This Adani Stock Jumped 17.79% In 1 Week, ICICI Direct Recommends Buy For 36% Return

Leading brokerage firm ICICI Direct has picked Adani Ports and Special Economic Zone Ltd (ADSEZ), a large-cap Adani Group stock, with a "Buy" tag for a target price of Rs 800 apiece, implying a potential upside of up to 36% from its current level. It has a market capitalisation of Rs 1,25,990 crore. Below is the key highlight from the report:

Adani Ports and Special Economic Zone Ltd Stock Performance

The stock of APSEZ is currently trading at Rs 588.20 apiece on NSE. Today it opened at Rs 573.60 apiece, while the previous close was Rs 582.30 apiece, trading 1.01% up. The stock's recorded 52 week low is Rs 395.10 apiece and 52 week high is Rs 987.85 apiece, respectively.

The stock has gained 17.79% in 1 week. It declined 26.22% in 1 month, 34.23% in 3 months and 19.62% in 1 year, respectively. It has gained 59.57% in 3 years and in 5 years it gained 47.27%, respectively.

Q3FY23 Results

According to the brokerage, Performance largely in line. Revenues grew 18% YoY to Rs 4786 crore (11% volume growth supported by 7% realisation growth). Absolute EBITDA grew 15% to Rs 3011 crore (margins remained range bound at 62-63% levels - higher realisation negated by change in product mix). PAT de-grew 16% to Rs 1316 crore due to forex loss of Rs 315 crore

ICICI Direct Suggests Buy for a target price of Rs 800/share

In the near term, APSEZ intends to prioritise a healthier balance sheet over growth (although the company has maintained its guidance of reaching 500 MMT by FY25). With lowered capex, its FCF has improved to 7-8% levels, which provides comfort on continued debt repayment beyond FY24. "We remain positive on the long term growth prospects of the stock and maintain our BUY recommendation. We value the stock at Rs 1000 on an SOTP basis," the brokerage has said.

Key triggers for future price performance

As APSEZ 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 the Stock

Adani Ports and Special Economic Zone (APSEZ) is the largest commercial port operator in India with 25% share of port cargo movement in India. The company has evolved from a single port dealing in a single commodity to an integrated logistics platform. Total ~70% of APSEZ's revenues is contributed by its port operations. Rest is led by harbour (11%), logistics (7%) and others. In FY22, container, bulk, liquid mix were at 36%, 55%, 9%, respectively

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 consult with certified experts before making any investment decision.