Q1 Results: Adani Ports Pares Volume Growth Outlook Amid Slowdown
The sun sets over the Jawaharlal Nehru Port, operated by Jawaharlal Nehru Port Trust (JNPT), in Navi Mumbai, Maharashtra, India. (Photographer: Dhiraj Singh/Bloomberg)

Q1 Results: Adani Ports Pares Volume Growth Outlook Amid Slowdown

Adani Ports & Special Economic Zone Ltd. said full-year volumes will be at the lower end of its guidance amid a slowdown in the economy.

The port developer and operator aims to achieve 10 percent volume growth in financial year ending March 2020 against the 10-12 percent guided earlier, according to a post-earnings conference call with analysts. The company, however, maintained the full-year guidance for revenue, Ebitda and capital expenditure.

Adani Ports pares outlook even as higher volumes, rise in other income and foreign exchange gains buoyed profit in the quarter ended June. Its cargo volumes rose 18 percent to 57 million metric tonnes—the highest ever.

Also, most analysts cut their target prices for the company on weaker growth outlook and economic slowdown.

Here’s what they have to say about Adani Ports’ first-quarter performance:

Citi

  • Maintains ‘Neutral’ but cuts target price to Rs 416 from Rs 417 apiece.
  • Strong core port volume and Ebitda growth.
  • Cargo growth was well diversified in first quarter.
  • Sees initial signs of slowdown; expects 10 percent consolidated cargo growth in FY20.

Macquarie

  • Maintains ‘Outperform’ but cuts target price to Rs 470 from Rs 472 apiece.
  • Volume growth led by coal, while container reported slowest growth in many years.
  • Large energy basket poses challenge for FY21 volume growth.

Nomura

  • Maintains ‘Neutral’ and cuts target price to Rs 415 from Rs 460 apiece.
  • Cuts FY20/21 revenue estimates by 2 percent each due to lower volume assumptions.
  • Results beat street estimates, but trade outlook weak.
  • Volumes mostly driven by coal; remaining volumes, especially in Gujarat, seems weak.

HSBC

  • Maintains ‘Buy’ but cuts target price to Rs 450 from Rs 470 apiece.
  • Strong Ebitda growth offset by higher interest and depreciation.
  • Market share gains and diversified mix to drive double-digit cargo growth.
  • Maintains Ebitda but lower net profit estimates on higher interest.

CLSA

  • Maintains ‘Buy’ with a target price of Rs 510 apiece.
  • Weak economy sees lower end of guidance; gasification on track.
  • Committed to its lofty buyback, which is key to return-on-equity improvement.
  • Mundra port volume rebounded and rise in share of other ports aids sustainability.

BofAML

  • Maintains ‘Buy’ and hikes target price to Rs 477 from Rs 475 apiece.
  • First quarter earnings beat; strong volume growth continues.
  • Growth outlook moderates but valuations look attractive.
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