Adani Ports share price climbs 3%; Motilal Oswal, Kotak positive on stock

The stock has gained about 25 per cent this year so far against a 14 per cent gain in the equity benchmark Sensex. On a monthly basis, the stock has gained over 26 per cent in December so far.

In an exchange filing on Wednesday, December 6, Adani Ports and Special Economic Zone said its board of directors will meet on Tuesday, December 12, to consider the proposal for (i) issuance of non-convertible debentures and (ii) issuance/renewal of non-cumulative redeemable preference shares, on a private placement basis/preferential basis, in one or more tranches.

The stock has attracted fresh buying interest after in an exchange filing on December 4, Adani Ports reported a strong 42 per cent year-on-year (YoY) growth in November cargo volumes. It said growth was witnessed across all three broad cargo categories – dry bulk (over 60 per cent YoY), containers (over 26 per cent) and liquids and gas (over 23 per cent).

Following the company’s business update, several brokerage firms expressed their positive views on the stock.

Brokerage firm Motilal Oswal Financial Services reiterated a buy call on the stock with a target price of ₹1,210, implying a 19 per cent upside.

“We anticipate sustained volume growth due to enhanced utilisation of current ports and favourable global trade trends. The company’s: (a) strong market leadership in ports, (b) focus on value-added areas such as logistics, and (c) focus on strategic acquisitions position it favourably for the future,” said Motilal Oswal.

“The operational ramp-up at recently acquired ports is expected to drive a 16 per cent growth in cargo volumes over FY23-25. This would drive revenue, EBITDA and PAT CAGR of 23 per cent, 21 per cent and 17 per cent, respectively, over FY23-25,” Motilal Oswal said.

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Brokerage Kotak Institutional Equities reiterated its buy call on the stock and raised the target price by 12 per cent to ₹1,060.

The brokerage firm expects a 20 per cent upside in Adani Ports over the next year.

“History suggests the stock has traded in the range of 10-16 times one-year forward multiple for most of the past seven years. We value the company at an implied multiple of 13 times on a two-year forward basis,” Kotak said.

“We increase our fair value (target price) by a higher 12 per cent to ₹1,060 on account of roll-forward and a lower (but still stiff) WACC (weighted average cost of capital) of 11.25 per cent. The stock trades at sub-12 times FY2025E EV/EBITDA and is the top pick within our transportation coverage. Buy for about 20 per cent upside over the next year,” said Kotak.

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Kotak increased its EBITDA estimates by 5-6 per cent to account for higher volume growth for Mundra, Dhanraj and Ennore ports.

“Over FY2023-26E, we expect 9 per cent, 10 per cent and 15 per cent volume CAGRs for Mundra, existing ports and overall portfolio, respectively. EBITDA CAGR would be higher at 21 per cent on account of realisation growth and margin expansion,” said Kotak.

Also Read: Adani Ports share price hits fresh 52-week high; brokerages Kotak, Citi see further upside

Meanwhile, according to media reports, Adani Ports is in advanced negotiations to acquire Shapoorji Pallonji Group’s (SP) Gopalpur Ports in Odisha. 

An Economic Times report said Adani Ports is in advanced negotiations to acquire Shapoorji Pallonji Group’s Gopalpur Ports in Odisha. The potential deal, estimated at ₹1,100-1,200 crore in equity value, aligns with Adani Port’s strategic expansion plans along both the eastern and western maritime borders.

Mint could not verify this development independently. 

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Published: 07 Dec 2023, 09:47 AM IST