Adani Transmission – Q2 FY20 (Unaudited – Cons.)
Share price – 298
Total revenue from operations at 2,587 Cr
1,132 Cr (152.32%) YoY | 2,857 Cr (-9.42%) QoQ
Half year revenue: 5,445 Cr Vs. 1,685 Cr (223.22%)
Net Profit of 230.4 Cr
89.5 Cr (157.43%) YoY 213.2 (7.97%) QoQ
Half year ending Net Profit: 443.8 Cr Vs. 258.9 Cr (71.7%)
EPS (in Rs.) 1.37
0.34 YoY | 1.66 QoQ
Half Year ending EPS: 3.03 Vs. 1.39
View: Result is above expectation. Excellent number posted by company. YoY revenue more than double and profit also get more than double. However QoQ revenue slightly down.
Business Highlights & Updates:
Consolidated Operational EBITDA of Rs. 1,082 crore, up 63% yoy. Transmission Business: Operational EBITDA of Rs. 623 crore, up 23%. Strong EBITDA Margin of 92%. Distribution Business: Operational EBITDA of Rs. 459 crore, up 190.
H1FY20 Performance:
Consolidated Operational EBITDA of Rs. 2,281 crore, up 95% yoy. Transmission Business: Operational EBITDA of Rs. 1,238 crore, up 23%. Strong EBITDA Margin of 92%. Distribution Business: Operational EBITDA of Rs. 1,043 crore
Continued strong operational performance in the Transmission business, with availability of 99.8% in Q2 and 99.9% in H1 across the portfolio.
AEML Mumbai Distribution business losses down by 21 bps in Q2 and 62 bps in H1 yoy.
Seven new Transmission networks commissioned in FY19 are fully operational, and have contributed revenue of Rs. 153 crore in Q2 and Rs. 300 crore in H1.
Won two new Transmission bids through TBCB: Lakadia-Banaskantha and Jam Khambaliya in Sept-Oct with total first full year tariff of Rs. 144 crore per annum.
Investment grade international credit rating (BBB-/ stable; Baa3/ stable) and AA+ domestic rating
With the completion of the ongoing projects, ATL’s total network will be approx. 14,738 ckt kms
ROE and ROCE is around 0.2% and 12% respectively and book value per share is around INR 47 and share is currently trading at 6.8x of its book value. Company is currently trading at annualized PE of around 50 which is expensive as per Industry benchmark. Promoter holding in the company is around 74.9% which is too strong however promoter has pledged around INR 10.2K Cr worth of share around more than 49% shareholding is pledged (concern). FIIs hold around 20.7% in the company. Company has around 17K Cr of debts in the company. The good thing is company debt equity ratio in H1FY20 is 1.05 as compare to 1.48 in H1FY19 and interest obligation is also down and around 1.38 Vs. 1.56 in H1FY18.
Share price high 299 and its trading life time high. Adani Transmission (ATL) is the transmission and distribution (T&D) business arm of the Adani Group, one of India's largest business conglomerates. It is the country’s largest private transmission company with a cumulative transmission network of more than 14,738 ckt kms, out of which more than 11,477 ckt kms is operational. With the Government’s accelerated efforts towards scaling infrastructure and improving electrification in rural areas and Mission 2022 Housing for all and electricity for all company will benefit in longer run.
Share has delivered outstanding growth and multibagger in last 3 year when it prices jumps from INR 40 to 298.
Long term investor can continue with the company based on the high transmission and distribution growth business model. Short term outlook is also bright.
Risk: High debt and volatile business