Cholamandalam Sec

Adani Ports & SEZ

(Outperformer)

CMP: ₹267.55

Target: ₹302

Adani Ports & SEZ began commercial operations in October 2001, after entering into a concession agreement with GMB to build, operate and maintain the port for a period of 30 years till 2031, extendable by another 20 years. The port is providing cargo handling services for bulk, crude and container cargo. The company has also received approval to develop the adjacent port land as a multi-product SEZ.

Newly-created assets at Goa, Vizag and visible asset additions (Dhamra, Kandla, Ennore & CT-4) will enable healthy growth in APSEZ’s volumes.

The new Vizhinjam port is likely to aid further growth. Increasing the utilisation level at Mundra (currently 53 per cent) and growth impetus from 3Cs (Coal, Containers & Crude) would drive cargo volumes at Mundra, aided by creation of CT-4.

Increased offtake from IOC, and HMEL would drive crude cargo volumes.

APSEZ would benefit the most from the rupee’s depreciation as their dollar earnings are sufficient to more than offset the negatives of higher debt and capex in dollar terms.

Healthy growth of container volumes, increase in cargo activity from coal and crude segment and continuing addition of new assets are key positives. However, slowdown in port traffic volumes, development of new port near Mundra port, and regulatory restrictions are major risks.