Adani Buzz: Adani Ports Share Nears 1-Year High, To Acquire 95% Stake Of Gopalpur Port; BUY For Rs 1,562 TP

Adani Group-backed ports flagship company, Adani Ports has made a big announcement of acquiring a 95% stake in Gopalpur Ports from its existing shareholders. Through this acquisition, Adani Ports continues with its strategy of East Coast to West Coast parity. On Tuesday, Adani shares traded near its 52-week high.

At the time of writing, Adani Ports traded at Rs 1,301.50 apiece, up by 1.60% on BSE with a market cap of Rs 2,80,980.07 crore. The stock was near its intraday high of Rs 1,307.50 apiece.

That being said, Adani Ports is nearing its 52-week high of Rs 1,356.50 apiece. While the stock is currently trading higher by a whopping 128% from its 52-week low of Rs 571.35 apiece.

There is a potential upside in Adani Ports. JP Morgan is the latest to maintain BUY on this Adani stock for a target price of Rs 1,562 per share. JP has also given a positive outlook on Adani Ports. This target price implies a potential 20% upside in Adani Ports ahead.

In its regulatory filing on Monday, Adani Ports said that the company will "acquire 95% stake of Gopalpur Ports Limited ("GPL") from the existing shareholders."

Of the total 95% stake, Adani Ports will buy 56% stake from SP Port Maintenance ("SP Group") and 39% stake from Orissa Stevedores Limited ("OSL") of GPL.

On the acquisition, Karan Adani, Managing Director of APSEZ, said, "The acquisition of Gopalpur Port will allow us to deliver more integrated and enhanced solutions to our customers. Its location will allow us unprecedented access to the mining hubs of Odisha and neighboring states and allow us to expand our hinterland logistics footprint."

He further said, "GPL will add to the Adani Group's pan-India port network, east coast vs west coast cargo volume parity and strengthen APSEZ's integrated logistics approach."

Adani Ports plans to complete the acquisition by Q1 of FY25. The equity consideration for a 95% stake is Rs. 1,349 crore, with an enterprise value of Rs. 3,080 crore, subject to closing adjustments.

GPL is engaged in the business of handling various types of dry bulk and break bulk cargo. GPL is a deep draft, multi-cargo port, that handles a diverse mix of dry bulk cargo, including iron ore, coal limestone, ilmenite sand, and alumina and handled 7.4 MMT of cargo in FY 23. It has a capacity of 20 MMT. The operational revenue for FY 23 was Rs. 373 crore.As per Adani Ports, in FY24, , GPL is estimated to handle about 11.3 MMT cargo (YoY growth - 52%) and earn a revenue of Rs 520 cr (YoY growth - 39%) and achieve EBITDA of INR 232 cr (YoY growth - 65%).

In Adani Ports view, the Gopalpur Port is all set for strong growth and margin expansion in FY'25 with opportunities already identified for achieving higher operational efficiencies and infra debottlenecking, implying further value accretion for APSEZ shareholders.

Giving investment rationale, Adani Ports also pointed out that the investment is in line with the Company's strategy of East Coast to West Coast parity. GPL's location will allow us unprecedented access to the mining hubs of Odisha and neighbouring states and allow us to expand our hinterland logistics footprint.

Notably, GPL is estimated to handle about 11.3 MMT cargo and earn an estimated operational revenue of Rs. 520 crore for FY 24.

The acquisition is subject to approval from Commerce and Transport Department, Government of Odisha.