Adani Ports Q1 results beat Street estimates. Should you buy stock?

Adani Ports and Special Economic Zone shares have a potential upside of 11-22%, according to estimates of top brokerages. The views come on the back of strong June quarter earnings posted by the Gujarat-based port operator. Estimating that double-digit growth would continue, Jefferies revised its stock price target upwards while recommending a buy. Domestic brokerages Kotak Institutional Equities, Nuvama and JM Financial have also recommended buy on the counter giving a thumbs-up to Adani Ports’ growth story.

The stock opened with over 1% gains on the NSE to hit the day’s high of Rs 792.75.

Adani Ports reported a consolidated net profit of Rs 2,115 crore for the quarter ended June 2023, which is higher by 83% compared with Rs 1,158 crore in the same quarter last year. Revenue from operations jumped 24% year-on-year (YoY) to Rs 6,248 crore in the June quarter. The same stood at Rs 5,058 crore in the same quarter last year. Both profit and revenue figures were above the ET Now poll estimates of Rs 2,000 crore and Rs 5,900 crore, respectively.

Here is what the brokerages recommended:

Jefferies: Buy | Target: Rs 890
Jefferies has maintained a buy on Adani Ports and raised the price target to Rs 890 from Rs 855 despite the company posting Q1 revenue which was lower than the brokerage’s expectations. It sees margins improving as acquired ports’ efficiencies pick-up. Jefferies said that the medium-term double-digit growth will likely continue.

Kotak Institutional Equities: Buy | Target: Rs 870
Kota recommended a buy on Adani Ports with a revised target price of Rs 870, up from the previous target of Rs 835. “We increase our estimates by 3-4% and roll forward to a fair value of Rs 870,” the brokerage note said. The stock trades at a reasonable one-year forward 12.5XEV/EBITDA. Growth is likely to accelerate, the brokerage said.

Nuvama: Buy | Target: Rs 956
Nuvama retained buy on Adani Ports with a discounted cash flow (DCF)-based target price of Rs 956. The domestic brokerage, in a note, said that the Q1 earnings exhibited an all-round performance to start FY24 with the guidance remaining intact for the financial year. The company is also aggressively expanding logistics footprints and its capacity creation is in anticipation of strong growth, going ahead.

“APSEZ continues to diversify and expand across the logistics value chain. Its aggressive expansion in logistics is quite synergistic to the ports business,” Nuvama said.

JM Financial: Buy | Target: Rs 920
JM maintains a buy on the stock with a SOTP-based June 2024 target price of Rs 920 which has been revised upwards from the March 2024 target of Rs 850. The brokerage firm has broadly maintained its FY24/25 EPS estimates while introducing FY26 EPS. The consolidated revenue grew in line with JMFe estimates largely led by consolidation of Haifa and Karaikal ports and India port volume growth. The quarter also saw strong growth in logistics, the brokerage note said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)