Motilal Oswal Securities upped its target price for Adani Ports & Special Economic Zone Ltd (APSEZ) while keeping its 'Buy' recommendation on the company, indicating a probable 21% upside. It stated that Adani Ports has a client base and a varied cargo mix in addition to sticky cargo.
According to the domestic brokerage, APSEZ has a good chance of exceeding its updated 400 mmt cargo volume projection for FY24. With a net debt-to-Ebitda ratio of 2.5 times, it continues to increase market share while producing good cash flows and preserving its leverage position. The domestic brokerage underlined this when increasing its volume predictions for the Adani group business by 2-3 per cent for FY24–26.
Motilal Oswal anticipates that APSEZ will have 10% volume growth during FY24–26, along with a CAGR of 15% for revenue, 16% for EBITDA, and 18% for profit after taxes.
It stated, "We increase the target multiple to 17 times EV/Ebitda (earlier 16 times) with consistent outperformance in cargo volumes and reiterate our BUY rating with a revised target price of Rs 1,600."
According to Motilal Oswal, Adani Ports is consistently investing in the construction of infrastructure for its logistics division, which should increase the company's long-term cash flows and profits.
"APSEZ has a significant presence throughout India, strong pricing power, and a high percentage of sticky cargo—more than 50%." APSEZ produced its best 9M performance in FY24, with the highest-ever revenue, EBITDA, and cargo volumes to date, thanks to strong volume driven by steady improvements in market share, according to the brokerage company.
According to the brokerage, APSEZ has a client base and a varied cargo mix in addition to sticky cargo. 382 mmt of goods were shipped in the first 11 months of FY24, according to APSEZ. The management has increased its projected cargo volume for FY24 from 380 mmt to 400 mmt.
