Adani Ports reported operationally weak results given cargo mix impacted margins in Q4. Cash flow has improved with working capital reducing and management continues to make the right noises on FCF. Apr’20 volumes are down 20-25% (vs. management expectation) in the lockdown period and volumes are expected to gradually improve as operations normalise.
10% volume change is 17% PAT impact: FY20 cargo volume was up 8% y-o-y. Container and coal volumes rose 8% y-o-y and 4% y-o-y, respectively. Dhamra Port has been the biggest contributor on incremental cargo at 44% y-o-y growth and has offset flattish volumes at Mundra port. Ports are considered essential services and remained active in the lockdown period. Management mentioned that they foresee volumes improving with potential of a V-shaped recovery in 2HFY20. Interesting trend they have seen is volumes shifting to rail from road constraints on vehicular movement and cited Reliance Jamnagar as an example where rail accounted for 80% volume shift in the lockdown vs 20% earlier. Core port Ebitda is up 8% y-o-y in Q4 and 13% y-o-y in FY20.
