Adani Ports' share price rose 7% to a new 52-week high of 1,082.95 in morning trade on the BSE on Wednesday, December 6. However, it trimmed most of its gains and was trading 1.6 percent higher at 1,027.90 at 9:50 a.m.
Adani Ports' share price rose 15% in the previous session after the company announced a robust 42% year-on-year (YoY) increase in November cargo volumes. Adani Ports' share price has increased by around 24% year to date.
Adani Ports reported growth in all three primary cargo categories in an exchange filing on December 4: dry bulk (over 60% YoY), containers (over 26%), and liquids and gas (over 23%).
Following the company's business report, numerous brokerage companies expressed optimism about the stock. Kotak Institutional Equities restated its buy recommendation on the company and boosted the target price by 12% to $1,060. The trading firm anticipates a 20% increase in Adani Ports over the following year.
"History suggests that the stock has traded in the 10-16 times one-year forward multiple range for the majority of the last seven years." "On a two-year forward basis, we value the company at an implied multiple of 13 times," Kotak added.
"We raise our fair value (target price) by 12% to $1,060 due to roll-forward and a lower (but still high) WACC (weighted average cost of capital) of 11.25%." The stock trades at less than 12 times FY2025E EV/EBITDA and is our top selection in the transportation sector. "Buy for a 20% return over the next year," urged Kotak.
Kotak raised its EBITDA forecast by 5-6 percent to account for stronger volume growth at the Mundra, Dhanraj, and Ennore ports.
"Over the fiscal years FY2023-26E, we anticipate volume CAGRs of 9%, 10%, and 15% for Mundra, existing ports, and the overall portfolio, respectively." "EBITDA CAGR would be higher at 21% due to higher realizations and margin expansion," added Kotak. Citi, among global brokerage houses, kept its buy call on the stock with a target price of 1,213, according to CNBC-TV18.
"The company continues to execute well and expand its dominance in the port and logistics space in India." Because of the unfavorable news flow around the Adani Group, CY23 valuations have been lowered. Despite the post-election surge, we believe there is still considerable room for valuations to rerate," Citi was cited as saying by CNBC-TV18.
