September 20, 2024
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Stock Market

How big is Adani Ports?

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Stock Market

How big is Adani Ports?

Trade across the world happens through majorly through sea routes. It helps to transport large and heavier goods passing many countries and regulations. Globalization has helped people transfer ideas, goods and services, technology, cultures, and others worldwide.

However, the port is a gateway for any country to import and export. Owning a port controls a huge supply chain which many companies and people rely on daily. In this article, we will look at Adani Ports & SEZ and look into their financials, outlook, and their business size.

Company Overview Of Adani Ports

Adani Ports and Special Economic Zone(APSEZ), is under the umbrella of Adani Group. They carry out operations and development of terminals and ports. They operate logistics parks in multi-products, especially in SEZs. Adani Ports offers services like breakbulk cargo, dry bulk cargo, container cargo, marine and liquid cargo, and dredging.

Their operational ports are situated in places like Mundra, Tuna, Hazira, Dahej, Vizhinjam, Murmugao, Ennore, and Kattupalli ports. They also provide logistics services which include contract logistics, inland container depot, inland waterways, and coastal shipping. APSEZ operates in countries like India, Bangladesh, Australia, Myanmar, and Singapore. The company is headquartered in Ahmedabad.

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Industry Overview

The Indian government actively supports port industry development. It allows 100% FDI for port projects and offers a 10-year tax break for businesses involved in port creation and operation. In India, there are around 12 major ports and 212 non-major ports. The central government manages major ports, while states oversee non-major ports.

Investments and cargo traffic are increasing, benefiting service providers in operations, maintenance, and marine assets. Port capacity is expected to grow 5-6% annually until 2022, adding 275-325 MT.

The government promotes domestic waterways as a cost-effective and sustainable freight option, aiming to operationalize 23 waterways by 2030. The Sagarmala project, launched in 2016, plans 574 projects worth US$ 82 billion between 2015 and 2035. It aims to reduce logistics costs and optimize infrastructure investment. The program targets enhancing India’s port capacity to over 3,300 MTPA by 2025, including 2,219 MTPA at major ports and 1,132 MTPA at non-major ports by 2024-2025.

How big is Adani Ports?

Adani Ports controls one of the largest ports in India. They are even diversfying into other ports in India as well as countries. They entered a joint venture with Gadot in Israel to buy Haifa Port which handles half of the country’s cargo, which is strategically located near the Suez Canal. Owning ports brings a lot of leverage in terms of control and power.

Earlier, Adani ports were in discussions in Bataan, Philippines. In the previous year, they joined a deal with Institution DFC to fund Colombo West International Terminal for USD 553 million. In FY24, around 721 million tonnes from non-major ports and 818 million tonnes from major ports collectively 1,539 million tonnes. The market share of the APSEZ is around 27.29% of total India’s cargo volumes in FY24.

As of the latest reports, APSEZ has an installed capacity of approximately 627 MMT per year across its ports. In fiscal year 2024, APSEZ handled a record of around 420 MMT of cargo, marking a 24% increase from the previous year.

Mundra Port alone contributed significantly, handling over 179.6 million tonnes of cargo, including 7.4 million TEUs (twenty-foot equivalent units) of container cargo. APSEZ accounts for about 24% of India’s total port capacity and plays a crucial role in the logistics and supply chain sectors of the country.

They employ around 2,919 people and are one of the largest port operators in the world. Mundra accounts for around 44% of the total domestic cargo volumes for Adani Ports in FY24. The cargo volume share from the East Coast has increased from 15% in FY19 to around 43% in FY24. This makes the supply chain more diversified.

Financials and its segments Of Adani Ports

The company reported Rs. 26,710.56 crore in FY24 compared to Rs. 20,851.91 crore in FY23. The Net Profits stood at Rs. 8,103.99 crore in FY23, a YoY increase of 50.32% from Rs. 5,390.85 crore in FY23.

Adani Ports has improved on the expenses YoY with major expenses related to Operating expenses such as Fuel charges, Waterfront charges, Custom establishment charges, cargo freights, etc. The second highest expense is employee benefit expenses in the operations. Interest cost has increased YoY and depreciation cost is around 14.55% of the operational revenue in FY24.

The Operating Profit margin has slightly reduced to 59% in FY24 from 62% a year ago. Meanwhile, PAT Margins have improved from 26% in FY23 to 30% in FY24. There was an exceptional item related to the employee’s retirement settlement expenses and foreign currency translation reserve as per the Ind AS framework.

The EPS improved from Rs. 24.58/share in FY23 to Rs. 37.55/share which increased shareholders value. The RoE in FY24 stood at 16% compared to 14% in FY23. Their debt-to-equity ratio has improved from 1.09 in FY23 to 0.87 in FY24, the debt reduction improves the capital structure of the company.

Adani Ports earn the majority of their revenue from Ports and SEZ activities with a contribution of 90.19% to the top line and the remaining 9.80% from others in FY24.