Adani Ports Has Strongest Ecosystem In HSBC's Asia Transport Coverage

HSBC Global Research has reiterated its 'buy' call on Adani Ports and Special Economic Zone Ltd. as the ports operator has the strongest ecosystem in the brokerage's Asia transport coverage. Logistics business rollout plans, mid-term volume targets, and potential mergers and acquisitions will be key focus in the company's upcoming FY24 results that will be out on May 2.

The brokerage hosted the Adani group company's management at its Global Investment Summit and made no changes to the earnings estimates. The FY24 Ebitda estimate is 1% higher than the consensus. For FY25-26, the estimates are 2-4% above consensus. "We expect a 19% CAGR in ADSEZ’s Ebitda in FY23-26 and return on invested capital to rise from 10% in FY23 to 16% in FY26."

The brokerage has a target price of Rs 1,560 per share on the stock, implying a potential upside of 18% from the current market price.

The stock is up 31% year-to-date and is among one of the best performing port operators under HSBC's coverage. It reiterated its 'buy' rating on Adani Ports and likes its ability to consistently ramp up throughput with market share and margin expansion.

The management reiterated its volume target of 500 million tonnes in 2025, which is achievable now, given volume addition from the recent acquisition of Gopalpur port, the brokerage said.

Shares of Adani Ports fell 1.18% during the day before paring loss to trade 0.13% lower at 9:51 a.m., compared to a 0.4% decline in the benchmark Nifty 50.

The stock has risen 97.6% in the last 12 months. The relative strength index was at 47.7.

Nineteen out of the 21 analysts tracking the company have a 'buy' rating on the stock and two suggest a 'sell', according to Bloomberg data. The average 12-month analysts' price targets implies a potential upside of 7%.