APSEZ Q2 PAT grows by 65%, Record Revenue and EBITDA

Ahmedabad, 1 November 2022: Adani Ports and Special Economic Zone Ltd (“APSEZ”), the largest transport utility in India, today announced its results for H1 FY2023.

All numbers include Gangavaram port numbers; # EBITDA excludes forex mark-to-market loss of Rs 370 Cr in current period and Rs 53 Cr of forex gains in FY22

“H1 FY23 is a record half-year in APSEZ’s history, with the highest ever cargo volume, revenue and EBITDA. Extending this strong performance into October, APSEZ achieved 200 MMT of cargo through-put within seven months, another new milestone,” said Mr. Karan Adani, CEO and Whole Time Director of Adani Ports and Special Economic Zone.

For H1 FY23, this record cargo volumes have resulted in a 24% Y-o-Y jump in Port EBITDA, while the EBITDA of the logistics business jumped 57% Y-o-Y. The margin expansion of the logistics segment continued with a 470 bps Y-o-Y jump on the back of better utilization of assets and increased share of the GPWIS revenue stream.

The volume growth will be further fueled by the recently commissioned facilities of APSEZ, which include – (i) 6 lakh TEU container terminal facility at Gangavaram, and (ii) liquid storage tanks at Katupalli, that have a Take-or-Pay contract. The scheduled commissioning of 5 MMT LNG terminal in Dhamra by the year end (with a Take-or-Pay contract) is another growth catalyst.

The logistics business is set to continue growing with improved utilization of assets, particularly – (i) the Kila Raipur MMLP, where the operations were restarted in Dec 2021, and (ii) the assets commissioned in H1 FY23, which include the Taloja MMLP, three agri-silo terminals, warehousing capacity of 0.6 Mn sq. ft, six new trains and 900 trucks. The successful integration of MMLP Tumb with Adani Logistics (ALL) in October and addition of more trains during H2 FY23 will also add material volumes.

In the current financial year, APSEZ signed a concession agreement for berth mechanization  at Haldia port taking our India footprint to 13 locations. We also received a LOI for the Tajpur Port, a greenfield development that we expect to commission in the next 5 years. Adani Agri Logistics (ALL) received a LOA from the Food Corporation of India (FCI) to build four silos, which will take our total silo capacity to 1.53 MMT and enable our presence across 24 locations. ALL has also been shortlisted as the H1 bidder for Loni ICD, which will take our total MMLP count to 10.

“APSEZ remains committed to its philosophy of ensuring sustainable growth in partnership with our key stakeholders. We are on track to achieve our full year guidance of 350-360 MMT cargo volumes and EBITDA of Rs 12,200-12,600 Cr,” added Mr. Karan Adani.

• KEY BUSINESS HIGHLIGHTS – H1 FY23 (YoY)

Operational Highlights

Ports Business 

• During H1 FY23, APSEZ handled 177.5 MMT of cargo which is 11% Y-o-Y growth.
• The growth in cargo volume was led by dry cargo (+18% increase), and containers (+5%). The automobile segment, though a small proportion of overall volumes, saw a 35% jump in volumes.
• The non-Mundra ports volumes grew at 14% Y-o-Y while Mundra growth rate was 7.5%; the non-Mundra ports contributed 54% to the cargo
• Mundra continues to be the largest container handling port with 3.28 Mn TEUs versus 2.96 Mn TEUs managed by JNPT during the first half of the year.

Logistics Business

•  Adani Logistics registered a 24% Y-o-Y growth in rail volume to 222,944 TEUs and a 43% Y-o-Y growth in terminal volume to 192,039 TEUs.
• The GPWIS cargo volumes almost doubled to 6.27 MMT on Y-o-Y basis.
• Operational MMLP count increases to nine with the recent addition of Tumb MMLP.
• Construction initiated on total of ~ 10 Mn sq. ft of warehousing capacity across seven locations, and two Agri container terminals in Bihar (Darbhanga and Samastipur).
• Given the placed orders for 82 more trains, the total train count at APSEZ is set to increase from 81 to 163.
• Trucks count increases to 900 (740 for container movement and 160 tippers).

Financial Highlights

Revenue 

• Consolidated revenue (including Gangavaram) grew by 15% Y-o-Y to Rs 10,269 Cr, despite the Rs 555 Cr decline in revenue from the SEZ business segment, which is also factored in our full year guidance for FY23.
• Cargo volume growth, improved realization, and addition of OSL enabled port revenue increase of 25% to Rs 8,967
• Revenue from the logistics business stood at Rs 721 Cr, a growth of 32% on account of improving container and terminal traffic, and also the bulk segment with overall increase in the rolling

EBITDA 

• Consolidated EBITDA (including Gangavaram) grew by 21% to Rs 6,551 Cr on the back of revenue growth for the Ports and Logistics business.
• Ports EBITDA grew 24% to Rs 6,236 Cr on the back of growth in port revenues.
• Logistics business EBIDTA grew by 57% to Rs 212 Cr, and the margin expanded by 470 bps to 4%. This was aided by increase in cargo volumes, cargo diversification, elimination of loss- making routes and operational efficiency measures.

 APSEZ’s Risk Management Approach

• During the quarter, the Company has took stock of its risk management approach towards foreign currency exposure.
• The Company has natural hedge i.e., sufficient future dollar linked revenue to meet the maturity date cash flows on debt in a financial year.
• The Company has applied (i) active hedging and (ii) designation of the bonds against natural hedge from future revenues.
• Pursuant to hedge designation, the company has recorded a part of the MTM FX losses amounting Rs 405 Cr (net of tax) directly in the Other Comprehensive Income, which will be moved to income statement in the year the designated forecasted sales occur. 

ESG Highlights

• Intensity improvements: In H1 FY23, emission intensity reduction of 43% and water intensity reduction of 64% from the base year FY2016. The renewable electricity share of electricity in H1 FY23 is around 13%.
• Progress on fuel switch: Out of 13 diesel cranes at Krishnapatnam Port, electrification of 4 was completed and purchase order of around 340 electric ITVs has been placed.
• Carbon offsetting: APSEZ issued fresh work orders for 800 Ha of mangrove plantation given the increase in its afforestation target to 5,000 Ha.
• Net-zero planning process: We are formulating our net zero plan for submission to the Science Based Target Initiative (SBTi). 

Other Business Updates 

Update on Haifa Port Company acquisition (HPC)

• Adani Ports and Gadot Group consortium (70:30 partnership) won the bid for acquisition of 100% stake in Haifa Port Company acquisition at a bid value of NIS 3.9 Bn (~USD 1.13 Bn).
• The implied EV/EBITDA multiple of the transaction is 7.5x, considerably lower than the trading multiple of APSEZ.
• This deal marks APSEZ’s entry into a developed market, in the busy Suez Canal, and will help the company expand its footprint in Europe.

Update on Ocean Sparkle acquisition (OSL)

• APSEZ has acquired 100% stake in Ocean Sparkle Ltd (OSL).
• OSL is India’s leading third-party marine services provider with 94 seaworthy vessels at its disposal, including 75 Tugs.
• OSL’s acquisition at an enterprise value of Rs 1,700 Cr translates into an EV/EBITDA multiple of 5.7x based on FY22 estimated EBITDA.
• With the transaction already completed, OSL’s financials are now consolidated with APSEZ.

Update on Gangavaram Port (GPL)

• Post approval from NCLT in October, Gangavaram Port Limited (GPL) is now fully integrated with APSEZ.
• The acquisition of GPL is priced at around Rs 6,200 Cr (517 mn shares @ Rs 120/share).
• The acquisition of 58.1% stake from DVS Raju & family has been through a share swap arrangement that resulted in issuance of around 47.7 mn APSEZ shares to the erstwhile GPL promoters.
• GPL is now fully consolidated in the APSEZ reporting from 1 April 2021 onwards. 

Awards

• APSEZ was recognized by the Chief Minister of Gujarat for its initiative on plastic waste collection from the villages around Mundra and its sustainable disposal.
• Adani Logistics has been awarded the ‘Best Rail Freight Service Provider’ and ‘Best Logistics Infrastructure and Service provider’ by the Government of India during the first-ever National Logistics Excellence Awards to private sector companies for its contribution in driving change and innovation in the logistics sector.
• APSEZ Mundra received “Gold Award for Environment Improvement” from the Sustainable Development Foundation.
• AVPPL received award under Environment Protection Category during the 22^nd Greentech Environment Awards 2022
• Dhamra Port won the “Annual Greentech Environment Award 2022”
• MIDPL received 12^th Exceed Energy Efficiency Award – Diamond Award.
• Adani Ennore Container Terminal Pvt Ltd received the Platinum Award under Energy Efficiency category of ‘Apex India Green Leaf Award 2021’.
• Adani Mormugao Port Terminal Pvt Ltd received the Gold Award under Energy Efficiency category from ‘Apex India Foundation’, Delhi.