Adani Ports and Special Economic Zone Ltd shares fell more than 3 per cent in early trade on Wednesday on the National Stock Exchange. This is on a day when the benchmark Nifty 50 index was up 0.50 per cent.
It was not without reason. The company’s March quarter results are lower than some analysts’ expectations. For perspective: Jefferies India Pvt. Ltd said in a report on 4 May, “4QFY21 Ebitda is 17 per cent below expectations, given lower margins but should recover as volumes rise and the April 2021 price hike reflects in FY22E.” Ebitda is earnings before interest, tax, depreciation, and amortization; a key measure of profitability for companies.
Adani Port’s Ebitda for the March quarter increased by 31 per cent over the same period last year to Rs2,287 crore. The company’s revenues have increased by almost 24 per cent year-on-year to Rs3,608 crore.
Further, Adani Ports’ guidance for the financial year 2022 (FY22) is disappointing, said an analyst requesting anonymity. “The run rate for FY22 guidance is the same as seen in the second half of FY21 (H2FY21). H1FY21 volumes were anyway weak.” In its outlook for FY22, the company said it expects volumes to be in the range of 310-320 million tonnes (mt) (including 10 mt of Gangavaram port from Q4FY22). In FY21, Adani Ports cargo volume stood at 247 mt, representing a year-on-year increase of 11 per cent.

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In addition to that, analysts from Edelweiss Securities Ltd said in a report on 4 May, “Management’s FY22 revenue guidance of 35 per cent growth is 4 per cent lower than our forecast, perhaps as it factors some uncertainty due to the second covid wave.” To be sure, shares of Adani Ports have seen a substantial jump of almost 89 per cent from its pre-covid highs seen in January 2020. According to Edelweiss, “Adani Ports has navigated the pandemic year with strong market share gains and new acquisitions, thereby further fortifying its numero uno position in the ports space.”
Jefferies believes three drivers will re-rate the stock from current levels. Those are: Market share rise from 21 per cent to 32 per cent with recent acquisitions by FY25E; return on equity back at 20 per cent with asset sweating; and further drop in promoter pledges.

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