India major ports’ throughput grew 8.1% y-o-y in September versus 2.0% y-o-yin August. POL continued to lead the growth, up 21.1% y-o-y (versus 6.7% y-t-d).However, container dipped to a contraction of 2.0% (versus +3.7% in August).Meanwhile, coal declined faster this month, down 13.0% y-o-y (down 9.9% y-o-y inAugust), mainly on lower coking coal throughput. Thermal coal, on the other hand,has seen improvement though it remains in negative territory. On a quarterly basis,throughput grew more slowly than in 1QFY17. POL showed sequential improvementwhile container remained flattish and coal throughput growth turned negative.

　　Remain optimistic on 3QFY17. As we have argued before, we expect improvementin 3QFY17e throughput due to a low base last year. Also, a good monsoon season inIndia should translate into a better harvest and better agricultural exports while risingrural incomes should, in turn, support domestic consumption.

　　We prefer ADSEZ to GPPV as a play on India’s structural growth. ADSEZ has apan-India presence positioning it to benefit from rising coastal shipping. Also, it has adiversified exposure to POL (14% in 1QFY17), container (36%), and coal (38%). Thiscompares with GPPV, a single-location, container focused (77% in 1QFY17) port withincreasing competition risk from capacity expansion at JNPT. We remain positive onPOL and container and the long-term prospects for coastal coal.