Q1FY13, while Adani’s imports increased from 2.75mt to
3.3mt for the same period. Other cargo categories at Mundra remained status
quo. On a consolidated basis, volumes at Dahej increased from 1.26mt in
Q1FY13 to 1.7mt in Q2FY13 and Hazira contributed marginally as the company
commenced trial runs there ahead of schedule.
􀂄 Valuations: Our SOTP for the company stands at Rs165, of which 76% is
contributed by the Mundra asset, 8% contributed by Abbot Point and the
remaining by the SEZ as well as the other Indian ports. We maintain ‘BUY’ on the
stock.

Adani Enterprises (Rs 225.6): BUY :: Business Line

Annual Report Analysis - Adani Enterprises ::Edelweiss, PDF link

Annual report analysis of Adani Enterprises (AEL) for FY12 highlights a significant increase in net debt to INR627bn, primarily to finance capex requirements of the port and power business (part of which is currently under CWIP). However, the operating cash flow for FY12 remains subdued at INR4.4bn. We believe that unless the situation in power business improves, operating cash flow at current levels may be vexing. Interest charged to P&L has been contained due to capitalisation and financing via unhedged forex loans wherein exchange losses are being capitalised.

Sizzling Stocks: Adani Enterprises, Jubilant FoodWorks :: Business Line

Adani Port & SEZ Volumes disappoint ::Prabhudas Lilladher

Adani Ports and Special Economic Zone: Geared for growth :JPMorgan

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We think Mundra Port will be in a sweet spot over the next 5 years with spare
capacity in high growth coal and container cargo segments. Actual 11th Plan
investments by overburdened major ports have slipped 75% vs. target and a
scalable non-major port alternative to Mundra on the west coast is still elusive.
The stock has underperformed the Sensex by ~20% over the last 6 months on
account of unfavorable newsflow and slippages in traffic (consensus
standalone EPS cuts of 13% thru 2HFY12) driven by delayed commissioning
of end-use customer projects and weak GDP growth. Growth drivers are
falling into place: we estimate a 35% consol EPS CAGR over FY12-17,
average 26-27% RoE and a FCF yield of at 7.7% in FY14. We think robust
fundamentals merit a valuation premium. Upgrade to OW with revised Mar-
13 PT of Rs160 implying 16.7x FY14 P/E and ~11x/ EV/EBITDA, a 19%
premium to global peers. Mundra Port+SEZ account for 85% of our PT.
 Capex intensity at Mundra Port to ebb. After incurring another Rs18-
20bn development capex at Mundra over the next two years, port capacity
will rise to 240MMT, including 100MMT coal terminal and 50MMT
container handling capacity, adequate for the current decade. Overseas port
projects are still nascent with no committed capex so far.
 Recent positives. Around end-March, ADSEZ finally managed to refinance
Abbot Point 1-yr US$2bn bridging loan (due in May-12), reducing exposure
to USD/AUD movement. Delayed end-use customer projects are on track
now: 9MMT HMEL Bathinda refinery and Tata Power’s 1st 800MW unit
were commissioned in Mar-12. Around end-Feb ADSEZ won a LoI from
nearby major port (Kandla) to set up a dry 20MMT dry bulk terminal. This
should assuage investor concerns as last year the company’s bids to set up
terminals at 3 locations were denied security clearance.
 Key downside risks. Alleged involvement of parent ADE in Karnataka
iron-ore mining related irregularities and unsubstantiated media reports
(Bloomberg) on alleged violation of foreign exchange rules by ADSEZ
have weighed on stock performance. These have been publicly denied by
management. Medium-term GDP slowdown and delay in power reforms
could adversely impact container and coal traffic growth projections.

52-WEEK FLOP: ADANI ENTERPRISES : Business Line

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Buy ADANI PORTS AND SPECIAL ECONOMIC ZONE : TARGET PRICE: RS.166: Kotak Securities PDF link

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http://www.kotaksecurities.com/pdf/dmb/MorningInsight11042012.pdf


ADANI PORTS AND SPECIAL ECONOMIC ZONE (ADSEZ)
PRICE: RS.132 RECOMMENDATION: BUY
TARGET  PRICE: RS.166 FY13E P/E: 17.5X
Adani Ports and Special Economic Zone (ADSEZ) has refinanced the ~USD2bn
bridge loan taken for the Abbot Point port terminal at lower than expected
terms. Plus the company has been issued Letter of Intent (LoI) for a 20 MT
bulk terminal at Kandla port. We believe these positives are being
overshadowed by negative news flow/perception at the group level. ADSEZ
has fallen by 21% in the last three months versus 8% fall in the broader
market (Nifty). This is again despite strong operational performance of the
company. Now the stock trades at attractive valuation of 17.5x FY13E P/E
considering PAT CAGR of 30% over FY11 to FY13E and over 25% RoE. Three
year average historical one year forward P/E for ADSEZ is 22x. In case of EV/
EBIDTA multiple, it trades at ~13 times FY13E, which we believe is
marginally undervalued in context of the healthy operating margin of ~65%
with strong operational cash flows of ~ Rs 32 bn over FY11 to FY13E and
healthy free cash flow of ~Rs 24 bn over FY11 to FY13E. Average historical
one year forward EV/EBIDTA for ADSEZ for the last 3 years is 15x. We
reiterate BUY with a price target of Rs 166.
Abbot Point bridge loan refinancing complete
The Abbot Point Terminal AUD1.8 bn acquisition, which was funded by a USD2bn
bridge loan, has been refinanced by a combination of asset backed loan and a holding company term borrowing at competitive rates of Bank-Bill Reference Rate
(BBSW) +250bps and 3m LIBOR + 330bps respectively. The repayment is back
ended, in line with volume scale up which would be 50mtpa terminal by FY15
thereby ensuring repayments aligned with project cash flows.
Project pipeline in line with 200 MT target by 2020
ADSEZ was recently issued LOI by the Kandla Port Trust to develop a 20 mtpa dry
bulk terminal at investment of Rs10bn on BOOT basis for 30 years. Further, the company is also in race for the Rs 37bn Chennai Port's 4mn TEU mega container terminal project. It is also scaling up capacity at its flagship port, Mundra, by incurring
capex of Rs 12 bn (over the next 2 years) buoyed by higher demand for coal imports
and containersation volumes.
The ongoing Central Bureau of Investigation (CBI) investigation
at the group level having overhang on the stock
The alleged involvement of the Adani Group in export of the illegally mined iron ore
from Karnataka has caused decline in the share prices of Adani Group including
ADSEZ. The matter will come up for hearing in due course of time. Till then we believe, the share price of Adani group shares would remain under pressure.
Earlier Adani Port was also indicted for destruction of mangroves
In October 2011, a bench of the Gujarat High Court (HC) had ordered the Adani
Group to halt development within 300 meter of the coastal area of Adani Port &
Special Economic Zone (ADSEZ) in Kutch. ADSEZ was blamed for destruction of
mangroves, which in the long run can prove fatal for the environment of the region.
All construction and development work in the area has been stopped till further order by the HC. Management indicated that the halting of the development work by
the HC pertains to a very small portion of the SEZ and won't impact the day to day
operations and financial performance of the company.

Adani Port & SEZ Positives weighing out negative news flow :Prabhudas Lilladher,

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􀂄 Overhang of Abbot Point loan financing out of the way: Adani port has
refinanced the US$2bn bridge loan that it had taken for Abbot Point coal
terminal in Australia in May 2011. The refinancing has been done using a
combination of an AUD1.1bn and US$0.8bn loan at an interest rate of
BBSW+270bps for the AUD loan and 3month US LIBOR+330bps for the USD loan
which is largely in line with expectations.
􀂄 HMEL commissioning to aid volume pick‐up: The ~9mt HPCL‐Mittal Energy
refinery in Bhatinda, which has been awaited for a while, has been fully
operationalized in the last week of March 2012. This refinery is expected to aid
crude volumes at Mundra , as crude will be transported through the 1,017 km
cross country pipeline connecting Mundra and Bhatinda. We expect this refinery
to contribute ~5mt of additional crude volumes at Mundra in FY13.
􀂄 Fundamentals on track: Adani is expected to witness strong volume pick-up
over the next few years, largely aided by higher coal volumes on account of the
commissioning of additional phases at Tata UMPP and Adani’s Mundra Power
plants as well as scale-up in crude volumes. The company’s volumes are
expected to increase from 66m tonnes in FY12 to 115m tonnes in FY15.
􀂄 Negative news flow has kept stock under pressure, valuations attractive: The
company’s stock price has been under pressure on account of negative news
flow regarding its probable involvement in a money laundering issue which has
been categorically denied by the management. On account of this negative
news flow, the company’s stock price has underperformed by 11% in the last
one month. However, with company fundamentals in place as well as the
positive news flow on the stock, we expect the overhang to clear. At CMP of
Rs130, we see a potential upside of 23%. We reiterate our positive stance on the
stock with a ‘BUY’ rating.