Research firm HSBC has increased its target price for APSEZ (Adani Ports And Special Economic Zone) from Rs 920 to Rs 1,250/share. The research firm has maintained ‘Buy’ rating on the stock. The firm says that Adani Ports is a proxy for India’s trade growth, that is, as India’s foreign trade and infrastructure grows, the company will directly benefit from it.
HSBC said, ‘The company’s diversified cargo management is able to withstand trade uncertainties, while the integration of Vizhinjam and Colombo terminals will strengthen its capacity and pricing power.’
The volume of cargo (throughput) handled by the company increased by 42% year-on-year to 35.6 million tonnes in December. This is the third consecutive month when this figure has crossed 35 million tonnes. This increase happened in different categories. There was a growth of 63% in ‘dry bulk’ (raw material which is loaded directly) and 28% growth in container managed goods.
In the current financial year, the company has increased its managed cargo (throughput) guidance to 400 million tonnes, whereas earlier this range was 370-390 million tonnes. The good thing is that the company has already achieved 78% of the increased guidance for cargo management in the first 9 months of the financial year.
HSBC has increased its throughput estimate to 411 million tonnes from the previous figure of 407 million tonnes, which is 3% more than the company’s guidance. Adani Port will have to deliver 33 million tonnes of throughput every month in the remaining three months, only then this target will be achieved.
Income forecast
HSBC has increased its earnings estimate for 2023-24 by 2%, while for the next 2 financial years it has a growth of 1%.
HSBC estimates that Adani Port’s EBITDA will have a compound annual growth of 17% in 2023-26. Whereas the return on invested capital will increase from 13% in 2022-23 to 17% in FY 2026.
Decision in favor from Supreme Court
The Supreme Court on Wednesday rejected the demand for further investigation by SIT into the allegations made by Hindenburg Research on Adani Group. The court said that there is no reason to doubt the investigation of SEBI. Let us tell you that SEBI has completed the investigation of 22 out of 24 cases.
HSBC said, ‘Refinancing will become easier further with the decision of the Supreme Court. Adani Group has already shown strong support from investors with refinancing of $3.5 billion. These investors include GQG Partners and Qatar Investment Authority.
HSBC said, ‘It is noteworthy that Adani Group has already raised funding for its Colombo project from US government-backed financiers.’
According to Bloomberg data, Adani Port’s stock has increased by 37% in the last 12 months. 19 out of 21 analysts tracking the company have maintained a buy rating. While two ‘hold’ ratings have been kept.
Adani Port’s stock rose 2.54% to Rs 1,122/share on Thursday. Whereas in comparison, the benchmark Nifty 50 has increased by 0.66%.
