Adani Ports up 6% on healthy volume guidance; Motilal reiterates BUY call

Motilal Oswal Financial Services believes that the company is very well placed to continue to outpace industry growth and gain market share.

Shares of India’s largest private port operator, Adani Ports and Special Economic Zone (APSEZ), jumped over 6 per cent to end at Rs 1,288.8, backed by heavy volumes on a healthy guidance. It was the biggest gainer in the Sensex on Tuesday. The stock of the Adani group company has been quoting higher for the third straight trading day and has rallied 11 per cent during this period. Between November 21 and 28, in the six trading days, the stock had dipped 13 per cent after the indictment of Gautam Adani and other senior Adani group executives on bribery and other charges.

 

 

Adani Green Energy (AGEL) clarified on November 27 that Gautam Adani (and two other directors of AGEL) were not charged with any violation of the US Foreign Corrupt Practices Act in the counts set forth in the indictment by the United States Department of Justice or the civil complaint by the United States Securities and Exchange Commission. 

 

APSEZ’s management reiterated its 2024-25 (FY25) cargo volume guidance of 460-480 million tonnes (mt). It is well-positioned to hit the upper end of its FY25 earnings before interest, tax, depreciation, and amortisation (Ebitda) guidance (Rs 17,000-18,000 crore), the management said.

 

APSEZ handled 293.7 mt (+7 per cent year-on-year/Y-o-Y) of cargo volumes over April-November 2024. The growth was supported by containers, which rose 19 per cent Y-o-Y, followed by liquids and gas (+7 per cent). Despite disruptions due to the worker strike at Gangavaram and severe weather conditions in Mudra and Tuna, management continues to retain its volume guidance of 460-480 mt for FY25, with revenue projected to be Rs 30,000 crore.

 

Analysts at Motilal Oswal Financial Services believe that the company is well-placed to continue outpacing industry growth and gaining market share. The integration of the logistics business with the port business is enhancing its service offerings and transforming the company into a transport utility. It reiterated its ‘buy’ rating on APSEZ with a target price of Rs 1,530 per share.

 

APSEZ targets to double its volumes handled to 1 billion tonnes by 2029. This would mainly be driven by domestic port volumes (850 mt) and does not include any inorganic growth. The company is expected to record volume growth driven by market share gains and increased capacity at existing ports.

 

APSEZ is likely to outpace India’s overall growth, driven by a balanced port mix along India’s western and eastern coastlines and a diversified cargo mix. The company continues to invest heavily in the port and logistics business to drive growth.

 

Kotak Institutional Equities pointed out that APSEZ was confident of five-year, double-digit volume growth, independent of an uptick in market growth and the absence of new port acquisitions. Implied share gains would be driven by a combination of growing market access (expanded port portfolio, logistics investments including land and interplay) and penetration (end-to-end offering, logistics superapp, sharing of cost efficiencies). The brokerage has a ‘buy’ rating with a target price of Rs 1,630 per share.

 

Motilal Oswal Research expects APSEZ to report 10 per cent growth in cargo volumes over 2023-24 (FY24) through 2026-27 (FY27). This would drive annual revenue/Ebitda/net profit growth of 15 per cent/15 per cent/21 per cent over FY24-27.