Adani Ports: This Adani group stock is a 100% buy for analysts; shares up 26% in 30 days

Adani Ports & SEZ (Adani Ports) has 100 per cent 'Buy' ratings, meaning all analysts covering this Adani group stock have buy call on it. This is even as a couple of rating agencies have recently changed their outlook on the company's instruments to negative. As per Motilal Oswal Securities, a total of 21 analysts have 'Buy' rating on Adani Ports with a consensus target of Rs 803. The scrip traded at Rs 697.85 level in Monday's trade and is up 26 per cent in the last one month.  

JM Financial recently initiated coverage on Adani Ports & SEZ with a 'Buy' rating and a March 2024 target price of Rs 800, as domestic brokerage expects Adani Ports to remain the market leader in India with volume growth of 16 per cent, translating into revenue growth of 15 per cent, Ebitda growth of 15 per cent and PAT growth of 13 per cent, compounded annually over FY23-25E.

JM Financial said Adani Ports Ltd may generate cumulative operating cash flow (OCF) of Rs 26,100 crore in FY24-25 and have a capex of Rs 12,000 crore, resulting in Rs 14,000 crore of free cash flow, substantially higher than its debt-repayment obligations of Rs 11,000 crore.

ICICIdirect had Adani Ports among its March stock picks.  Adani Ports, it said, is backed by strong free cash flow FCF (5.3 per cent FY24 FCF yield) generating assets with a 15 per cent-plus RoCE. Further it has a comfortable debt-equity ratio close to 1. This brokerage has a target of Rs 800 on the stock.

Kotak Institutional Equities has a target of Rs 810 on the stock. The company's guidance for FY2024 suggests healthy low-teens/high-teens organic growth and a healthy quantum of deleveraging to 2.5 times net debt to Ebitda, Kotak said in a February note.

Outlook negative, says ICRA

Ratings agency ICRA recently revised the outlook for the Adani group company to 'negative' from 'stable', while reaffirming the ratings.

ICRA on March 3 said Adani Ports' track record of refinancing a large part of its debt with borrowings (mostly from overseas debt capital markets) of longer tenures at lower interest rates were the key credit strengths, which have been adversely impacted.

Further, ICRA sees an increased risk of regulatory/legal scrutiny on the group entities and its impact on the credit quality of Aani Ports will be monitored. However, ICRA notes that the Adani Ports’ liquidity profile remains robust and a large repayment of international bond of $650 million is due only in FY2025," said ICRA in its rationale for downgrading Adani Ports.

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