Adani Ports and SEZ’s (APSEZ) Q2FY16 consolidated PAT at R670 crore came in line with our estimate, boosted by ~R310 crore SEZ revenue, negating the impact of lower volumes—37MT versus ~42MT estimate. Management reiterated impact of lower coal imports on cargo volumes to be mitigated largely by coastal shipping as well as imports by coastal power plants (AEL coal trading volume growth vindicates this). We continue to believe that APSEZ will not only leverage its strong asset- based balance sheet, but also its expertise to pursue growth opportunities. We have recalibrated volumes, resulting in revised target price of INR351 (INR367 earlier). Maintain ‘buy’.
APSEZ’s consolidated cargo volume at ~36.5MT grew 4% YoY, but fell 8% QoQ due to lower coal volumes and slow ramp up at Dahej. Mundra container volumes at 732k TEUs grew 10% YoY despite tepid ExIm container market, which grew mere ~2%. Apart from gaining market share, transshipment cargo (~140k TEUs) handled at Mundra helped the company sustain such growth rates. While cargo at Dahej was 1.2MT against 3MT estimated, Dhamra and Hazira volumes were on track. Adjusted for the INR3.1bn SEZ land sale income, consolidated Ebitda margin came in line at 62%.
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