Mundra Port good buy in sharemarket nifty

The only listed private sector port of India, Mundra Port is a much fancied stock on the bourses but since the meltdown, the stock has also been facing the brunt. There is nothing fundamentally which has changed within the company, it’s just the overall listlessness.

The financial performance of the company for the first quarter ended 30^th June 2008 has not been very good on a QoQ basis. Its net sales dropped 23% at Rs.253.73 crore and despite a 18% drop in its operating expense, it was the 71% fall in its tax provision which helped the company post a 6% higher PAT of Rs.96.80 crore. Its OPM slipped marginally from 77.84% to 77.69% but NPM rose from 27.72% to 38.15%.

Yet, the company continues to remain on a strong footing. To ensure stability in revenue, the company has long term contracts with customers. Around 15% of the company’s cargo currently comprises of coal but for the future, 50% of the coal cargo is expected to come from group company – Adani Power and also Tata Power. Both the companies are setting up cola based power plants. Hence its contribution from coal is expected to go up in the coming years. It has also got into long term contracts with IOC and HPCL for providing single-point mooring facility for crude oil transport. The upcoming dedicated export terminal for Maruti’s A-Star car is its winner. To ward off competition from JNPT and Mumbai Port, the company has now started offering value added services.

Another major earner for the company is its SEZ. It has 6,700 acres of SEZ and it has now started realising non-refundable upfront against lease or sub-lease of the land. And in the coming 2-3 years, as its SEZ gets developed and it makes newer lease agreements, the SEZ would also become a major income contributor.

The company had gone public in November 2007 and it had offered shares at Rs.440 per share. Today it is quoted at around Rs.450 levels. Of the Rs.1771 crore raised, it has utilized Rs.1368.90 crore. An IPO from group company – Adani Power is also on the anvil. Stay invested if you already have the shares, a good buy too at the current rate.
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