Adani Ports shares: Equirus Securities sets target price at Rs 1,440, says this

Equirus Securities has upheld its 'Long' rating on Adani Ports and Special Economic Zone Ltd (ADSEZ), setting a target price of Rs 1,440. The firm anticipates ADSEZ will experience revenue, Ebitda, and PAT CAGRs of 11%, 13%, and 14% respectively over the fiscal years FY24-FY27. This projection comes amidst Adani Ports' strategic acquisition of Abbot Point Port Holdings Pte. Ltd. (APPH) from Carmichael Rail and Port Singapore Holdings Pte. Ltd.

Adani Ports announced its acquisition of APPH through a non-cash share swap transaction. APPH controls the North Queensland Export Terminal (NQXT), a coal export facility with a capacity of 50 million tonnes per annum. This move signifies ADSEZ's re-entry into the terminal, a key asset they owned from 2011 to 2013.

Equirus Securities highlighted, "With its Indian portfolio now stable and expanding, ADSEZ is resuming its international growth strategy, aiming to scale total cargo volumes to 1bn metric tonnes by 2030, including 150mn tonnes from international ports." This acquisition is expected to bolster ADSEZ's foothold internationally, adding a scalable and cash-generative asset to its portfolio.

The NQXT is strategically located near critical coal basins and Asian trade routes, aligning with ADSEZ's east-west corridor strategy. "This acquisition significantly strengthens ADSEZ's international footprint, adding a high-performing, cash-generative asset with substantial scalability," Equirus Securities stated. The terminal's current capacity of 50 MTPA, with 40 MTPA under contract, presents growth opportunities post-acquisition.

The acquisition, valued at AUD 3.97 billion, includes an equity value of AUD 3.15 billion and net debt of AUD 819 million. ADSEZ will issue 143.8 million new equity shares to CRPSHPL, raising the promoter group's shareholding by 2.13%. The transaction's EV/Ebitda multiple is calculated at 17 times FY25E Ebitda.

ADSEZ aims to leverage synergies across the group, increasing contracted capacity and renewing contracts with better terms. These initiatives are expected to drive Ebitda growth, with projections reaching AUD 400 million by FY29, up from an estimated AUD 228 million for FY25.

Equirus Securities believes this acquisition will play a vital role in ADSEZ achieving its target of transporting 1 billion metric tonnes of cargo by 2030. ADSEZ's strategic expansion into international markets is poised to enhance its economic footprint and operational capacity.