Centrum Broking

Adani Ports & SEZ (Buy)

CMP: ₹282.4

Target: ₹395

Adani Ports & SEZ’s Q4FY20 cargo grew 7.1 per cent y-o-y to 58 mt driven by 11.6 per cent y-o-y growth in container cargo and 12.8 per cent y-o-y growth in crude and other cargo. Coal cargo declined by 2 per cent y-o-y to 18.5mt. For FY20, cargo grew 7.4 per cent y-o-y to 223 mt led by containers and crude. Share of cargo — containers (41 per cent ), Coal (32 per cent ) and Crude and others (27 per cent ). In FY20, Mundra grew 1.4 per cent, Hazira 10.5 per cent , Dahej (-30 per cent ), Kattupalli 21.6 per cent , Dhamra (43.7 per cent ) and terminals at Major ports (25 per cent ). Growth at Dhamra recovered led by improved availability of rakes while at terminals it was aided by new cargo contracts and diversification efforts.

Adani Ports & SEZ has a strong portfolio of cash generating assets and its cargo stickiness partly safeguards against near term growth disruption while also giving it ability to capitalise on growth recovery. We expect the port EBITDA to grow at 17.4 per cent CAGR over FY20-22E. Sustained effort to unwind related party exposures and pledges is an added positive. Maintain Buy on the stock with a SOTP based target price of ₹395.

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