Adani Ports and Special Economic Zone Share Price

Adani Ports and Special Economic Zone Ltd. Fundamental Analysis

In this guide, we will consider Adani Ports & SEZ Ltd., its business model, and industry fundamentals so as to make a decision about whether or not it would be an appropriate investment for you.

Adani Ports and Special Economic Zone Ltd.

Adani Ports and Special Economic Zone Limited (APSEZ) is an Indian multinational port operator and logistics company, which is a constituent of the Adani Group. Established in 1998, it has become the biggest privately managed port operator in India with twelve ports and terminals.

APSEZ manages India’s initial port-centered Special Economic Zone (SEZ) situated in Mundra and the foremost deepwater transshipment port located in Thiruvananthapuram.

The company has a large number of services it offers such as dry bulk cargo, breakbulk cargo, liquid cargo, container cargo, dredging and marine. It also operates three inland container depots (ICD) through its subsidiary Adani Logistics Ltd.

APSEZ is famous for its work on environment conservation with a variety of redevelopment activities such as mangrove afforestation projects aimed at making all ports and townships run on 100 percent renewable energy.

Is the Port Operator Sector a Goldmine Investment?

The Port Operator Sector in India is showing promising signs for investment. With its strategic location on the world’s shipping routes and a coastline of about 7,517 km, India has a strong footprint in the global maritime industry.

The government has introduced several fiscal and non-fiscal incentives to encourage the development of ports, inland waterways, and shipbuilding. The Maritime India Vision 2030 and Sagar Mala Program are some key initiatives that can enhance the sector with investments worth over Rs. 4 trillion ($123 billion) respectively.

These initiatives aim to unlock additional potential such as annual revenue of $2.7 B from existing assets and creating jobs, targeting 2 Mn direct and indirect jobs by 2030.

In India, the maritime infrastructure is focused on by the government and there has been a solid growth in the port sector. In particular, Adani Ports and Special Economic Zone Ltd is an outstanding investment choice because of these developments. It has consistently recorded good financial performance coupled with major investments in this sector which makes it well-positioned for future growth.

Who are Adani Ports & SEZ competitors in the Port Operator Sector?

Some of the competitors that Adani Ports & Special Economic Zone Ltd. faces in the Port Operator Sector are:

• Gujarat Pipavav Port Ltd.
• JSW Infrastructure Ltd.
• GMR Airports
• RITES
• Hutchison Ports
• DP World

History of Adani Ports & SEZ Limited

Here’s a brief history of Adani Ports & SEZ Limited:

• Incorporation: Adani Ports and Special Economic Zone Limited (APSEZ) was incorporated as Gujarat Adani Port Limited on May 26, 1998.
• Product Range: APSEZ operates in various sectors including port operation, maritime transport, logistics, and dredging. It has shifted from B2B to B2C businesses, with a gas distribution network serving key geographies across India, an electricity distribution network powering India’s financial capital, and operations managing and developing eight airports in the country.
• Infrastructure: APSEZ is India’s largest commercial port operator, accounting for nearly one-fourth of the cargo movement in the country. It operates across 13 domestic ports in seven maritime states of India. The port facilities are equipped with the latest cargo-handling infrastructure capable of handling diverse cargo, from dry cargo, liquid cargo, and crude to containers.
• Certifications: APSEZ has been certified for its Environmental Management Systems.
• Awards and Recognition: APSEZ was awarded the ‘honorary special mention’ at the national CSR award ceremony conducted by the Ministry of Corporate Affairs in New Delhi. This award was given for 'CSR in Challenging Circumstances' in the western region. It recognized the company's efforts in improving the incomes and living standards of the fishing community in Gujarat.

Company Profile of Adani Ports & SEZ Limited

Pros:

• Stock Performance: Adani Ports & SEZ stocks have shown a positive trend, with significant returns over the past few years.
• Credit Rating: The company has attained India’s first AAA rating in the private infrastructure space, indicating strong creditworthiness and the capacity to repay investors.
• Business Growth: There’s a robust business model and strong growth in operations with healthy profitability. The company has also shown a compounded annual growth rate (CAGR) of 15% from FY19-FY24.
• Market Leadership: Adani Ports is the largest port developer and operator in India by volume, with a total capacity of 607 MMT and a 27% volume market share.

Cons:

• Debt Levels: As of the latest financial data, Adani Ports & SEZ has a leverage ratio of 2.5x Net Debt to EBITDA. While this is within the guided level, it indicates a significant amount of debt that could be a concern for risk-averse investors.
• High Valuation: With a substantial increase in PAT (Profit After Tax) by 65% year-over-year to ₹8,104 crores, the company’s valuation might be quite high. High valuations can lead to limited upside potential and increased downside risk if the company’s future performance doesn’t meet market expectations.
• Concentration Risk: Investors with a significant portion of their portfolio in Adani Ports & SEZ may face concentration risk. This means that any negative developments specific to the company or the sector could disproportionately affect their investment portfolio.

The Finances

Here’s a summary of Adani Ports & SEZ Limited financial information as of June 2024:

Shareholding pattern of Adani Ports & SEZ Limited

As of the latest data, the shareholding pattern of Adani Ports & SEZ Limited is as follows:

• Promoters: Hold 65.9%
• Foreign Institutional Investors (FII): 15.0%
• Domestic Institutional Investors (DII): 11.8%
• Public: 7.3%

Peer Multiple Comparison

Here are some of the key competitors of Adani Ports & SEZ Limited and their respective financial metrics: