Buy This Large Cap Adani Stock For A Target Price Of Rs 950: ICICI Direct

Adani Ports and Special Economic Zone Limited gets a ball call by the ICICI Direct for a target price of Rs 950 apiece. The brokerage estimated target price if taken into consideration, the stock could witness a jump of around 19% if shares of the company were purchased at the current market price.

Adani Ports and Special Economic Zone is the largest commercial port operator in India with 25% share of the port cargo movement in India. The company has evolved from a single port dealing in a single commodity to an integrated logistics platform. Adani Ports and Special Economic Zone is a large cap shipping sector company having a market capitalization of Rs 169,338 crore.

Total ~70% of Adani Ports and Special Economic Zone's revenues is contributed by its port operations. Rest is led by the harbour (11%), logistics (7%) and others. Of the total 247 MT cargo volume in FY21, container volumes were at 105 MT (43%), bulk at 110 MT (44%) and rest liquid at 32 MT (13%).

Stock Outlook & Returns

The stocks of Adani Ports and Special Economic Zone closed yesterday at Rs 801.65 apiece, the current market price. Currently, the shares of the company trading Rs 149.7 above the 52-week low and Rs 123 below the 52-week high, respectively.

The stock's 52-week low is Rs 651.95 apiece recorded on February 24, 2022, and the 52 week high is Rsa924.65 recorded on April 27, 2022, respectively. TTM PE ratio is 35.61, PB ratio is 5.40 and TTM EPS is Rs 22.51. The ROE of the stock is 12.41%.

In the past 1 week, the share of the company jumped roughly 0.05%. In the past 1 month, the shares gained 12.01%. Over the past 1 year, the shares moved up by 12.8%. In the past 3 years, the shares gained nearly 114.37% and 93.26% in the past 5 years, respectively.

Q1FY23 Results

According to the brokerage firm, Higher realisation, bulk volume lifted operational performance.

• Revenues remained flat YoY at Rs 4638 crore (8% volume growth negated by one-off SEZ land transaction in base quarter).
• However, absolute EBITDA grew 13% to Rs 3006 crore (margins expanded 777 bps to 64.8% due to higher realisation).
• However, PAT de-grew 19% to Rs 1072 crore due to forex loss of Rs 1201 crore.

Buy for a target price of Rs 950 apiece

Strong organic growth coupled with efficient assimilation of inorganic acquisition into Adani Ports and Special Economic Zone fold (margin improvement) and integrating logistics operations both vertically and horizontally, has built a strong moat around the business. "We remain positive on the long-term growth prospects of the stock and maintain our BUY recommendation Target Price and Valuation: We value the stock at Rs 950 on an SOTP basis," the brokerage has said.

Key triggers for future price performance

As Adani Ports and Special Economic Zone embarks on becoming India's largest integrated transport utility company by 2030, it is strengthening its capabilities in all logistics segments (ports, CTO, warehousing, last mile delivery, ICDs, etc.) Hence, it will offer end to end service to its customers thereby capturing higher wallet share and also making the cargo sticky in nature.

DFC connectivity to Mundra (normalisation in the medium term) to provide faster port evacuation, quicker transit time. Inorganic opportunities such as acquisition of Concor [~67% market share (MS) in CTO business].

About - Adani Ports and Special Economic Zone Limited

Adani Ports and Special Economic Zone Limited (APSEZ) is the largest commercial ports operator in India accounting for nearly one-fourth of the cargo movement in the country. Its presence across 13 domestic ports in seven maritime states of Gujarat, Maharashtra, Goa, Kerala, Andhra Pradesh, Tamil Nadu and Odisha presents the most widespread national footprint with deepened hinterland connectivity. The port facilities are equipped with the latest cargo-handling infrastructure which is not only best-in-class, but also capable of handling the largest vessels calling at Indian shores. Our ports are equipped to handle diverse cargos, from dry cargo, liquid cargo, crude to containers.

 

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.