Adani Ports stock: On June 14, Adani Ports and Special Economic Zone (APSEZ) saw a rise in its share price following an upward revision in its target price by Kotak Institutional Equities, from Rs 1,550 to Rs 1,650 per share. This upgrade reflects the company’s consistent outperformance in FYTD24.
Despite a sluggish start in the Indian stock market this year, Adani Ports has maintained its strong performance, according to the brokerage.
Kotak emphasized that this positive trend is expected to continue, with potential margin improvements. They highlighted recent discussions with Mundra Ports management and evaluations of master plans for other key ports, indicating significant growth prospects. The brokerage believes Adani Ports has a competitive edge due to its lower cost of capacity expansion compared to its peers, potentially allowing for a 5–6 times increase in capacity over time.
In contrast, Kotak pointed out that many of Adani Ports’ competitors face limitations in expanding their existing capacity beyond two times, mainly due to fixed capacities at their terminals and certain non-major ports.
This situation requires these competitors to invest in asset additions for growth, which could raise their capital costs per ton, either by acquiring government port terminals through bidding or building new greenfield terminals, according to the report.
Adani Ports
It’s important to highlight that Adani Ports has strategically acquired several non-major ports from private players over the past decade, enabling significant capacity expansions at reasonable valuations.
Noteworthy acquisitions include assets in Dhamra, Kattupalli, Krishnapatnam, Gangavaram, and Sarguja Rail, which now generate a combined EBITDA of approximately Rs 5,000 crore. This figure is equivalent to their combined net debt after adjusting for loans to the parent company.
As of 12:57 pm, Adani Ports shares were trading 1.6 percent higher at Rs 1,427.80 each on the National Stock Exchange (NSE). Year-to-date, the stock has surged by 36 percent, outpacing the 26 percent rise in the Nifty 50 during the same period.
Kotak’s updated target price for Adani Ports suggests a potential upside of approximately 18 percent from its recent closing price of Rs 1,404.45. This target signifies a new record high for the stock.
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