Adani Ports shares hit new high, mcap tops Rs 3 lakh cr; Citi sees stock above Rs 1,750

Global brokerage firm Citi is positive on Adani Ports & Special Economic Zone Ltd (Adani Ports) and sees up to 28 per cent upside in the stock from its previous close. Analysts at Citi are opening a 90-day positive catalyst watch on the counter. The brokerage expects the Adani Group firm to report a strong performance in the March 2024 quarter. Citi said that Adani Ports is likely to report a strong set of numbers for the three-months ending on March 31, 2024, with positive volumes, revenue, EBITDA growth and good cash flow. The foreign brokerage also mentioned that the Adani Group firm has emerged strong post Hindenburg's damning report with strong business momentum, robust market share and reduced leverage. The strong volume growth should lead to core-port Ebitda growth of about 29 per cent on a year-on-year (YoY) basis, while consolidated Ebitda and profit before tax is expected to grow 27 per cent and 24 per cent YoY, respectively, Citi said. Citi added that valuations were still reasonable at 30 times P/E and 19 times EV/Ebitda on FY25 estimates. Citi believes these valuations leave ample room for upside given the quality and scale of the underlying business. Citi has maintained its 'buy' rating on the counter and the oversea brokerage has raised its target price on the Adani Ports to Rs 1,758 per share from Rs 1,564, which suggests an upside potential of 28 per cent from its previous close on Monday. Another global brokerage firm Morgan Stanley has maintained its 'overweight' stance on the stock with a target price of Rs 1,576 apiece. Shares of Adani Ports rose about 3.55 per cent during the trading session on Tuesday, to scale new 52-week high of Rs 1,425 as its mcap topped Rs 3 lakh crore-mark for the first time. The scrip had settled at Rs 1,376.05 in the previous trading session Monday. In an exchange filing on Monday, Adani Ports reported its highest-ever monthly cargo volume of 38 million metric tonnes (MMT) in March 2024, with domestic ports contributing over 408 MMT cargo. The country's largest port player revised its financial year 2024 guidance in January to 370-390 MMT from 350-370 MMT earlier. Adani Ports has recovered decently from the significant 50EMA zone of Rs 1,235 levels, after forming the higher lows near Rs 1,190 zone, with currently moving past the previous peak zone of Rs 1,356 levels to indicate a breakout, said Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher "The RSI has indicated a decent pullback confirming a trend reversal to signal a buy. With the trend remaining strong, we anticipate further rise for fresh targets of Rs 1,490 and Rs 1,570 levels in the coming days. The near-term support would be maintained near the 50EMA level of Rs 1,255," he added.