Buy Mundra Port & SEZ; Target Of Rs 162: KRChoksey.

KRChoksey is bullish on Mundra Port and Special Economic Zone (MPSEZ) and has recommended buy rating on the stock with a target of Rs 162 in its February 10, 2011 research report.

“Mundra Port and Special Economic Zone (MPSEZ), a flagship company of the Adani Group is the developer and operator of India's largest and fastest growing private sector Multi Cargo port (eighth largest in India in terms of FY10 cargo volumes). It is also developing the largest port linked SEZ contiguous to Mundra Port, with a notified area of ~15,995 acres. The company is actively bidding and developing ports/terminals on the west coast. MPSEZ recorded a healthy Topline growth of 33% q-o-q and 9% sequentially. The Company’s EBITDA margins improved by 253 bps q-o-q and registered a growth of 33% yoy coupled with a 40% increase in PAT in line with our estimates. The growth in margins is on the back of decrease in employee cost and other administration expenses. The net margins improved by 237bps y-o-y on the back of higher operating profitability and lower effective tax rate. MPSEZ’s overall market share improved from 6.75% to 8.28% y-o-y, while container business market share improved from 11.7% to 14.1% y-o-y.”

“The company handled 12.4 MMT of cargo in this quarter, a growth of 26% y-o-y. Crude volumes declined sharply by 28% y-o-y to 0.98 MMT this quarter. Container volumes increased 44% y-o-y to 3.92 MMT. Dry cargo performed exceptionally well as the volumes grew by 42% y-o-y to 5.66 MMT whereas Bulk Cargo grew by 31% yoy to 7.51 MMT. The SEZ income was in line with our expectations at Rs 8 crores this quarter. Crude volumes are expected to pick up from the next quarter on the back of commissioning of Bhatinda Refinery and expansion of IOC’s Panipat refinery. Operations commenced at world’s largest fully mechanized 60MMTPA coal terminal through which MPSEZ will cater to an estimated coal traffic of over 10mt for Adani Power and Tata Power in FY12. Coal volumes for MPSEZ are expected to grow in the coming quarters. On the MoEF show cause notice to MPSEZ in Dec-10 seeking clarifications on the impact of operations on mangroves around the port area and construction of certain buildings without obtaining Coastal Zone Regulation notification, MPSEZ has submitted its reply within 10 days of receipt and is awaiting a further response from the ministry. We do not see any operational hindrance on this matter as the issues raised by the MoEF are pertaining to an area located at a distance from the west port.”

“Mundra port is slated to become the largest standalone port in terms of the handling capacity by FY12-13 and based on our projections it would handle more than 100 mtpa by FY14 making it one of the largest standalone ports in terms of the cargo handled. Growth will be mainly driven by the capacity expansion (coal terminal, dedicated container terminals for car exports, bulk cargo port at Dahej, ICDs at new locations, and additional rakes at Adani Logistics). We believe the company exhibited a strong performance in Q3FY11 in line with our expectations and we maintain our BUY recommendation on MPSEZ considering its fair valuation using SOTP with a 12-month price target of Rs 162/Share, a potential upside of 25% from current levels,” says KRChoksey research report.

Source : moneycontrol.com