Adani Ports, Adani Wilmar: 2 Adani group stocks to buy post selloff

Post up to 80 per cent plunge in Adani group stocks from their one-year high levels, two stocks adaniports-share-price-363228" target="_blank">Adani Ports & SEZ and awl-share-price-366595" target="_blank">Adani Wilmar have received buy ratings from analysts post their December quarter results.

A total of 21 analysts track Adani Ports, out of which 16 have strong buy, four have buy and one brokerage has hold rating on the stock, as per publicly available data with Trendlyne. The average price target for this stock at Rs 1,145, which suggests a potential 101 per cent upside. That said, recent brokerage notes peg upside potential at lower levels.

In the case of Adani Wilmar, the average price target at Rs 637.67 suggests a 60 per cent potential; upside. This stock, as per Trendlyne, is tracked by four analysts. The scrip has two 'buy' and two 'sell' calls.

In the case of Adani Ports, the company is the largest commercial port operator in India with 25 per cent share of port cargo movement in India. A total of 70 per cent of Adani Ports' revenue is contributed by its port operations. The rest is contributed by harbour (11 per cent) and logistics (7 per cent) and others.

"In the near term, APSEZ intends to prioritise a healthier balance sheet over growth (although the company has maintained its guidance of reaching 500 MMT by FY25). With lowered capex, its FCF has improved to 7-8 per cent

levels, which provides comfort on continued debt repayment beyond FY24. We remain positive on the long term growth prospects of the stock and maintain our BUY recommendation," ICICIdirect said in a February 9 note. The brokerage has a target of Rs 800 on the stock.

Kotak Institutional Equities finds the stock worth Rs 810.

"We lower estimates and fair value by 5 per cent, as we factor in limited asset acquisitions in FY2024/25E and the weakness in the FY2023 print. We set aside 200 bps of market cap per annum (Rs 2,500 crore) as a cushion against unforeseen events," it said.

Recently Credit Suisse upgraded the stock to Outperform from Neutral with a target of Rs 825 on attractive valuations and strong earnings growth outlook.

In the case of Adani Wilmar, KRChoksey Shares and Securities has suggested a target of 569 level. The target suggests a 43 per cent potential upside for the Adani group stock from Wednesday's closing price of Rs 397.25.

KR Choksey said Adani Wilmar shares fell due to reports relating the Group, but it believes that this is temporary.

It said Adani Wilmar may perform well because of strong and sustainable volume growth. The Adani group company's focus on penetration-led growth and increasing its reach is yielding results for the company, the brokerage said in a February 15 note

"We like the company’s strategy of penetration-led growth, focus on the international market, increasing distribution reach, timely capacity addition to supporting the growth, new product launches, and acquisition of the Kohinoor brand. We expect Adani Wilmar to benefit from the recent uptick in demand," it said.

KR Choksey said Adani Wilmar has shown strong volume growth in Food and FMCG and Industry Essentials with market share gains in Edible oil, Atta and Rice. It noted that Food and FMCG segments registered a growth of 26 per cent on a YoY basis in volume; Industrial Essentials volume grew 38 per cent on a YoY basis and for Edible Oil, it was up 9 per cent on a YoY basis, the brokerage said.

"Alternative channels such as E-commerce, Modern Trade, and eB2B have continued to grow at a much faster rate, owing to a shift in customer behavior. The company recognises a large opportunity in the HoReCa (Hotel,

Restaurants, and Caterers) segment and is planning to develop an operating model to drive sales in this segment," the brokerage noted.

Recently, Nuvama Institutional Equities said that Adani Wilmar competes in an extremely competitive business but it delivered strong volume growth across segments in December quarter. It cut its earning estimates for FY2-FY25 by 4.4-8.2 per cent and rolled over its estimates to FY25E with a new price target of Rs 680 from Rs 708 earlier. This price target in fact suggests a 70 per cent potential upside for the stock.

Also read: Adani Wilmar shares at Rs 569! KR Choksey sees 43% rally in battered Adani group stock

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