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Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Stock performance (%)
1m 3m 12m
ADSEZ 3.4% 0.3% 20.7%
Sensex -0.3% 2.6% 6.2%
Date July 30, 2015
Market Data
SENSEX 27705
Nifty 8422
Bloomberg ADSEZ IN
Shares o/s 2,071mn
Market Cap Rs. 659bn
52-wk High-Low Rs. 358-244
3m Avg. Daily Vol Rs. 1,161mn
Index member BSE100
Promoters 56.3
Institutions 37.2
Public 6.6
Annual Report Analysis We analyzed the FY15 annual report of Adani Ports & SEZ (ADSEZ) and the following are the key takeaways
FY15 Annual Report Analysis
Cargo Volumes: Standalone volume grew 10% yoy, aided by 13% in Coal, 14% in Containers and 38% in Minerals & Fertilisers; we
expect a 11% CAGR for volumes for FY15-18E led primarily by Containers and Crude. Consolidated volumes grew by 28% led by
57% at Dahej, 93% at Hazira and inclusion of Dhamra’s numbers; commencement of operations at Kandla, Vizag and Goa augurs
well for future growth (expect 16% CAGR for FY15-18E consolidated volume growth)
Margins: Standalone EBITDA margin remains robust at to 67% (adjusted EBITDA margins of 67% in FY14 as well). Key subsidiaries
like Dhamra Dahej, Hazira and Adani Logistics witnessed robust margin improvement in FY15 (53% to 64% for Dhamra, 58% to 62%
for Dahej and 60% to70% for Hazira); as a result Consolidated EBITDA improved to 63% (from 61% in FY14)
Loans and Advances: Standalone loans and advances to related parties and 3rd parties increased from Rs. 50.3bn to Rs. 65.44bn.
Inter Corporate Deposits (ICDs) to related parties increased from Rs. 33.6bn to Rs. 52.71bn; primary beneficiaries have been Adani
Agri fresh (incremental Rs. 1.6bn in FY15), Dhamra Port (Rs. 10bn) and Adani Logistics (incremental Rs. 1.9bn in FY15)
Working Capital & Receivables: Standalone working capital days have increased to 386days (primarily due to short term lending as
ICDs). Debtors (Receivables) has increased to Rs. 11.7bn in FY15 from just Rs. 3.3bn in FY12; receivables from related parties have
increased to 64% of the total (from just 16% in FY12); 80% of this related party receivables is due from Adani Power
Debt: Total standalone debt has increased to Rs. 117.6bn from Rs. 89.1bn in FY14; debentures have increased to Rs. 41.4bn from
Rs. 19.9bn; there is Rs. 55.6bn of foreign currency loans which has been recently refinanced by way of USD 650mn dollar bond.
Company’s D/E ratio remains comfortable at 1.1x (1x in FY14)
Cashflows: Standalone operating cashflows stood at ~Rs. 26bn in FY15 while interest + repayment (~Rs. 20bn), investments (~Rs.
29bn) and ICDs (~Rs. 15bn) have been the major cash outflows; With most investments & CAPEX completed we estimate cumulative
~Rs. 30bn incremental debt required for FY16-18E (not taking into account Vizhinjam and other likely inorganic acquisitions)
Subsidiary Performance: Dhamra port witnessed a turnaround in its financials (Rs. 1,001mn PAT vs. a loss of 1,719mn in FY14).
Dahej, Hazira and Adani Logistics also witnessed tremendous turnaround in their financials (PAT of Rs. 857mn vs. 127mn for Dahej,
Rs. 704mn vs. loss of Rs. 246mn for Hazira and Rs. 478mn vs. Rs. 297mn for Adani Logistics); these subsidiaries generated a
cumulative EBITDA of Rs. 12bn in FY15
Consolidated Performance: Consolidated performance was robust in FY15 due to addition of Dhamra and stellar performance from
Dahej, Hazira and Adani Logistics (resulting in 33% yoy PAT growth). We expect the consolidated PAT to grow at a CAGR of 25% for
FY15-18E driven by profitability of new assets; consequently we estimate doubling in Consolidated EPS in the same period (from Rs.
11.2/ share in FY15 to Rs. 22/ share in FY18E)
Triggers in the Future: Masterplan for Dhamra provides for building a 100MT port (From the current 25MT), similarly Hazira has only
2 berths constructed of the 5 berths in the masterplan; also, Company has recently won the bid (sole bidder) to develop a 1.2mn TEU
transshipment port at Vizhinjam in Kerala and is likely to acquire a port on the Eastern Coast of India; we have not factored-in all
these in our estimates due to lack of clarity/ information; we believe that these events are likely to be the triggers for the stock in the
future
Valuation Discussion: We continue to value the Company on n SoTP basis; we use DCF to value the port assets and arrive at a
value of Rs. 250/ share for the standalone business (Mundra Port and SEZ business); we use DCF for the other assets and
arrive at a final target price for the stock at Rs. 36/ share (earlier Rs. 394/ share as we rationalize our SEZ revenue outlook). We
continue to remain positive on the stock and maintain our “Buy” rating. BUY with a TP of Rs. 364/ share.
Find Spark Research on Bloomberg (SPAK <go>),
Thomson First Call, Reuters Knowledge and Factset
VIJAYARAGHAVAN SWAMINATHAN [email protected] +91 44 4344 0022
BHARANIDHAR VIJAYAKUMAR [email protected] +91 44 4344 0038
Rating: ◄► Target price: ▼
Page 1
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 2
Standalone P&L, Rs. mn FY14 FY15
Volumes, MT 101 111 Growth in volumes led by 13% growth in Coal, 14% growth in Containers and 38% growth in
fertilizers and minerals growth, % 23% 10%
Port Services Revenues 30,715 34,592 13% growth in port services revenues is due to the 10% growth in volumes
Land Lease 2,394 1,021
Income Related to Container Terminal Development 7,249 0 There was a one off infrastructure development income booked in FY14 related to CT3
Construction Income 3,100 3,481
Total Revenues 43,458 39,094
Operating Expenses 12,715 8,855 • There was a one off infrastructure development related expense in FY14 related to CT3
(excluding which the growth in operating expenses was 4%) Employee Cost 1,170 1,576
Other Expenses 2,172 2,588
Total Expenses 16,057 13,019
EBITDA 27,401 26,074
margin, % 63% 67% Margins increase due to operating leverage (13% increase in revenues but only 4%
increase in operating expenses)
Interest Income 6,798 7,382 Large interest income is due to the ~Rs. 65bn of Inter Corporate Deposits to related and
unrelated parties Depreciation 4,557 4,886
EBIT 16,046 13,807
Interest 7,539 7,088
PBT 8,508 6,719
Tax 1,941 (350)
PAT 6,567 7,068
margin, % 15% 18%
Standalone P&L, FY15
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Balance Sheet, Rs. mn FY14 FY15
Share capital 4,168 4,168
Reserves and surplus 89,191 107,863
Non-current liabilities 93,359 112,032
Long-term borrowings 92,095 117,642 ~Rs. 20bn of additional borrowing in FY15 resulted in increased debt
Other long-term liabilities 11,674 10,423 Consists of Rs. 7.7bn of unearned income
Deferred Tax 6,708 7,165
Current liabilities
Trade payables 2,167 6,239
Short-term provisions 3,042 4,570
Total 5,208 10,809
Total Assets 209,044 258,071
Gross Block 108,107 113,240
Net Block 85,372 84,619
Capital work in progress 6,615 6,632
Non-current investments 17,863 47,623 Investment into Dhamra (~Rs. 27bn) has increased FY15’s investment
Long-term loans and advances 43,261 50,340 There has been a ~Rs. 15bn increase in loans to related parties and 3rd parties
Other Current Assets 8,108 9,026 There has been a ~Rs. 2bn increase in accrued revenues
Current assets
Inventories 1,430 1,795
Trade receivables 8,294 7,490
Cash and bank balances 3,998 4,958
Other Current Assets 5,696 6,653
Short-term loans and advances 28,406 38,935
Total 47,825 59,831
Total Liabilities 209,044 258,071
Page 3
Standalone Balance Sheet, FY15
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Mundra Cargo Volumes, MT
Source: Company, Spark Capital Research
Page 4
4 8 9 15 19
27 36
43 44 46 48
9 10 11
15 18
25
35
40 46
54 58
5 10
12
12
14
17
20
17
22
24
31
10
9 8
11
13
13
10
12
12
13
15
29
36 40
52
64
82
101
111
124
137
152
0
20
40
60
80
100
120
140
160
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Vo
lum
es,
MT
Coal Containers Crude Others
4%
13%
23%
8%
11%
39%
23%
18%
2%
21%
Cargo Volumes – Standalone (Mundra)
CAGR %
FY16E-FY18E
CAGR %
FY08-FY15
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Adani Ports & SEZ Consolidated Cargo Volumes, MT
Source: Company, Spark Capital Research
Page 5
29 36 40 52
64 82
101 111
124 137
152
12
17
18
20
0 0
0
0
2
8
8
12
14
16
18
1
4
7
12
15
18
29 36
40
52
66
91
113
144
171
199
229
0
50
100
150
200
250
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Vo
lum
es,
MT
Mundra Dhamra Dahej Hazira Kandla Goa Vizag Ennore
11%
18%
13%
12%
32%
298%
90%
63%
21%
Cargo Volumes - Consolidated
CAGR %
FY16E-FY18E
CAGR %
FY08-FY15
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 6
Financials - Standalone
Standalone Revenues
Source: Company, Spark Capital Research
Fixed Costs and Variable Costs
8,1
82
11,3
51
13,9
25
18,8
51
24,8
19
33,6
11
43,4
58
39,0
94
48,7
30
51,5
16
58,2
05
41%
9%
41%
34%
24%
13% 13% 11% 11%
19%
0%
10%
20%
30%
40%
50%
0
10,000
20,000
30,000
40,000
50,000
60,000
FY08 FY10 FY12 FY14 FY16E FY18E
Rs. M
n
Port Services Revenues Land Lease CT3 Development
Construction Income Port Revenue, growth %
2,8
28
3,7
34
4,3
14
5,7
51
7,7
00
8,9
08
16,0
57
13,0
19
14,4
22
15,5
35
17,5
40
0
5,000
10,000
15,000
20,000
25,000
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs. M
n
Variable Costs Fixed Costs
EBITDA and EBITDA margins PAT and PAT margins
5,3
54
7,6
17
9,6
11
13,1
00
17,1
19
24,7
02
27,4
01
26,0
74 34,3
09
35,9
81
40,6
65
65%
67%
69% 69% 69%
73%
63%
67%
70% 70% 70%
56%
58%
60%
62%
64%
66%
68%
70%
72%
74%
76%
0
10,000
20,000
30,000
40,000
50,000
60,000
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16EFY17EFY18E
Rs. M
n
EBITDA EBITDA, %2,1
35
4,6
12
7,0
10
9,8
62
11,7
73
17,5
42
20,1
62
21,8
32
28,7
07
31,4
38
37,0
20
26%
41%
50% 52% 47%
52%
46%
56% 59% 61%
64%
0%
10%
20%
30%
40%
50%
60%
70%
0
10,000
20,000
30,000
40,000
50,000
60,000
FY08 FY10 FY12 FY14 FY16E FY18E
Rs. M
n
PAT PAT, %
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 7
Per Tonne Analysis – Adani Ports & Gujarat Pipavav
FY2014 FY2015
355
146
209
369
204
165
0
50
100
150
200
250
300
350
400
Revenues Per Tonne Cost per tonne EBITDA per tonne
Rs. p
er
To
nn
e
ADSEZ
GPPV
362
147
215
403
188
215
0
50
100
150
200
250
300
350
400
450
Revenues Per Tonne Cost per tonne EBITDA per tonne
Rs. p
er
To
nn
e
ADSEZ
GPPV
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Loans & Advances, FY15 Loans and Advances to related parties, end of year, Rs. mn
*Loans and Advances to these entities are interest bearing, all other loans are on interest free basis; Source: Company
Page 8
Rs. Mn 2008 2009 2010 2011 2012 2013 2014 2015
Adani Logistics Ltd.* 0 0 1,499 1,865 2,034 4,625 11,472 13,405
Adani Agri Fresh Ltd.* 0 0 0 0 0 0 9,040 10,649
The Dhamra Port Company Ltd.* 0 0 0 0 0 0 9,981
Adani Kandla Bulk Terminal Pvt. Ltd.* 0 0 0 0 0 0 3,245 9,277
Adani Hazira Port Pvt. Ltd. 0 0 0 0 4,747 3,463 253 2,780
Adani Enterprises Ltd.* 0 3 0 0 0 0 2,500 2,500
Adani Murmugao Port Terminal Pvt. Ltd. 0 0 0 0 713 1,144 832 2,411
Karnavati Aviation Pvt. Ltd. 0 0 300 424 1,120 1,525 1,462 1,429
Adani International Container Terminal Pvt. Ltd. 0 0 0 0 472 0 840
Adani Vizag Coal Terminal Pvt. Ltd. 0 0 0 0 44 1,249 1,188 735
Adani Ennore Container Terminal Pvt. Ltd. 0 0 0 0 0 0 647
Mundra SEZ Textile and Apparel Park Pvt. Ltd. 0 0 0 45 53 137 139 246
Adani Petronet (Dahej) Port Pvt. Ltd.* 0 0 0 0 204 1 96
Dholera Infrastructure Pvt. Ltd. 0 0 88 88 88 88 88 88
Mundra International Airport Pvt. Ltd. 0 0 0 65 80 85 96 87
Adani Hospitals Mundra Pvt. Ltd. 0 0 0 0 0 0 7 41
Adani Properties Pvt. Ltd. 0 10 0 0 10 10 10 10
Chemoil Adani Pvt. Ltd.* 0 0 0 0 0 0 1,928 2
MPSEZ Utilities Pvt. Ltd. 0 0 0 0 57 54 57 2
Mundra Port Pty Ltd., Australia 0 0 0 0 24 606 0 0
Adani Abbot Point Terminal Pty Ltd, Australia 0 0 0 0 33 0 0
Adani Power* 0 2 0 0 540 0 0
Adani Mundra SEZ Infrastructure Pvt. Ltd. 261 707 0 108 249 0 0
Shanti Builders 0 52 0 0 12 0 0
Total 261 775 1,886 2,593 9,905 13,559 32,315 55,224
26%
21%
20%
18%
5%
5% 5%
Adani Logistics Ltd.
Adani Agri Fresh Ltd.
The Dhamra Port Company Ltd.
Adani Kandla Bulk Terminal Pvt. Ltd.
Adani Hazira Port Pvt. Ltd.
Adani Enterprises Ltd.
Adani Murmugao Port Terminal Pvt. Ltd.
Loans & Advances to Related Parties - Standalone
Loans and Advances, FY15, Rs. mn
Related Party 40,172 73%
Non Related
Party 15,052 27%
Total 55,224
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Long Term Investments, Rs. mn
Source: Company
Investments, FY15
Page 9
Rs. mn FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
The Dhamra Port Company Limited 27,427
Adani Hazira Port Private Limited 5 240 1,641 3,692 6,500 7,155
Adani Logistics Limited 1,751 1,982 3,119 3,119 3,119 3,251 3,251 3,251
Adani International Container Terminal 0 5 272 3,102 3,102
Adani Petronet (Dahej) Port Private Limited 212 321 1,927 2,087 2,561 2,562 2,562 2,562
Adani Vizag Coal Terminal Private Limited 0 5 48 48 1,013
Adani Murmugao Port Terminal Private Limited 1 313 328 858 858 858
MPSEZ Utilities Private Limited 0 0 0 525 525 525 525 525
Karnavati Aviation Private Limited 10 10 10 50 50 50 200 450
Kutch Railway Company 400 400 400 400 400 400 400 400
Adinath Polyfills Private Limited 174 115 195 385 385 385 385 385
Adani CMA Mundra Terminal Private Limited 304
Adani Kandla Bulk Terminal Private Limited 0 0 0 0 148
Mundra SEZ Textile and Apparel Park 25 25 25 25 25 25 25 25
Mundra International Airport Private Limited 5 5 5 5 5 15
Adani Hospitals Mundra Private Limited 1 3
Adani Warehousing Service Private Limited 1 1 1
Adani Ennore Container Terminal Private
Limited 1 1
Mundra Solar Technopark Private Limited 1
Adani Shipyard Private Limited 1 1 1 1 0
Mundra Port Pty Ltd. 2,451
Adani Abbot Point Terminal Holding Pty Ltd. 6,874
Total 2,571 2,852 5,686 7,150 18,375 12,073 17,863 47,623
60% 16%
7%
7%
6% 2% 2%
The Dhamra Port Company Limited
Adani Hazira Port Private Limited
Adani Logistics Limited
Adani International Container Terminal
Adani Petronet (Dahej) Port Private Limited
Adani Vizag Coal Terminal Private Limited
Adani Murmugao Port Terminal Private Limited
Long Term Investments - Standalone
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Debt – Standalone
Source: Company
Page 10
Debt and Return Ratios - Standalone
Debt/ Equity RoE, RoCE
3,002 7,362 11,946 10,763
46,965
50,216 57,934
55,634
18,645 22,750
31,572 27,098
61,727
83,353 89,060
117,642
0
20,000
40,000
60,000
80,000
100,000
120,000
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Rs. M
n
Debentures Rupee Loans Foreign Currency Loans Short Term Debt
0.7 0.8
0.9
0.6
1.2 1.2
1.0 1.1
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
D/E
8.2%
16.6%
21.8%
25.3% 24.7%
29.4%
25.1%
21.3%
5.8%
13.2% 13.2% 15.2%
13.9% 14.2% 14.1% 12.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
RoE, % RoCE, %
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 11
Cash Flows, Rs. mn FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Sources of Funds
Operating Cash before Working Capital 7,082 9,135 11,861 17,044 24,100 27,646 26,473 34,321 36,027 40,378
Dividend Income 18 13 62 20 70 118 20 0 0 0
Interest Income 988 1,137 688 268 509 1,846 7,643 7,581 7,522 7,406
Equity Raised 0 0 0 0 0 9,901 0 0 0 0
Net Debt 2,833 9,709 (5,162) 30,838 20,094 (234) 27,843 (19,761) (20,911) (14,886)
Sources of Funds 10,921 19,994 7,449 48,169 44,773 39,278 61,980 22,007 22,476 33,198 \
Application of Funds (positive numbers indicate outflow of cash)
Taxes 226 44 (10) 2,501 3,552 4,857 4,317 5,842 12,246 19,717
Working Capital (764) (1,259) (720) 1,668 6,850 6,772 2,175 1,641 745 1,355
CAPEX in Gross Block 12,313 13,979 11,200 19,556 2,414 2,654 (955) 0 0 0
Investments into Susidiaries 10,033 3,530 2,958 12,460 6,399 3,261 24,024 3,408 2,500 0
Investment in liquid short term instrument (16,083) (3,477) (7,331) 2,499 (1,651) (10,736) (769) 0 0 0
Inter Corporate Deposits Given (44) 4,756 (1,241) 3,964 17,875 29,922 20,929 0 0 0
Interest 1,968 1,592 1,577 2,534 4,296 4,747 6,332 8,296 7,178 6,168
Dividend Payment 1,407 1,404 2,406 1,499 1,629 2,422 2,422 2,635 2,635 2,635
Application of Funds 9,056 20,569 8,838 46,681 41,364 43,899 58,473 21,552 25,057 30,072
Net Cash 1,865 (575) (1,389) 1,489 3,409 (4,621) 3,507 5,320 (7,665) 3,024
Free Cash Flow to Firm 2,390 (7,302) 7,693 (25,337) (10,830) (7,239) (15,603) 31,005 28,031 26,880
We are not assuming any
Inter Corporate Deposits
going forward and yet we
estimate that the Company
would take on additional ~Rs.
30bn of debt in the next 3
years
With most projects
completed, CAPEX is
required only for Ennore, CT4
and Vizhinjam
With a comfortable Debt/
Equity position, Company will
not be under undue stress
taking-on more debt
Likelihood of Company
raising monies in the Capital
market is also high given the
capital requirement
Cash Flows - Standalone
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 12
Working Capital - Standalone
Standalone
Receivables
Source: Company
Working Capital, Days FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Inventory Days 9 7 8 8 8 9 12 15
Debtor Days 132 82 48 41 33 50 79 74
Short Term Loans & Advances Days 59 47 100 73 24 106 232 314
Other Current Assets Days 20 16 15 9 9 88 106 58
Creditor Days 114 91 87 47 22 16 18 39
Other Current Liabilities Days 35 20 16 18 27 30 30 36
Working Capital including Loans & Advances 71 41 69 65 26 206 381 386
Working Capital without Loans & Advances 48 (25) (48) 3 (100) (30) 63 55
1,969 1,096 532 1,150 541
3,678
7,338 7,500 2,963 2,116
1,580 2,688
3,345
8,034
12,700 11,734 66%
52%
34%
43%
16%
46%
58% 64%
0%
10%
20%
30%
40%
50%
60%
70%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Receivables from Related Parties Receivables from Others % of related party receivables
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 13
Subsidiaries – Dhamra Port
Volumes & Growth %
Source: Company, Spark Capital Research
Revenues & Growth %
*for FY15 the numbers are for 9 months period from June 23, 2014 – March 31, 2015
EBITDA & Growth %
*for FY15 the numbers are for 9 months period from June 23, 2014 – March 31, 2015
PAT & Growth %
*for FY15 the numbers are for 9 months period from June 23, 2014 – March 31, 2015
5.0
11.1
14.3 15.5
16.7 18.0
19.5
121%
29%
8% 8% 8% 8%
0%
20%
40%
60%
80%
100%
120%
140%
0.0
5.0
10.0
15.0
20.0
25.0
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Metr
ic T
on
ne
Volumes growth, %
1,951
5,024
7,314 7,182
9,402
10,662
12,091
46%
-2%
31% 13% 13%
-10%
0%
10%
20%
30%
40%
50%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs. M
n
Revenues growth, %
(128)
2,038
3,868 4,575
6,111 6,930
7,859
-7%
41%
53%
64% 65% 65% 65%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
(1,000)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs. M
n
EBITDA margin, %
(4,581)
(3,400)
(1,719)
1,001 1,476
2,385
3,325
-26% -49%
-158%
47% 62%
39%
-200%
-150%
-100%
-50%
0%
50%
100%
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs.M
n
PAT growth, %
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 14
Subsidiaries – Dahej Port
Volumes & Growth %
Source: Company, Spark Capital Research
Revenues & Growth %
EBITDA & Growth % PAT & Growth %
2.1
7.6 7.9
12.4 14.0
16.0
18.0 253%
4%
57%
13% 14% 13%
0%
50%
100%
150%
200%
250%
300%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Metr
ic T
on
ne
Volumes growth, %
885
2,682 2,888
4,847
5,682
6,753
7,901 203%
8%
68%
17% 19% 17%
0%
50%
100%
150%
200%
250%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs. M
n
Revenues growth, %
496
1,615 1,676
3,026
3,661
4,351
5,091
56%
60%
58%
62%
64% 64% 64%
50%
52%
54%
56%
58%
60%
62%
64%
66%
0
1,000
2,000
3,000
4,000
5,000
6,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs. M
n
EBITDA margin, %
(311)
430
127
857
1,527
2,029
2,618
-70%
572%
78% 33% 29%
-200%
-100%
0%
100%
200%
300%
400%
500%
600%
700%
(500)
0
500
1,000
1,500
2,000
2,500
3,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs.M
n
PAT growth, %
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 15
Subsidiaries – Hazira Port
Volumes & Growth %
Source: Company, Spark Capital Research
Revenues & Growth %
EBITDA & Growth % PAT & Growth %
0.0
1.0
3.7
7.2 8.0
8.9
10.1 266%
93%
11% 12% 13%
0%
50%
100%
150%
200%
250%
300%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Metr
ic T
on
ne
Volumes growth, %
0 747
2,664
4,925
6,153 6,901
7,789 257%
85%
25% 12% 13%
0%
50%
100%
150%
200%
250%
300%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs. M
n
Revenues growth, %
0
724
1,611
3,454
4,122
4,624
5,218
0%
97%
60%
70% 67% 67% 67%
0%
20%
40%
60%
80%
100%
120%
0
1,000
2,000
3,000
4,000
5,000
6,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs. M
n
EBITDA margin, %
0 6
(246)
704 742
1,101
1,597
5%
48%
45%
0%
10%
20%
30%
40%
50%
60%
(500)
0
500
1,000
1,500
2,000
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs.M
n
PAT growth, %
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 16
Subsidiaries - Adani Logistics
Revenues & Growth %
Source: Company
EBITDA & Growth % PAT & Growth %
1,231
2,707
4,271
6,341 120%
58%
48%
0%
20%
40%
60%
80%
100%
120%
140%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
FY12 FY13 FY14 FY15
Rs. m
n
Revenues growth, %
69
275
580
768
6%
10%
14%
12%
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
100
200
300
400
500
600
700
800
900
FY12 FY13 FY14 FY15
Rs. M
n
EBITDA margin, %
(65)
101
297
478 195%
61%
0%
50%
100%
150%
200%
250%
(100)
0
100
200
300
400
500
600
FY12 FY13 FY14 FY15
Rs. M
n
PAT growth, %
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 17
Consolidated PAT & EPS
Consolidated PAT
Consolidated Earnings Per Share
Rs. mn FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Standalone 11,773 17,542 20,162 21,832 28,707 31,438 37,020
CT3 0 0 (200) (2) 256 351 461
CT4 0 0 0 0 0 (945) (845)
Dhamra 1,001 1,476 2,385 3,325
Dahej (311) 430 127 857 1,527 2,029 2,618
Hazira 0 6 (246) 704 742 1,101 1,597
Goa 0 0 0 (282) 225 127 416
Kandla 0 0 0 (58) (74) 738 1,780
Vizag 0 0 0 (202) 164 127 251
Ennore 0 0 0 0 0 133 537
Others (709) (1,634) (2,514) (573) (605) (605) (605)
Consolidated 10,833 16,232 17,396 23,143 31,853 36,423 45,496
5.7 8.5 9.7 10.5
13.9 15.2 17.9
5.2
7.8 8.4
11.2
15.4
17.6
22.0
0.0
5.0
10.0
15.0
20.0
25.0
FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Rs./
Sh
are
Standalone CT3 CT4 Dhamra Dahej Hazira Goa Kandla Vizag Ennore Others Consolidated
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 18
Cash Flows - Consolidated
Cashflows – Consolidated, Rs. mn
Sources of Funds FY09 FY10 FY11 FY12 FY13 FY14 FY15
Operating Cash before Working Capital 7,019 9,262 11,802 19,959 23,811 29,259 39,529
Dividend Income 19 14 62 20 75 136 112
Interest Income 972 1,253 757 373 572 1,860 7,407
Equity Raised 26 720 166 456 (80) 10,061 -
Net Debt 7,297 9,465 (1,861) 136,018 49,460 6,546 12,780
Government Grant 55 63 - 23 - - 51
Total 15,389 20,776 10,927 156,849 73,839 47,862 59,879
Application of Funds
Taxes 245 85 33 2,524 3,735 5,200 4,868
Working Capital (692) (1,309) (324) 5,439 6,285 12,740 4,010
CAPEX in Gross Block 15,138 18,771 18,257 45,472 38,314 11,022 12,289
Investments into Susidiaries 9,562 2,685 215 3,126 73 - 22,427
Investment in liquid short term instruments (15,953) (5,221) (6,109) 5,908 (5,475) (10,719) (343)
Investment in Discontinued Operations - - - 84,728 - - -
Intercorporate Deposits Given 250 3,050 (1,840) (80) 14,633 26,893 (1,923)
Interest 2,072 1,925 1,982 5,235 6,373 6,360 12,775
Dividend Payment 1,407 1,404 1,603 1,499 1,630 2,422 2,422
Total 12,029 21,389 13,817 153,849 65,569 53,919 56,525
Net Cash 3,360 (613) (2,890) 3,000 8,270 (6,056) 3,353
Free Cash Flows to Firm (17,483) (14,019) (4,540) (36,521) (39,229) (26,596) (2,143)
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 19
SoTP Valuation
ADSEZ SoTP Valuation, Rs. mn
Asset Stake, % Method Equity
Value
Value to
ADSEZ
Per Share
Value (Rs.) % to Total
Stand Alone Entity - Mundra Port & SEZ 100% FCFE with CoE of 12% 516,750 516,750 250 69%
Adani International Container Terminal Pvt. Ltd.
(CT3) 50% FCFE with CoE of 12% 13,502 6,751 3 1%
Adani CMA Mundra Terminal Pvt. Ltd. (CT4) 50% FCFE with CoE of 13% 6,016 3,008 1 0%
Adani Petronet (Dahej) Port Pvt. Ltd. 74% FCFE with CoE of 12% 45,014 33,310 16 4%
Adani Hazira Port Terminal Pvt. Ltd. 100% FCFE with CoE of 12% 60,584 60,584 29 8%
Adani Murmugao Port Terminal Pvt. Ltd. 74% FCFE with CoE of 12% 9,232 6,832 3 1%
Adani Vizag Coal Terminal Pvt. Ltd 100% FCFE with CoE of 12% 4,159 4,159 2 1%
Adani Kandla Bulk Terminal Pvt. Ltd 74% FCFE with CoE of 12% 17,285 12,791 6 2%
Dhamra Port 100% FCFE with CoE of 12% 84,125 84,125 41 11%
Adani Ennore Container Terminal Pvt. Ltd. 100% FCFE with CoE of 13% 18,609 18,609 9 2%
Adani Logistic Ltd. 100% 15x FY15 earnings 7,167 7,167 3 1%
Total 782,443 754,087 364 100%
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 20
Financial Summary – Standalone
Abridged Financial Statements Key metrics
Rs. mn FY14 FY15 FY16E FY17E FY18E FY14 FY15 FY16E FY17E FY18E
Profit & Loss Growth Ratios
Revenues 43,458 39,094 48,730 51,516 58,205 Cargo Volume 101.1 110.9 124.1 137.1 152.4
EBITDA 27,401 26,074 34,309 35,981 40,665 Revenues 29.3% -10.0% 24.7% 5.7% 13.0%
Other Income 6,798 7,382 7,459 7,406 7,420 EBITDA 10.9% -4.8% 31.6% 4.9% 13.0%
Depreciation 4,557 4,886 4,886 4,886 4,886 PBT 17.0% -2.8% 34.5% 9.5% 17.1%
EBIT 29,641 28,570 36,882 38,500 43,199 PAT 14.9% 8.3% 32.3% 9.5% 17.1%
PBT 22,103 21,482 28,886 31,623 37,031
PAT 20,162 21,832 28,886 31,623 37,031 Performance ratios
RoA (%) 10.6% 9.7% 11.7% 12.9% 15.2%
Balance Sheet RoE (%) 25.1% 21.3% 23.1% 20.7% 20.1%
Net Worth 93,359 112,032 138,283 167,271 201,668 RoCE (%) 15.5% 12.7% 14.9% 15.7% 17.7%
Total Debt 92,095 117,642 97,882 76,971 62,084 Total Assets Turnover (x) 0.2 0.2 0.2 0.2 0.2
Receivable under long term
lease 11,674 10,423 10,423 10,423 10,423 Fixed Assets Turnover (x)
0.5 0.5 0.6 0.7 0.8
Deferred Tax Liability (net) 6,708 7,165 1,290 (11,018) (30,858) Working capital Turnover (x) 1.0 0.8 1.0 1.0 1.1
Total Networth & Liabilities 203,836 247,262 247,877 243,647 243,317 Financial stability ratios
Gross Fixed assets 108,107 113,240 113,240 113,240 113,240 Net Debt to Equity (x) 0.9 1.0 0.7 0.4 0.3
Net fixed assets 85,372 84,619 79,733 74,847 69,961 Current ratio (x) 9.2 5.5 5.7 5.0 4.7
CWIP 6,615 6,632 6,632 6,632 6,632 Working capital days 358 458 383 349 338
Loans and Advances 51,369 59,366 59,366 59,366 59,366 Inventory & Debtor days 368 512 425 415 391
Investments 17,863 47,623 51,030 53,530 53,530 Creditor days 44 101 82 86 91
Cash and bank balances 3,998 4,958 5,414 2,833 5,959 Interest cover (x) 3.9 4.0 4.6 5.6 7.0
Other receivables 43,827 54,873 56,684 58,617 62,370 Valuation metrics
Current Liabilities 5,208 10,809 10,983 12,179 14,501 Fully Diluted shares (mn) 2,070 2,070 2,071 2,072 2,073
Net current assets 42,617 49,022 51,115 49,271 53,828 Fully diluted M. Cap (Rs.mn) 636,954
Total Assets 203,836 247,262 247,877 243,647 243,317 Fully Diluted EPS (Rs.) 9.7 10.5 13.9 15.3 17.9
P/E (x) 31.6 29.2 22.1 20.1 17.2
Cash Flows EV (Rs.mn) 714,371 725,051 749,638 729,422 711,092
Cash flows from Operations 16,016 19,982 34,254 30,342 26,815 EV/ EBITDA (x) 26.1 27.8 21.8 20.3 17.5
Cash flows from Investing (23,136) (35,565) (3,408) (2,500) - BV/ share (Rs.) 45.1 54.1 66.8 80.7 97.3
Cash flows from Financing 2,499 19,089 (30,391) (30,423) (23,689) Price to BV (x) 6.8 5.7 4.6 3.8 3.2
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 21
Financial Summary – Consolidated
Abridged Financial Statements Key metrics
Rs. mn FY14 FY15 FY16E FY17E FY18E FY14 FY15 FY16E FY17E FY18E
Profit & Loss Growth Ratios
Revenues 48,240 61,520 76,712 86,674 100,833 Cargo Volume 112.8 144.2 171.2 199.1 229.1
EBITDA 29,203 39,023 51,058 56,819 65,937 Revenues 34.9% 27.5% 24.7% 13.0% 16.3%
Other Income 6,836 6,856 6,300 6,378 6,835 EBITDA 22.9% 33.6% 30.8% 11.3% 16.0%
Depreciation 6,495 9,117 9,630 10,351 10,640 PBT 18.0% 26.5% 35.5% 15.1% 25.7%
EBIT 29,545 36,763 47,729 52,846 62,132 PAT 6.2% 33.5% 39.7% 15.1% 25.2%
PBT 19,777 25,012 33,901 39,016 49,025 PAT after MI 7.2% 33.0% 38.4% 14.3% 24.3%
PAT after MI 17,396 23,143 32,032 36,608 45,507 Performance ratios
Balance Sheet RoA (%) 7.8% 8.4% 10.1% 11.4% 14.0%
Net Worth 87,681 107,678 138,218 173,549 218,278 RoE (%) 22.6% 23.7% 26.1% 23.5% 23.2%
Minority Interest 1,437 1,590 2,026 2,778 4,030 RoCE (%) 13.2% 13.3% 15.1% 16.5% 19.1%
Total Debt 116,940 151,553 135,218 112,603 95,991 Total Assets Turnover (x) 0.2 0.2 0.2 0.3 0.3
Deferred Tax Liability (net) 6,744 8,590 1,973 (11,048) (32,171) Fixed Assets Turnover (x) 0.4 0.4 0.4 0.5 0.6
Other liabilities 28,069 43,330 43,330 43,330 43,330 Working capital Turnover (x) 1.0 1.1 1.1 1.1 1.3
Total Networth & Liabilities 240,870 312,741 320,765 321,212 329,457 Financial stability ratios
Gross Fixed assets 158,416 221,503 219,858 237,358 242,358 Net Debt to Equity (x) 1.3 1.3 1.0 0.6 0.3
Net fixed assets 131,226 179,272 168,639 175,924 170,419 Current ratio (x) 10.7 9.6 35.8 19.2 15.0
Investments 575 574 574 574 574 Working capital days 396 373 354 326 295
Loans and Advances 30,928 24,901 24,901 24,901 24,901 Inventory & Debtor days 441 421 364 344 322
Goodwill on Cosolidation 404 25,997 25,997 25,997 25,997 Creditor days 45 48 10 18 27
Cash and bank balances 5,139 6,338 1,557 56 22,719 Interest cover (x) 3.0 3.1 3.5 3.8 4.7
Receivables & other current
assets 58,251 70,985 76,523 81,763 88,957 Valuation metrics
Current Liabilities 5,901 8,080 2,184 4,261 7,448 Fully Diluted shares (mn) 2,070 2,070 2,070 2,070 2,070
Net current assets 57,489 69,242 75,896 77,558 104,228 Fully diluted M. Cap (Rs.mn) 658,292
Total Assets 240,870 312,742 320,765 321,212 329,457 Fully Diluted EPS (Rs.) 8.4 11.2 15.5 17.7 22.0
P/E (x) 37.8 28.4 20.6 18.0 14.5
Cash Flows EV (Rs.mn) 756,608 770,092 803,507 791,953 770,839
Cash flows from Operations 11,319 30,650 44,492 58,377 66,499 EV/ EBITDA (x) 25.9 19.7 15.7 13.9 11.7
Cash flows from Investing (25,100) (24,931) (10,358) (9,000) 7,920 BV/ share (Rs.) 42.4 52.0 66.8 83.8 105.4
Cash flows from Financing 7,725 (2,366) (36,344) (48,714) (49,591) Price to BV (x) 7.5 6.1 4.8 3.8 3.0
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 22
Recommendation History
Report Date CMP (Rs.) TP (Rs.) Recommendation
05/May/15 345 394 Buy
29/Jan/15 338 394 Buy
16/Sep/14 279 349 Buy
07/Aug/14 266 349 Buy
24/Jul/14 276 349 Buy
28/May/14 215 226 Add
28/Jan/14 145 157 Add
29/Oct/13 145 157 Add
17/May/13 161 172 Add
04/Feb/13 150 160 Add
25/Oct/12 130 150 Buy
Report Date CMP (Rs.) TP (Rs.) Recommendation
03/Aug/12 121 150 Buy
02/Jul/12 119 150 Buy
25/May/12 114 150 Buy
17/May/12 114 150 Buy
0
50
100
150
200
250
300
350
400
450
Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15
Historical Target
Adani Ports & SEZ
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 23
Disclaimer (1/2)
Spark Disclaimer
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have not been debarred from doing business by any Stock Exchange/SEBI or any other authorities, nor has our certificate of registration been cancelled by SEBI at any point of
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Spark Capital has a subsidiary Spark Investment Advisors (India) Private Limited which is engaged in the services of providing investment advisory services and is registered
with SEBI as Investment Advisor. Spark Capital has also an associate company Spark Infra Advisors (India) Private Limited which is engaged in providing infrastructure
advisory services.
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be construed as investment or financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of
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This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through an independent analysis by Spark
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Absolute
Rating
Interpretation
BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year
horizon
ADD Stock expected to provide positive returns of >5% – <15% over a 1-year
horizon SELL Stock expected to fall >10% over a 1-year horizon
Adani Ports & SEZ CMP
Rs. 318
Target
Rs. 364
Rating
BUY
Page 24
Disclaimer (2/2)
Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency,
Spark Capital has incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:
Disclosure of interest statement Yes/No
Analyst financial interest in the company No
Group/directors ownership of the subject company covered No
Investment banking relationship with the company covered No
Spark Capital’s ownership/any other financial interest in the company covered No
Associates of Spark Capital’s ownership more than 1% in the company covered No
Any other material conflict of interest at the time of publishing the research report No
Receipt of compensation by Spark Capital or its Associate Companies from the subject company covered for in the last twelve months:
Managing/co-managing public offering of securities
Investment banking/merchant banking/brokerage services
products or services other than those above
in connection with research report
No
Whether Research Analyst has served as an officer, director or employee of the subject company covered No
Whether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research
analyst’s compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.
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