Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adani Ports & Special Economic Zone Ltd (BOM:532921, Financial) reported its highest-ever revenue, EBITDA, and PAT for Q1 FY25.
- The company handled 109 million metric tonnes of cargo in Q1, marking an 8% year-on-year increase.
- Adani Ports & Special Economic Zone Ltd (BOM:532921) won two concession agreements to operate terminals in Tanzania and Deendayal Port.
- The logistics business expanded its warehousing capacity to 2.9 million square feet and added four rakes.
- CARE and ICRA upgraded the company's credit rating to AAA, and S&P upgraded its outlook to positive from stable.
Negative Points
- Gangavaram port faced operational challenges, being non-operational for 36 days in Q1.
- The logistics business margins fluctuated, with a decrease to 25% in the current quarter.
- The company faced a frivolous land recovery case in Gujarat Mundra Port, which is being contested in the Supreme Court.
- Haifa Port operations were impacted by geopolitical tensions, leading to a 42% drop in dry bulk and 22% in container volumes.
- The company has significant capex plans, including INR20,000 crores for the second phase of Vizhinjam, which may strain financial resources.
Q & A Highlights
Q: Could you give us an overview of the future potential pipeline for port development revenue and recent investments, particularly in Tanzania and Colombo?
A: We have been on the lookout for strategic opportunities and have developed ports on our own strength. We recently signed a concession agreement in Tanzania and have been operating the terminal for the past 1.5 years. In Colombo, construction is at an advanced stage and is expected to start by late FY25. Our investments are categorized into operational efficiency, capacity expansion, and new projects, aiming to reach 1 billion metric tonnes by 2030.
Q: What should we assume for Vizhinjam's volume this fiscal year and other upcoming ports?
A: Vizhinjam will be fully operational starting October, but full capacity utilization will be seen in FY26. Gopalpur will contribute from the next quarter. Despite challenges, we are on track to deliver our guidance for the year.
Q: What drives the variation in margins for the logistics business?
A: Margins fluctuate due to factors like contract repricing and busy season surcharges. The FCI contracts have a step-down pricing after 10 years, impacting margins. We expect margins to stabilize and improve in the coming quarters.
Q: Could you comment on the capex for the current year and its allocation?
A: We have guided a capex range of INR10,000 to INR11,500 crores, with allocations for ports, marine, logistics, and renewables. We are on track with our capex plans, focusing on digitalization, capacity expansion, and new projects.
Q: How do you view the land recovery situation with the Gujarat state government?
A: We have contested the case, which we consider frivolous. The Supreme Court has taken action, and we will follow the due process of law.
Q: Could you clarify the auditor's qualification being dropped?
A: An independent review by a lawyer and an accounting firm was conducted. Based on their reports and the full context, the auditors dropped the qualification, and it is now an emphasis of matter (EOM).
Q: How do you plan to fund the USD325 million maturity bonds and any plans to access the US dollar debt capital markets?
A: We used our cash balance to repay the bonds and have no current plans to access the US dollar debt capital markets.
Q: What is the status of the Vietnam project and its investment timeline?
A: We are exploring opportunities in Southeast Asia, including Vietnam, but no decisions have been made yet. The project is still in the study stage.
Q: How are Haifa Port operations affected by increased tensions in the Middle East?
A: Haifa Port is operating 24/7, but geopolitical sanctions have impacted cargo volumes. We have seen a shift in business mix, with car imports increasing significantly.
Q: What are the expected full-year volumes for Mundra containers, and how sustainable is the volume growth?
A: We are confident in our guidance, with significant growth in container volumes at Mundra. The Indian economy's robust performance supports this growth, and we expect to maintain our market share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
