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

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Adani Enterprises’ (AEL) reported consolidated Q3FY15 PAT of INR4.4bn, much higher than estimated INR1.4bn, aided by strong coal trading volumes and improved performance by subsidiaries. Management is hopeful that the group restructuring exercise will simplify the corporate structure and enhance shareholders’ value. While management continues to eye long-term growth opportunities, we remain positive on the domestic coal mine development operator (MDO) opportunity with clarity set to emerge post coal block allocation/bidding.

All round performance

AEL traded 17MT (13MT est.) of coal with EBITDA/t of INR340 (INR315/t est.) reporting coal trading EBITDA of INR5.7bn versus our INR4.1bn estimate. Further, better-than-expected performance reported by power and port subsidiaries led to consolidated PAT of INR4.4bn, being much higher than our estimated INR1.4bn.

Restructuring to simplify corporate structure of group

AEL announced a scheme for demerger of the port, power and transmission assets into separate companies to simplify the shareholding structure. Pursuant to the scheme, the equity shares held by AEL in APSEZ and APL will stand cancelled. In lieu of their current holding in AEL, existing shareholders (including the promoters) will get 14,123 equity shares in APSEZ and 18,596 equity shares in APL for every 10,000 equity shares held in AEL. Further, shareholders will also get 1 share of Adani Transmission (which will hold the transmission assets, to be eventually listed) for every AEL share.

LINK

https://www.edelweiss.in/research/Adani-Enterprises--Value-Un-Locking-on-The-Cards;-Result-Update-Q3FY15/28186.html