MUNDRA PORT

Mundra Port And Special Economic Zone having gone public in November 07 had issued 402.50 lakh equity shares of Rs 10 each at Rs 440 per share. Share got listed on 27.11.07 and closed at Rs 962 on that day. Its 52 week high low is at Rs 1,324 and Rs 250 and is now ruling at Rs 282.



Mundra Port spread over 32,000 acres of land has deep water draft ranging from 15 meters to 32 meters in depth and has concession agreement valid upto 17.2 .2031. The port is presently offering port services for bulk cargo, container cargo, crude oil cargo and is setting up automobile terminal, coal terminal. Maruti Suzuki and Nissan would start exporting cars to Europe from January 09 with estimated volume of about 2 lakh cars per annum. 8,600 MW of coal-based power generating capacity is coming up near the por,t for which, imported coal shall be handled by the port. Apart from this, the port shall be having liquid cargo storage and handling facility and shall be handling dedicated crude sourcing and supply for some of the refineries. Though concession agreement for the port is valid upto February 2031, it is only in respect to 3,404 acres of land along with the right to use foreshore land and waterfront while the company has acquired over 32,000 acres of land with ancillary and related services being offered.



So even on termination of port contract in 2031, the company would own the land and related facilities which will have huge capital value coupled with income generating thereof.



It is like Mumbai Port Trust owning huge land in Mumbai near Mumbai Port Trust which has value running into thousands of crores of rupees.



The present equity of the company is at Rs 400 crores and market capitalization is just at Rs 11,200 crores. Even adding debt of Rs 1,800 crores thereto, the enterprise value works out to a mere Rs 13,000 crores. As the port is already operational, it had an income of Rs 550 crores for six months ended 30th September 08 with net profit of Rs 209 crores, translating into an annualized EPS of Rs 10.50.Though the operations of the company are stll at very low scale, this would reach to its full capacity in the next three years when one could expect an EPS of over Rs 40. Majority of the fund requirements of the company is already tied up and hence current credit crunch will not affect its future growth plans.



The share had its 52 week low of Rs 250 having seen on 28.11.08 and now ruling at 282 which is close to its all time low. Promoters stake of 81% also instills confidence and even Pre –IPO investors of 9% continue to remain invested in the company, inspite of shares having gone out of lock in.



We have recommended investment in the stock at 440 levels in IPO and investors got good opportunity of making huge gain. Those who have missed an opportunity to acquire the stock in the past or have booked profit are advised to buy it now at 282 levels, but with 12 months view. Share is now available at such a low valuation, due to depressed market conditions, coupled with negative outlook on realty and infrastructure stocks.



The working of such companies would not hamper as they are catering to the growth of the economy being core sectors and would continue to grow with the backing of its owned assets.



Those holding the stock having acquired in IPO are advised to remain invested and even further buying can be made at 282 levels. These stocks are truly eligible to enjoy the fruits of the growing Indian economy.

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