CREDIT RESEARCH REPORT

• Total port capacity more than 1500 million tones

• APSEZ is India's largest commercial port operator, with best-
in-class operational efficiency
• APSEZ has spare capacity and can fund its large capex plan
from operational cash flow
• It accounted for 21% of the country's seaborne cargo in FY19
• APSEZ's portfolio is mainly private ports, which have the
freedom to fix their own tariffs.
• APSEZ's capacity is sufficient to support medium-term
throughput growth
Financial Analysis

• Strong client retention by providing integrated services for

a diverse range of cargo.
• Allows the Company to capture revenue from additional
services and charge premium for a superior bundled
service.
• Only company in India to develop and operate more than
326 kms of private railway line.
• Long standing relationships with clients strengthened by
ability to provide integrated solutions.
• Successfully diversified cargo mix through the client
relationships and strategic partnerships.
Liquidity Analysis

Ratios 2015 2016 2017 2018 2019

Current Ratio 2.44 3.93 6.28 6.91 8.94

Current 1.87 1.57 3.05 5.58 1.57

Ratio(Incl. ST
Loans)}

Quick Ratio 2.40 3.60 5.52 6.41 8.40

Liquidity Analysis

• From the above table, the analysis leads to

following conclusions:
i. The current ratio indicates the company being able
to meet its short-term obligations.
ii. Increase in quick ratio shows the company is
financially secure and can quickly convert
receivables into cash.
iii. Declining fixed asset turnover ratio indicate over
investment in fixed assets.
Corporate Governance
• Company's Philosophy on Code of Governance
– Corporate Governance is about meeting our strategic
goals responsibly and transparently, while being
accountable to our stakeholders.
– The main tenets of Corporate Governance Philosophy:
• Courage: we shall embrace new ideas and businesses.
• Trust: we shall believe in our employees and other
stakeholders.
• Commitment: we shall stand by our promises and adhere to
high standard of business.
• The Board currently comprises of 10 (ten) Directors out of
which
– 3 (three) Directors are Executive Directors,
– 2 (two) are Non-Executive, Non-Independent Director
and
– Remaining 5 (five) are Independent Directors.
• Independent Directors are Non-Executive Directors as
defined under Regulation 16(1)(b) of the Listing Regulations
• The Board of Directors met 5 (five) times during the year
Committees of the Board

• The Board supervises the execution of its

responsibilities by the Committees and is
responsible for their action.
• Audit Committee
• Nomination and Remuneration Committee
• Stakeholders’ Relationship Committee
• Sustainability and Corporate Social Responsibility
Committee
• Risk Management Committee
• Transfer Committee
Board of Directors

Mr. Gautam Adani (Chairman and Managing Director)

• more than 33 years of business experience.
• ambitious and entrepreneurial vision, coupled with great vigour and hard work

Mr. Rajesh Adani (Non-Independent and Non-Executive Director )

• associated with Adani Group since its inception.
• in-charge of the operations
• responsible for developing its business relationships.

Mr. Karan Adani (Whole-Time Director)

• holds a degree in economics from Purdue University, USA.
• responsible for the strategic development of the Adani Group and day to day
operations
Dr. Malay Mahadevia (Whole-Time Director)
• He has been working with the Company since 1992
• Worked on the development of the Mundra Port since its
conceptualisation.

Mr. Sanjay Lalbhai (Independent and Non-

Executive Director)
• Chairman and Managing Director of Arvind Limited.
• Member of the board of governors of the Indian Institute of
Management, Ahmedabad.
Prof. Ganesan Raghuram (Independent and Non-Executive
Director)
• Specialises in infrastructure and transport systems, logistics and supply
chain management
• Currently a Director of Indian Institute of Management, Bangalore
Mr. Gopal Krishna Pillai (Independent and Non-Executive
Director)
Mr. G. K. Pillai retired from the IAS as Union Home Secretary in 2011.

Mr. Mukesh Kumar, IAS (Non-Independent and Non-

Executive Director)
• an IAS Officer of 1996 batch.

Ms. Radhika Haribhakti (Independent and Non-Executive

Director)
• over 30 years of experience in Commercial and Investment Banking
• Founder Director of RH Financial Services

Ms. Nirupama Rao (Independent and Non-Executive Director)

currently a Global Fellow of The Wilson Center in Washington D.C. and a
Councillor of the World Refugee Council.
Was the first Indian woman to be appointed High Commissioner to Sri Lanka
and Ambassador to China
 Financial Analysis

REVENUE
EBITDA

12000
11,323.00 8000
10,925.00
7145 7067
10000 7000

8,439.00 6000 5692

8000
7,109.00
5000 4574
6,152.00
6000 3902
4000
4,830.00
2919
4000 3000

2000
2000
1000

0
0
FY14 FY15 FY16 FY17 FY18 FY19
FY14 FY15 FY16 FY17 FY18 FY19
 Financial Analysis

PROFIT AFTER TAX EARNINGS PER SHARE

4500 25

4006
4000 3920
3683
20 18.89 19.27
3500
17.74

3000 2914

15 13.99
2500 2314
11.18
2000
1740 10
8.45
1500

1000
5

500

0 0
FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19
Financial Analysis

ROCE

16
14.4
14 13.5
f(x) = 1.72 ln(x) + 10.39
11.9 12.1
12
10.7 11

10

0
FY14 FY15 FY16 FY17 FY18 FY19
Investment Summary

Goal: doubling throughput from 208mn tonne in FY19 to 400mn tonne by FY25

Purchase of a 75% stake in Krishnapatnam Port (India’s second-largest commercial private port,
after ADSEZ’s Mundra ) for Rs 5,520 crore deal will be completed by the first quarter of FY21

Adani Logistics, an arm of Adani Ports, is also buying the promoters 40.25% stake in
Snowman Logistics(market leader in cold chain services) for Rs 296 crore.
construction of the Vizhinjam transhipment port, the upgrade of Dhamra
and Kattupalli into multipurpose ports and the expansion of the logistics
business

APSEZ through its subsidiary, Adani Yangon International Terminal Co. Ltd,
signed a 50-year build, operate and transfer agreement with the
Myanmar government to develop an 800,000-TEU international container
terminal at Yangon Port

APSEZ has acquired Adani Agri Logistics Limited. APSEZ has also signed a
definitive agreement to acquire Innovative B2B Logistics Solutions Private
Limited. The transaction is expected to complete by first half of FY20
RISK
• WTO lowered trade forecast to 2.7% for FY20 from 3.0%
• High leverage of 3x Debt/EBITDA
• Slowdown in EXIM, global trade and weak cargo volume
growth
• Related party transactions ; concern for investors
• Contingent liability not provided for as on 31 March
2019 of INR 58bn
• Adverse forex movement
• Viability of import coal
• A downgrade of India's Country Ceiling from 'BBB-‘
• Adjusted net debt/EBITDAR above 5.0x due to
underperformance or a material reduction of average
concession life is expected
• Mundra Port, contributed 66% of the group's throughput and
serves as the gateway to landlocked north-western India
• APSEZ's revenue dropped by 4% yoy in FY19 as strong cargo
throughput growth of 15% was offset by a decline in logistics
revenue
• Rising commodity prices and market volatility gives rise to
business and credit risks.
• Trade restrictions and regulatory policies stemming from geo-
political events that can curb seamless functioning