Buy This Multibagger Adani Group Stock For Target Price Of Rs 1007: Edelweiss Wealth Research

Edelweiss Wealth Research in its report on Adani Ports & Special Economic Zone Ltd., suggests buy the stock of the company for a target price of Rs 1007 apiece. According to the brokerage's estimated target price, investors buying the stock of the company at the current market price would gain 12%. The company is a large-cap port & port services industry company having a market cap of Rs 1,91,560 crore.

Stock Outlook

Friday. 09 Sept. the stock of the Adani Ports closed at Rs 906.85 apiece, after gaining 2.71% from its previous close. Its 52-week low is Rs 651.95 apiece and the 52 week high is Rs 925 apiece. The ROE of the stock is 12.41%.

Returns on Investments

Adani Ports' shares in a week, ending Friday, surged by 6.44%. Whereas, in the past 1 and 3 months, it gave a positive return of 13.12% and 23.3%, respectively. The stock surged nearly 20.96% in the past 1 year. Whereas, in the past 3 and 5 years, it gave multibagger returns of 145.39% and 135%, respectively.

Key highlights

• Sustainable market share gains at Mundra (containers particularly), expansion of LPG, LNG terminals at Mundra and Dhamra and the upcoming Vizhingham port are likely to keep volume growth ticking in double digits for the next 3-4 years
• As shipping lines deploy larger vessels and consolidate routes, the focus will move to ports with O&D demand over transhipment. Thus this consolidation will be a boost for APSEZ given its scale, pan-India presence and existing strong relationships with container liner companies.
• Post-acquisition of Krishnapatnam Port, the company revised upwards its cargo volume target for FY25 from 400MT to 500MT, a staggering 18% CAGR over FY20. Though this is a tall ask, we believe execution capabilities and proven track record of volume ramp-up provides comfort on cargo growth visibility.
• Leveraging its relationships with shipping liners and its ability to offer end-to-end solutions can make its business sizable. Management aims to achieve this with an asset-light model and roadmap including Railway transportation, Private freight terminals, trucking and Warehousing.

Risks

• Currency fluctuation as it does not undertake any major hedge to currency movements.
• Traffic uncertainty at ports.
• Regulatory changes regarding SEZ.

 

Business Overview

Adani Ports & SEZ's (APSEZ) business is classified into three verticals consisting of Ports, Logistics and Special Economic Zone. The company has a pan-India presence in ten locations (nine are operational) with the flagship Mundra port, India's largest commercial port, in the Gulf of Kutch. APSEZ has the capacity as well as ability to handle multiple cargo at its ports. It has a large land bank of 8,481 hectares of contiguous land at Mundra with requisite approvals and clearances in place. It has expanded its presence in logistics as well inorganically, acquiring Adani Agri Logistics and B2B logistics in the recent past.

 

Disclaimer

The stock has been picked from the brokerage report of Edelweiss Wealth Research. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.