Adani Ports Q4 Profit Zooms 288% Over Strong Operating Performance

Adani Ports and Special Economic Zone (APSEZ) reported a consolidated net profit of Rs 13.2 bn for the quarter ended 31 March 2021.

The country's largest integrated logistics player had clocked a consolidated net profit of Rs 3.4 bn in the corresponding period of the previous fiscal year.

The company's consolidated net profit jumped 33% to Rs 50.5 bn in the year ended March 2021 (FY21) from Rs 37.9 bn in FY20.

On a consolidated basis, profit before tax (PBT) soared by 500% to Rs 15.4 bn in Q4FY21 as against Rs 2.6 bn in Q4FY20.

For the full fiscal year 2021, PBT stood at Rs 62.9 bn, up by 48%, compared to Rs 42.4 bn in the last year.

Revenue from Operations Increased

The company's March-quarter consolidated revenue from operations rose almost 24% to Rs 36.1 bn as against Rs 29.2 bn a year ago.

In FY21, total operating revenue grew by 6% from Rs 118.7 bn in FY20 to Rs 125.5 bn.

Its port revenue increased 12% to Rs 107.4 bn on account of 11% growth in cargo. Revenues from the logistics business stood at Rs 9.6 bn.

For Q4FY21, the company's port revenue increased 30% to Rs 31.2 bn, while revenue from logistics business declined 7% to Rs 2.7 bn.

Increased cargo volume, operational efficiencies enabled port earnings before interest, tax, depreciation, and amortisation (EBITDA) to grow by 15% from Rs 65.9 bn in FY20 to Rs 75.6 bn in FY21.

The company's port EBITDA margin for FY21 increased by 100 basis points (bps) to 70% due to optimal use of resources and operating efficiency.

Logistics business has reported an EBIDTA of Rs 2.3 bn in FY21 and maintained the EBIDTA margin at 24%.

Key Financial Highlights

Particulars (Rs in bn)	FY21	FY20	Growth (YoY)	Q4FY21	Q4FY20	Growth (YoY)
Cargo (in MMT)	247	223	11%	73	58	27%
Operating revenue	125.5	119	6%	36.1	29.2	24%
Consolidated operating EBITDA	80.6	75.7	7%	22.9	16.4	39%
Port Revenue	107.4	96.1	12%	31.2	24	30%
Port EBITDA	75.6	65.9	15%	21.7	15.3	42%
Port EBITDA margin	70%	69%		69%	64%
PBT	62.9	42.4	48%	15.4	2.6	499%
PAT	50.5	37.9	33%	13.2	3.4	288%

Data Source: Investor Presentation

Equity dividend

The board has recommended a dividend of Rs 5 per equity share of Rs 2/- each fully paid-up for the financial year 2020-21 subject to the approval of shareholder at the ensuing Annual General Meeting.

Operational Highlights - FY21

Adani Ports outperformed the market and grew by 11%, on the back of 16% growth in container and 9% growth in dry bulk cargo.

It registered a record throughput of 247 million metric tonnes (MMT) and achieved a market share of 25%, a gain of 4%.

APSEZ ports across the Indian coastline registered positive growth. While east coast ports grew by 42%, west coast ports grew by 3% outperforming the nearby major ports.

APSEZ handled highest ever container volume of 7.2 m twenty-foot equivalent units (TEUs) during the year and achieved a market share of 41%, a gain of 5%.

Mundra Port continues to be the largest container handling port in India and handled 5.7 m TEUs which is almost nearly 1 m TEUs more than Jawaharlal Nehru Port Trust (JNPT).

In April 2021 Adani Logistics announced a strategic and commercial partnership with e-commerce major Flipkart, to strengthen its supply chain infrastructure.

As part of this partnership, Adani Logistics will construct a massive 5.3 lakh square foot of fulfilment centre by leveraging state-of-the-art technologies in its upcoming logistics hub in Mumbai.

Mergers and Acquisition

In April 2021, APSEZ signed an agreement to acquire balance 25% stake in Krishnapatnam Port. The acquisition is expected to be completed in Q1FY22.

In March 2021, the company also announced the acquisition of 100% stake in Gangavaram Port. The acquisition is expected to be completed in Q3FY22.

Upon completion of the transactions both Krishnapatnam Port and Gangavaram Port will be wholly owned subsidiaries of Adani Ports.

Debt Profile of Adani Ports

Gross debt increased on account of new issuance of US dollar bond of 750 m (coupon of 4.2% and 7-year bullet maturity) for the Krishnapatnam Port acquisition and rupee bonds for capital expenditure (Capex) program.

Average maturity of debt improved from 5.2 years to 6 years on account of refinancing of US$ 500 m bond (coupon of 3.1% and 10-year bullet maturity) of one year ahead of time.

Average cost of borrowing has decreased from 6.9% to 6.7% due to new issuances and refinancing with lower coupons.

Equitymaster's View on Adani Ports Right Now...

We reached out to Aditya Vora, Research Analyst at Equitymaster, for his view on the company's quarter four performance.

Here's what he has to say -

• "Increased focus on ramping up the logistics business would be the key growth driver going forward. The company is targeting a 25% revenue share from the logistics business over the medium term which is 3x the current size of the logistics business.
  
  It has also announced a partnership with Flipkart to construct a 0.5 m sq.ft. fulfilment warehouse in Mumbai. The centre is likely to be operational by 3QFY22.
  
  We believe with recent acquisitions, increasing share of logistics business over the medium term and strong cargo and container volume run rate, Adani Ports will consolidate market share.
  
  Scaling up the logistics business is a key monitorable. While the stock is pricing in strong growth and market share gains in the future. Any delay in the ramp up of the logistics business could de rate the stock".

How the Stock Markets Reacted to Q4FY21 Numbers Today...

Shares of Adani Ports opened the day at Rs 775 on the BSE and Rs 772 on the NSE.

At the time of writing, shares of Adani Ports were trading down by 3.3% on the BSE.

At its current price, it's trading at a P/E of 41.9.

The share also touched its 52-week high of Rs 885 and 52-week low of Rs 203 on 7 April 2021 and 23 March 2020, respectively.

Over the last 30 days, the Adani Ports share price is down 0.5%. Over the last one year, the company's share price is up 177.1%.

About Adani Ports

Adani Ports and Special Economic Zone (APSEZ) is the largest commercial ports operator in India accounting for nearly one-fourth of the cargo movement in the country.

Its presence across 12 domestic ports in seven maritime states of Gujarat, Maharashtra, Goa, Kerala, Andhra Pradesh, Tamil Nadu, and Odisha is the most widespread national footprint with deepened hinterland connectivity.

The port facilities are equipped with the latest cargo-handling infrastructure which is not only best-in-class, but also capable of handling the largest vessels calling at Indian shores.

Through its subsidiary Adani Logistics, APSEZ operates three logistics parks located at Patli in Haryana, Kila-Raipur in Punjab, and Kishangarh in Rajasthan.

With the ability to handle 5 lakh twenty foot equivalent units (TEUs) annually, the Adani logistics business is growing at a rapid pace.

The company's integrated services across three verticals, that is, Ports, Logistics and SEZ, has enabled it to forge alliances with leading Indian businesses making APSEZ an undisputed leader in the Indian port sector.

For more details about the company, you can have a look at Adani Ports factsheet and quarterly results on our website.

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