Adani Ports share price target at Rs 958 post Q1 results, says Nuvama

Adani Ports and Special Economic Zone Ltd (Adani Ports) reported record revenue, Ebitda and profit figures for the June quarter, following which Nuvama Institutional Equities has suggested a target price of Rs 958, which suggests a potential 22 per cent upside for the Adani group stock. The brokerage said the recent acquisition of Karaikal is complete and the port is ramping up well, along with the newly acquired Haifa port. It noted that the Adani Ports management has also maintained its FY24 guidance. The brokerage is positive on Adani Ports prospects.

"All said, operational numbers were strong as Adani Ports also gained market share by 200 basis points," the brokerage said as it retained its 'Buy' rating on the stock. Nuvama said Adani Ports continues to diversify and expand across the logistics value chain and that its aggressive expansion in logistics is quite synergistic to its ports business.

For FY24, Adani Ports has guided for cargo volumes of 370-390 mt and expects revenue of Rs 24,000-25,000 crore and Ebitda of Rs 14,500-15,000 crore. Total capex during the year is seen at Rs 4,000-4,500 crore. Nuvama said the Adani Ports' guidance was reasonably robust. More importantly, the logistics business continues to outpace peers with three new MMLPs added during the year, it said. With robust growth and prudent spending on capex, Nuvama sees return ratios and debt metrics improving in the next couple of years.

"In-line with Adani Ports' expansion plan, Mundra container capacity expansion of 0.8MTEUs should see completion by Q3FY24 along with five new rail lines, which in total should improve container-handling capacity by 30 per cent. Furthermore, on the logistics side, Adani Ports aspires to achieve a warehousing capacity of 60 million square feet. with annual addition of 10mn square feet. Inorganic acquisition on the port side along with multi fold capacity creation in the logistic business should provide multi-year growth prospects for Adani Ports," Nuvama said.

The Adani group firm reported an 82.57 per cent year-on-year (YoY) rise in net profit at Rs 2,114.72 crore for the June quarter compared with Rs 1,158.28 crore in the same quarter last year. Analysts were expecting the Adani group firm to report up to 70 per cent YoY rise in profit. Revenue for the quarter rose 23.51 per cent YoY to Rs 6,247.55 crore compared with Rs 5,058.09 crore in the corresponding quarter last year. Analysts were expecting sales to grow 15-20 per cent YoY.

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Consolidated Ebitda including forex impact grew 80 per cent YoY to Rs 3,765 crore, Adani Ports said. Excluding forex impact consolidated Ebitda stood at Rs 3,754 crore. Adani Ports said its Ebitda margin for ports business expanded 150 bps to 72 per cent with improved realisation and operating efficiencies. Logistics business Ebitda margin expanded by 150 bps to 28 per cent, aided by increase in cargo volumes and sweating of assets, it said.

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