Nomura expects this Adani Group stock to cross Rs 1,000 mark in year

Shares of Adani Ports and Special Economic Zone were in focus today after financial brokerage firm Nomura gave a buy call to the Adani Group firm with an unchanged target price of Rs 1,025. The target price translates into a 22 per cent upside for the stock of Adani Ports. Adani Ports stock rose 0.46 per cent to Rs 846.30 against the previous close of Rs 842.35 on BSE.  The share has gained 13.22 per cent in a year and gained 15.49 per cent in 2022.

Market cap of Adani Ports stood at Rs 1.78 lakh crore. Total 0.63 lakh shares of the firm changed hands amounting to a turnover of Rs 5.30 crore on BSE. Nomura said the Adani Group firm is into an integrated logistics play and port volumes are trending above guidance.

The company may be requiring Rs 23,000 crore in capex over FY23-25, leading to a capex-intensive phase but concerns on group leverage are overdone,  Nomura said in its latest note on Adani Ports. Nomura said Adani Ports was adequately de-linked from Group companies' operational and stock performance due to improved governance.

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"With limited exposure to Group companies, we view ADSEZ as well insulated from Group performance. Further, over FY16-22 Adani entities' cash flows have improved, and adequately cover interest expenses, and relative leverage levels (net debt/EBITDA) has dropped. Additionally, individual entities have also witnessed a lowering of share pledges, leading to adequate headroom to refinance maturing debt and less of a need to pledge ADSEZ shares in a major manner," Nomura mentioned in the note.

"Further, Adani Logistics (ALL) has witnessed significant gain in container train market share from Concor. With a capex plan of Rs 23,000 crore and a focus on logistics and warehousing, we expect market share gains to accelerate for ALL and warehousing over FY23-25F," it said.

AR Ramachandran, Co-founder & Trainer, Tips2Trades said, "Among all the Adani Group stocks, Adani Ports stands out due to its strong financial performance, consistent future prospects and decent valuations. Rs 860 remains a strong resistance above which Rs 925- Rs 940 could be achievable in the near term. Ideally, long-term investors should start accumulating only near Rs 765- Rs 770."

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Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking said, "The share price of Adani Ports has witnessed a strong buying demand from the crucial support area of  Rs 820 being the confluence of the 20DMA and the rising demand line joining lows of July 2022 (Rs 745) and August 2022(Rs 778) signalling strength and positive price structure.  Currently, the stock is in a consolidative mode of the last few days in a trading range of  Rs 820- Rs 850. Thus, it offers fresh entry opportunity. On the larger time perspective i.e. in weekly chart, since Mar'21 the stock has been trading amid the broader range of  Rs 650- Rs 900 thus resulting in to form bullish 'Rectangle' pattern. Presently, the stock is trading at the higher quadrant of the structure and hence the longer-term outlook continues to remain positive. For short term traders, one can expect the stock to continue with its up move and head towards  Rs 900- Rs 920 levels in the coming weeks as it is the previous swing high. Decisive close of the said resistance level would be recognised as a breakout of bullish 'Rectangle' pattern."

Pranit Arora, Co Founder & CEO of Univest is bullish on the stock with a target price of Rs 1,020.

"Adani Ports and Special Economic Zone (APSEZ) is the biggest  commercial port operator in India with 25 per cent share of port cargo movement in India. The Adani ports stock reached its all-time high of  Rs 924 on April 27, 2022, and is currently trading close to that. The 50 EMA is well above 100 and 200 EMA, indicating bullishness.  They have a robust goal of becoming India’s largest integrated transport utility company by 2030. The company is strengthening its capabilities in all logistics segments (ports, CTO, warehousing, last mile delivery, ICDs, etc), so that it can offer end-to-end services to its customers thereby capturing higher wallet share and also making the cargo sticky in nature. Therefore, long-term investors can expect decent return with target price of Rs 1,020, given its robust future prospects and expanding demand with recovering economy,"  said Arora.

Palak Kothari, Senior Technical Analyst, Choice Broking said, "On a monthly chart, the stock has been trading with the support of 21 MMA which suggests a positive bias. Additionally, the stock has formed a strong base around Rs 640 while Rs 925 will be a resistance level crossing above the same can show more upside rally On a weekly chart, the stock has been trading in a rectangle formation and consolidating near to resistance zone which points out strength in the counter Moreover, the stock has moved above "Ichimoku Cloud" with a positive crossover between the conversion line and the baseline, which shows the upside movement in the counter. On a daily chart, the price has been trading with the middle leg of "Bollinger Band" which suggests a bullish rally will continue further in the near term A daily momentum indicator Stochastic shows positive crossover which adds more bullishness to the price. As per the above technical parameters, the stock is looking bullish on charts crossing above Rs 925 can show more strength in the counter for the target at Rs 990- Rs 1,040 levels while on the downside, the support comes at Rs 640 levels."

In June 2022, Citi assigned a buy call on the Adani Group firm. Citi gave a target price of Rs 981, a 35 per cent upside on BSE. Citi in a note said the firm reiterated FY23E volume guidance of 350-360 million tonnes and underlined April/May volumes were in line with guidance.

In Q1 of the current fiscal, Adani Ports reported a 16.1 per cent fall in consolidated net profit at Rs 1,072 crore for the quarter ended 30 June, 2022. The multi-port operator had posted a net profit of Rs 1,278 crore in the year-ago period.

Revenue from operations declined marginally to Rs 4,737 crore as against Rs 4,672 crore in the same quarter last fiscal.

Sequentially, profit grew 5 per cent from Rs 1,024 crore in the preceding quarter (Q4FY22). The EBITDA, however, clocked 11 per cent YoY growth at Rs 3,005 crore. The company also added that it recorded its highest ever quarterly cargo of 91 MMT, up 8 per cent YoY.