IGI Logo

In-line performance; outlook remains bright

* Adani Ports & SEZ (APSEZ) reported a revenue growth of 11% YoY to INR69.6b in 1QFY25 (in line). Cargo volumes grew 8% YoY to 109mmt. Volumes at Gangavaram port were affected by a worker strike in AprMay’24; however, the operations returned to normalcy in Jun’24.

* EBITDA margin came in at 61% (est. 58.7%), up 90bp YoY/240bp QoQ. EBITDA grew 13% YoY to INR42.4b (in line).

* APAT rose 29% YoY to INR26.3b (13% beat), aided by a lower tax outgo.

* Port revenues grew 13% YoY to INR55.4b and EBITDA margins stood at 72% (flat YoY). Logistics revenues grew 13% YoY to INR5.6b and EBITDA margins stood at 25% (vs. 28% in 1QFY24).

* In 1Q FY25, APSEZ managed ~27% of the country’s total cargo and ~46% of container cargo. APSEZ's domestic cargo volumes grew by 9% YoY, compared to 4% YoY growth in India's overall cargo volumes.

* The 1Q performance was largely in line with our estimates. APSEZ is expected to record 2-3x of India’s cargo volume growth, driven by a balanced port mix on the western and eastern coastlines of India. Further, the logistics business will serve as a value addition to the domestic port business, with a focus on enhancing last-mile connectivity. We largely retain our estimates for FY25/FY26. We expect APSEZ to report 11% growth in cargo volumes over FY24-26. This would drive a CAGR of 14%/15%/22% in revenue/ EBITDA/PAT over FY24-26. We reiterate our BUY rating with a revised TP of INR1,850 (based on 20x FY26E EV/EBITDA).

APSEZ delivers in-line performance led by growth across ports; volumes grow 2x of industry

* During the quarter, APSEZ clocked cargo volume of 109mmt (up 8% YoY), primarily driven by Containers (up 18% YoY) and Liquids & Gas (up 11% YoY). APSEZ recorded a volume loss of 5.7mmt at the Gangavaram Port due to a worker strike in Apr-May’24, which returned to normalcy in Jun’24.

* APSEZ's domestic cargo volumes grew by 9% YoY compared to 4% YoY growth in India's overall cargo volumes. The proportion of non-Mundra domestic ports in the overall cargo distribution increased to 47% in 1QFY25 from 41% in 1QFY24.

* The company has secured two new port concessions and a port O&M contract in 1Q. It targets cargo volumes of 460-480mmt in FY25.

Last-mile connectivity to bolster growth in the Logistics business

* In 1QFY25, Adani Logistics (ALL) posted ~13% YoY growth in revenue and EBITDA margins of 25% (28% in 1QFY24).

* ALL recorded its highest-ever quarterly rail cargo volumes in 1Q, with container volumes reaching 0.16m TEUs (up 19% YoY) and bulk cargo exceeding 5.56mmt (up 28% YoY).

* ALL expanded its services to cover container train operations, container handling in logistic parks, and warehouses offering storage and trucking solutions. With 12 multi-modal logistics parks, 131 trains, 2.9m sq. ft. of warehousing space, and 1.2mmt of grain silos, ALL aims to establish a nationwide presence by further developing logistic parks and warehouses.

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html

SEBI Registration number is INH000000412