Adani Ports gets a buy from CLSA as it expects strong Q2FY24 performance
CLSA has maintained a buy call on Adani Ports stock with a target price of ₹878, implying an 8 per cent upside potential in the stock from its September 7 closing of ₹809.60 on BSE. The brokerage firm said Adani Ports looks to be on track for a strong Q2FY24 despite slowing global trade, with Aug-23 traffic up 17 per cent year-on-year (YoY) (up 13 per cent YoY ex-Haifa mergers and acquisitions). CLSA highlighted that port traffic was led by containers and gasification of cargo mix of traffic, while coal imports picked up following a demand spike, improved viability and a government decree.
"Its flagship, Mundra Port, saw a resurgence with all-time high traffic in Aug-23, led by container and coal traffic on a power demand spike met by improved viability of imported coal. The key bright spot was also logistics, with higher bulk volume (up 42 per cent YoY) and rail container traffic up 24 per cent YoY. Overall, we believe this strategic asset remains on track to gain share and grow ahead of the market, which deserves re-rating," said CLSA.
CLSA expects volume to grow 50 per cent in FY23-26, led by the new terminal at Mundra, the start of Vizhinjam, mergers and acquisitions (Krishnapatnam and GPL), and Dhamra and Kattupalli. "Adani Ports has maintained its guidance for double-digit growth in its port traffic, revenue and EBITDA ( ₹14,500-15,000 crore versus our estimate of ₹14,000 crore) in FY24 despite an uncertain macro climate. We view Adani Ports as a strategic asset with long-duration port concessions, trading at a 43 per cent discount on FY25CL PE (price-to-earnings ratio) to Container Corp.
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