Adani Ports Q3 Results Review - Inline; Well Placed To Surpass Volume Guidance Of FY24: Motilal Oswal

Motilal Oswal Report

Adani Ports and Special Economic Zone Ltd. reported a revenue growth of 45% YoY to Rs 69.2 billion in Q3 FY24 (in line). During the quarter, Adani Ports recorded ~44% YoY growth in cargo volumes to reach 108.6 million metric tonne.

Ebidta margin came in at 60.5% in Q3 FY24 versus our estimate of 59.5% (down 240 bp YoY, up 210 bp QoQ). While Ebitda grew 39% YoY to Rs 41.9 billion, Adani Ports increased 52% YoY to Rs 23.5 billion (our estimate was Rs 21.1 billion).

In Q3 FY24, port revenues grew 41% YoY to Rs 55.4 billion. Ebitda margins in the ports business stood at 71% in Q3 FY24 (70% in Q3 FY23). Logistics revenues grew 8% YoY to Rs 6 billion. Ebitda margins in the logistics business stood at 28% in Q3 FY24 (29% in Q2 FY23). During 9M FY24, revenue increased 32% YoY to Rs 198 billion, Ebitda increased 24% YoY to Rs 118 billion, and adjusted profit after tax stood at Rs 66 billion (+19% YoY).

Adani Ports reported a robust 9M FY24 by handling 311 mmt of cargo volume in the period. The management recently revised its FY24 cargo volume guidance to 400 mmt from ~380 mmt earlier. Further, through debt reduction, Adani Ports has achieved its net debt to Ebitda target of 2.5 times, well ahead of its given timeline and aspires to sustain this level in the future.

Adani Ports has a diversified cargo mix along with sticky cargo and customer base. The operational ramp-up at the recently acquired ports is expected to drive a 14% growth in cargo volumes over FY23-26.

This would drive a revenue/Ebitda/profit after tax compound annual growth rate of 19% over FY23-26. We marginally increase our estimates with improved growth outlook and reiterate our 'Buy' rating with a revised target price of Rs 1,470 (premised on 16 tims FY26E enterprise value/Ebitda).

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