Adani Ports and SEZ Rating: reduce; Weak performance was along expected lines APSEZ reported an expectedly weak print in Q4. Its capex plan aims to provide the path for APSEZ to (1) reach 500-mn ton port volume target by FY2025 from 350-360-mn FY2023 guidance and (2) become a transport utility with a strong logistics offering. Up-fronting of capex and fluid market conditions would make the path to 16% RoCE target for 2025 from current 11% difficult, more back-ended and less clear. We retain operational estimates and increase FV on roll-forward to Rs 735. Reduce stays, with 15X FY2023E EV/Ebitda trading valuations. Weak end to the year on expected lines Guidance reasonable on volumes and aggressive in terms of timing on capex Volume guidance for FY2023 appears reasonable to us at 350-360 mn tons versus 312 mn tons in FY2022. The guidance lacks the punch on a low y-o-y base. The guidance on capex suggests a sharp jump to Rs 86 bn or more than 2X versus FY2022 levels. Key movers of the incremental Rs 50 bn capex are warehousing (Rs 25 bn capex), Gangavaram (Rs 8 bn) and Mundra+Dhamra (Rs 12 bn). From a port perspective, the capex intensity is doubling in Mundra and Dhamra. In logistics, the focus is more on warehousing – equipment capex to build in land bought by Adani Ports last year. The up-fronting of capex and fluid market conditions imply that realisation of the business returns envisaged on the incremental capex may take time. This can impact the realisation of the 16% RoCE target by FY2025. Currently, the APSEZ portfolio operates at 11% RoCE (down 100 bps y-o-y). We retain estimates and increase FV We increase our FV to Rs 735 (from Rs 710), largely on account of six months of roll-forward and higher value for Gangavaram asset, with half of the increase negated by higher capex assumptions. Retain Reduce given punchy 15X FY2023E EV/Ebitda entry valuations.
The move had also prompted the country’s largest organised retailer Reliance Retail to step into the value retail segment with Yousta, which was announced on Thursday. Like Intune, Yousta began its operations in Hyderabad, with plans to expand across the country. Intune has three stores – two in Hyderabad and one in Dombivli, near Mumbai, with plans to add another three more outlets in the coming months.
Nair had admitted on a recent earnings call that the apparel segment in general was witnessing moderation and that the value retail foray by Shoppers Stop could help the company tap into the growing trend for affordable fashion and lifestyle products, aiding sales growth.
That was an important statement for Shoppers Stop, which reported a nearly 37% year-on-year drop in net profit to Rs 14.5 crore in the June quarter of FY24, even as revenue grew only 4.8% versus the previous year to nearly Rs 994 crore.
On a yearly basis, the company had last reported a net profit of nearly Rs 114 crore in FY23 after three consecutive years of loss between FY20 and FY22 due to the Covid-19 pandemic. FY23 topline also jumped nearly 60% year-on-year to Rs 4,022 crore, the highest in six years, its results showed.