Maintain ‘buy’ on Adani Ports, target Rs 334: Edelweiss

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Published: January 9, 2016 12:06:00 AM

Adani Ports and SEZ (Adani) has announced expansion of its existing capacity at Container Terminal 3 (CT3) to 3.1mn TEUs, of which 1.2mn TEUs will exclusively handle transhipment containers.

Adani Ports and SEZ (Adani) has announced expansion of its existing capacity at Container Terminal 3 (CT3) to 3.1mn TEUs, of which 1.2mn TEUs will exclusively handle transhipment containers. The terminal’s current capacity is 1.5mn TEU and it handled ~900k TEUs cargo in FY15 with transhipment accounting for 30% of the same. While the finer commercial details of expansion are being finalised, we expect a similar revenue sharing model as the existing JV terminals. However, factoring in lower margin in transhipment cargo and advancement of capex, we have marginally tweaked the TP to Rs 334 (Rs 337 earlier).

Mediterranean Shipping Company (MSC), the JV partner in CT3, handles 6.1mn TEUs of transhipment cargo largely through Middle– East ports (Jebel Ali, Dubai, Salalah, Oman) catering to Afro-Asian markets. The company is planning to shift some of this cargo to Mundra. Adani expects to handle 1.2mn TEUs of transhipment cargo over the next 3-4 years against current volume of ~300k TEUs. With CT3 operating at ~70% utilization, capacity expansion is being undertaken which will commence in mid CY17.

Mundra Port’s current container capacity of ~4mn TEUs is operating at 75% utilisation. With the transhipment dedicated terminal of 1.2mn TEUs and the under-construction CT4 with 1.5mn TEUs (in JV with CMA-CGM), Mundra will be the largest container port in India with ~7mn TEU capacity by CY17. While the transhipment cargo could incrementally aid ~1mn TEU, another ~1mn TEU is expected from EXIM trade.

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