Motilal Oswal sees up to 20% upside in Adani Ports. Here’s why

Domestic brokerage Motilal Oswal on Tuesday said it sees an upside potential of 20% in Adani Ports and suggested a ‘buy’ rating on the stock with a target price of Rs 1,590. This is supported by consistent outperformance in cargo volumes, 24% volume growth in FY24 volumes.

“In FY24, the company took the total volumes to 420 MMT, well surpassing its revised guidance of 400 MMT. 25% of all-India cargo volumes was routed through APSEZ ports in the same period. For FY25, the company is targeting cargo volumes of 500 MMT,” according to the Motial Oswal report.

Earlier in October, Motilal had initiated coverage on Adani Ports where it was highlighted that the company’s improving utilization levels at its current ports, along with its ramping up of volumes at newly acquired ports, will position the company to exceed its FY24 volume guidance and expand its market share in cargo handling.

Adani-led infrastructure company is continuously investing in building infrastructure for its logistics business. With 11 multi-modal logistics parks, 116 trains, 2.4 million sq. ft. of warehousing space, and 1.1 million metric tonne of grain silos, APSEZ aims to establish a nationwide presence by further developing logistic parks and warehouses.

“APSEZ continues to gain market share while generating strong cash flows and maintaining its leverage position, with a net debt-to-EBITDA ratio of 2.5x as of Dec’23. We expect APSEZ to register 10% volume growth and a CAGR of 14%/15%/19% in revenue/EBITDA/PAT over FY24-26,” the report added.

Adani Ports stock price closed on a flat note on Tuesday with a gain of 0.10% at Rs 1,322.30 on BSE.

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