Adani Group is one of the biggest corporate groups in India. If you are an active trader or an investor in the market, you would have thought about investing in at least one of Adani’s companies. And why not? The rise of Adani Group over the years is historic and a revolutionary story itself. We are well aware of Reliance and Tata companies, now it’s time to respect the beloved Adani Group and learn what it’s one of the biggest has to offer. Today, we dig deeper into Gautam Adani’s crown jewel company, Adani Ports and Special Economic Zone Limited.

About APSEZ

This entity was established on 26 May 1998. In the last 22 years, it has shown exceptional growth to become India’s largest private port and Special Economic Zone operator. The company has been listed on NSE and BSE since 27th November 2007. APSEZ is responsible for almost 25% of the total cargo movement in the country. 

They provide services across three verticals, i.e. Ports, Logistics and Special Economic Zones (SEZs). You would wonder how they cater the logistics? This happens with the aid of its subsidiary Adani Logistics Limited. This is the benefit of having several companies under one umbrella.

APSEZ currently operates at 11 domestic ports. From the Bay of Bengal to the Arabian Sea, Adani Ports are spread everywhere. The highest number of ports (4) are present in Gujarat. Other ports are present in states like Tamil Nadu (2), Goa, Kerala, Andhra Pradesh and Odisha. In totality, Adani Ports & SEZ offers over 400 MMTPA (Million Metric Tonne Per Annum) capacity. It is paired with over 4 Lakh square feet of warehousing.

Out of the 11 ports, Mundra Port which is in Gujarat is India’s largest commercial port. Here the company offers you Bulk & Break Bulk, Liquid Cargo, Container Cargo, LPG/LNG Cargo and Crude – Single Point Mooring. This Mundra Economic Hub is the largest multi-product SEZ, Free Trade and Warehousing Zone (FTWZ) and Domestic Industrial Zone which spreads over 8,000 hectares. 

Remarkable Recovery in the Market

Weekly Chart of Adani Ports & Special Economic Zone
  • Due to Covid-19 pandemic, the share price of APSEZ fell to the 52-week low of Rs 203 on 23rd March 2020.
  • In less than 11 months, the stock has attained its all-time high of Rs 594.
  • The image below shows the weekly chart of Adani Ports. Since the last many weeks, the stock is making a new all-time high.
  • The curved yellow line shows the journey of the stock over the last 11 months.
  • The promoters of Adani Ports hold more than 60% of the total stake in the company. But, most of the shares of the promoters’ are pledged shares. Pledging of shares means that the investors have taken a loan by submitting shares. Generally, this is considered as a negative signal for retail shareholders like you and me. 
  • A few weeks back, the management of the company stated that soon they will be paying their debt and freeing up almost all of their shares. Investors did not have many red flags before investing in Adani Ports. And, this commentary further increased the positive sentiments within the investors.
  • Adani Ports have expanded their business even during the pandemic. They have added five new container services; two at Mundra, two services at Hazira, and one at Kattupalli.

Positive Results Keep Flowing In

Consolidated net profit rose by 16% at Rs 1,577 crore on YoY (Year-on-Year) basis for the December quarter. The net profits by the end of the last quarter were Rs 1393 crore. Total revenue increased by over 10% YoY and by 25% when compared to the previous quarter. Revenue and profits for nine-month ending FY21 are more than what was recorded till December 2019. Thus, telling that even after Covid-19 lockdown, the company has performed exceptionally well to beat its previous years’ performance.

This success is based on many key pointers. One of those is a 37% rise in cargo volume as compared to the same quarter last year. This has helped the company to increase its market share from 25% to 28%. All India Cargo volume grew by only 5% from Q3FY20 to Q3FY21. But APSEZ’s cargo volume increased by a stunning 37% during the same period. The port of Mundra has alone recorded a growth of 25% during the third quarter. This shows how dominating performance the company has been able to put in.

(Source:Company Website)

“The strong and lasting recovery at APSEZ has been the cornerstone of our journey in the recent past. It’s a proven certitude that our business now operates closer to a pure-play utility. Our portfolio of assets, increasing market share in India, and pre-eminence of our network with leadership positions have an unparalleled value proposition.” – Karan Adani, Chief Executive Officer and Whole Time Director of APSEZ.

APSEZ ranked 14th globally out of 102 companies in the transportation and transportation infrastructure sector by Dow Jones Sustainability Emerging Markets Index. In fact, they have the highest EBITDA margin (70%) globally. 

Conclusion

The success of APSEZ tells us about their journey from a single port single commodity to an integrated logistics platform. The company aims to keep its EBITDA margin from ports above 71%. The Indian government also has the vision to manufacture and produce more in the coming years. They not only aim to be self-reliant but also become a net exporter. All of these things have benefitted Adani Ports and will keep on doing so in the future.

(Source)

Their revenue has grown at a yearly rate of 15% in the last five years. This is more than 13.5% which is the industry average. Its median sales growth is 27.38% of the last 10 years. A company which is outperforming its own industry shows the positive work put in by them. APSEZ looks like an interesting bet for sure. The way they conduct their business and the opportunities in the future both tells that Adani Ports might have a long way to go. With all the interesting upcoming projects, strong revenue growth, high margins for profits and government support, Adani Ports will surely reach greater highs.

You can find the company’s third-quarter results here. What are your opinions on Adani Ports and Special Economic Zone Limited? Let us know in the comments section!