Please Share::
India Equity Research Reports, IPO and Stock NewsVisit http://indiaer.blogspot.com/ for complete details �� ��
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.
No comments:
Post a Comment