Citi sees Adani Ports up 34% on strong expectations for the first quarter

Adani Ports is expected to have a strong first quarter driven by healthy port freight volume growth and a strong increase in logistics business.

In the June quarter, Adani Ports recorded a total cargo volume of 101.4 MMT, representing a year-on-year growth of 11.5%.

Growth was seen in most ports and all three major cargo segments. While the container segment grew 19%, liquids and gases grew 8% and dry bulk grew 7%.

Brokerage Citi has placed the stock on buy on the prospect of good first-quarter results with a price target of Rs.972, up 34% from current levels.

Year to date, Adani Ports shares have underperformed benchmarks but recovered from the damage caused by Hindenburg. The stock is down 12% so far this year. Flat returns were achieved last year.

Valuations are attractive as the stock trades at a one-year forward EV/EBITDA of 13x versus a historical average of 16x, Citi said, adding that the underlying business, competitive position and cash-generating ability remain supportive are by far the best.

In June alone, Adani Ports handled 32.8 MMT of cargo, including 1 MMT at its Haifa port.

Logistics volume also continues to show a significant increase with year-to-date rail volume of 131,420 TEU, up 18% YoY, and GPWIS volume of 4.35 MMT, up 40% YoY.
Adani Ports is the largest commercial port operator in India, handling almost a quarter of the country’s cargo throughput.

The company is present in 13 domestic ports in the seven sea states of Gujarat, Maharashtra, Goa, Kerala, Andhra Pradesh, Tamil Nadu and Odisha.

In the previous March quarter, the company saw its consolidated net profit grow 5% to Rs.1,159 billion. Meanwhile, consolidated sales rose 40% to Rs.5,797 crore.

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