DCF Studio

    ADANIPORTS.NS · NSI · Industrials

    Adani Ports and Special Economic Zone Limited

    Also onConsensus Drift

    Implied value per share

    INR 1045.37

    Market price

    INR 1824.00

    Implied upside

    -42.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 34.4% of revenue against depreciation of 14.9%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: INR assumption - no free live source available for this market.

    Current EV/EBITDA of 20.8x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    INR 1045.37-42.7%
    Exit multiple
    INR 3662.18+100.8%
    Market price
    INR 1824.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (INR). Outflows negative.

    0bn96bn192bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayINR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueINR 476.2bnINR 585.4bnINR 719.6bnINR 884.6bnINR 1087.4bn+22.9%
    EBITINR 217.2bnINR 267.1bnINR 328.3bnINR 403.6bnINR 496.1bn+22.9%
    NOPATINR 185.7bnINR 228.3bnINR 280.7bnINR 345.0bnINR 424.1bn+22.9%
    Add depreciation & amortisationINR 70.9bnINR 87.2bnINR 107.2bnINR 131.8bnINR 162.0bn+22.9%
    Less capital expenditureINR -163.8bnINR -201.3bnINR -247.5bnINR -304.2bnINR -374.0bn+22.9%
    Less increase in working capitalINR -8.7bnINR -10.7bnINR -13.2bnINR -16.2bnINR -20.0bn+22.9%
    Free cashflow to firmINR 84.2bnINR 103.5bnINR 127.2bnINR 156.3bnINR 192.2bn+22.9%
    Discount factor0.94800.85210.76580.68830.6186-
    Present valueINR 79.8bnINR 88.2bnINR 97.4bnINR 107.6bnINR 118.9bn+10.5%
    Present Value Of The ForecastINR 491.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate6.80%INR assumption - no free live source available for this market (assumption)
    Equity risk premium8.00%Market assumption
    Beta0.660Reported 0.493, pulled toward 1.0 (Blume)
    Cost of equity12.08%Risk-free + beta x equity risk premium
    Cost of debt6.80%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationINR 4202.4bn86.9% of capital
    Total debtINR 632.4bn13.1% of capital, book value as a proxy
    Tax rate14.5%Effective, capped at statutory
    WACC11.26%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareINR 1045.37

    83% of EV

    Forecast FCFF, final year
    INR 192.2bn
    Capex at depreciation, working capital in reinvestment
    INR 424.1bn
    Less reinvestment at g/ROIC (22.2% of NOPAT)
    INR -94.1bn
    Capitalised
    INR 330.0bn
    ROIC (WACC floor)
    11.3%
    Terminal value, undiscounted
    INR 3859.9bn
    Terminal value, discounted
    INR 2387.8bn
    Enterprise value
    INR 2879.7bn
    Less net debt
    INR 580.7bn
    Equity value
    INR 2298.9bn

    Exit at 20.0x EBITDA

    Value per shareINR 3662.18

    94% of EV

    Terminal value, undiscounted
    INR 13162.3bn
    Terminal value, discounted
    INR 8142.6bn
    Enterprise value
    INR 8634.4bn
    Less net debt
    INR 580.7bn
    Equity value
    INR 8053.7bn

    Spread between methods: 111%.

    Sensitivity

    Value per share (INR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.26%1414.131431.801451.141472.561496.58
    10.26%1194.001200.061206.111212.161218.22
    11.26%1034.771040.071045.361050.661055.96
    12.26%902.80907.47912.15916.82921.49
    13.26%791.86796.01800.16804.31808.46

    Outlined: this model. Green text: above today's price of 1824.00. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year22.9%35.9%+12.9pp
    EBIT margin45.6%68.1%+22.5pp
    Discount rate11.3%8.2%-3.1pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.