Adani Ports and Special Economic Zones Ltd (APSEZ), a part of billionaire Gautam Adani-led Adani group, gained 3 percent in Wednesday's trade, as analysts have reposed faith in the stock, with some even raising their target prices. This comes a day after the company reported a strong quarter, especially on volume and EBITDA front.

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Cargo volumes grew 12 percent year-on-year (YoY) to a record 101 million metric tonnes (MMT) as container volumes surged 15 percent. Consequently, Adani Ports also recorded its highest-ever revenue/EBITDA/profit after tax.

Despite being affected by the cyclone and operating at 50 percent capacity for six days, APSEZ saw its market share improve 200 basis point to 26 percent. Consolidated revenue grew 35 percent YoY and 8 percent QoQ. EBITDA grew 108 percent YoY and 15 percent QoQ. Overall PAT was up 97 percent YoY and 82 percent QoQ.

FY24 guidance intact

The management has also maintained its FY24 guidance on port volume (370-390 MMT; 9 percent-15 percent YoY), revenue (Rs 24,000-25,000 crore), EBITDA (Rs 14,500-15,000 crore), and capex (Rs 4,000-4,500 crore).

This has been a strong start to FY24, and with this run-rate, Nuvama believes that FY24E operational metrics could overshoot management guidance.

"APSEZ has guided cargo volumes to the tune of 370–390 MMT for FY24E (including Haifa) along with a revenue and EBITDA guidance of Rs 24,000 crore/Rs 14,500 crore, which in our view, is reasonably robust," Nuvama said.

With robust growth and prudent spending on capex, the brokerage house sees return ratios and debt metrics improving in the next couple of years.

At 10.46 am, the scrip was trading 0.74 percent higher at Rs 790 apiece on the NSE. Analysts have a 'Buy' rating on the counter, with target prices between Rs 820 and Rs 972 per share. This implies an upside potential of up to 22.6 percent from the current market levels.

What brokerages say

Bernstein: According to Bernstein, Adani Ports continues to be a "prized asset". The brokerage has maintained an 'Outperform' rating on the counter, with a target of Rs 888 per share, as it cited the company's impressive volumes and EBITDA growth. "Comforting to see management retain guidance on balancesheet strengthening," it said.

CLSA: The brokerage has a 'Buy' rating on Adani Ports and a target of Rs 878 a share. CLSA noted that the CEO said the company is resolutely focused on bringing down net debt/Ebitda to 2.5 times in FY24.

Jefferies has a 'Buy' rating on the counter and has raised its target price to Rs 890 a share. The brokerage expects even better margins as the efficiency of acquired ports picks up. Jefferies has adjusted its EBITDA estimates for FY24 and FY25, projecting a growth of 3-5 percent. "Medium-term double-digit growth should continue," it said.

For Adani Ports, Citi has one of the most bullish targets on the Street at Rs 972 per share, suggesting a further upside of 23 percent from the current market price. Given the strong Q1 performance, the broking firm thinks there is some upside risk to FY24 volume guidance.

Goldman Sachs too has raised its target on the stock to Rs 820 a share considering a good quarter despite disruptions. The management's FY24 guidance is also well within range, it said.

First Published:Aug 9, 2023 11:32 AM IST