Motilal Oswal raises target price of Adani Ports on strong Q4 earnings; should you buy, sell or hold?

After Adani Ports delivered a robust performance in the March quarter, brokerage firm Motilal Oswal raised target price on the Nifty-listed stock Adani Ports and SEZ.

The brokerage firm retained its ‘buy’ rating on the Adani Ports and SEZ stock, while raising the target price to ₹1,550. "We largely retain our estimates and reiterate our BUY rating with a revised TP of ₹1,550 (based on 17x FY26E EV/EBITDA)," said the firm in a note.

Adani Ports & SEZ (APSEZ) reported a revenue growth of 19 per cent year-on-year (YoY) to ₹68.9 billion in 4QFY24. During the quarter, APSEZ recorded 26 per cent YoY growth in cargo volumes to reach 108.8 MMT.

Also read: Adani Ports Q4 Results: Net profit jumps 76% YoY to ₹2,040 crore; declares dividend of ₹6

According to the brokerage firm, the performance in the fourth quarter closely aligned with our projections. APSEZ is anticipated to achieve cargo volume growth 2-3 times that of India’s, primarily due to a well-balanced port portfolio along both the western and eastern coastlines, coupled with operational enhancements at recently acquired ports. 

Additionally, the logistics segment is poised to complement the domestic ports business by improving last-mile connectivity. Over the period spanning FY24-26, we foresee APSEZ reporting an 11% increase in cargo volumes, resulting in a Compound Annual Growth Rate (CAGR) of 14 per cent, 15 per cent, and 19 per cent in revenue, EBITDA, and Profit After Tax (PAT), respectively.

“We expect APSEZ to report 11 per cent growth in cargo volumes over FY24-26. This would drive a CAGR of 14 percent/15 per cent/19 per cent in revenue/EBITDA/PAT over FY24-26. APSEZ is anticipated to outpace India's overall growth, driven by a balanced port mix along India's western and eastern coastlines and a diversified cargo mix,” the firm added.

Also read: Adani Enterprises Q4 Results: Net profit drops 38% to ₹451 crore, revenue up marginally; dividend declared

Other than Motilal Oswal, brokerage firm Jefferies has also raised the target price of the Adani stock to ₹1,640, saying that the Q4 EBITDA fell short of expectations by 5 per cent due to slightly lower realizations. Nevertheless, the management's remarks conveyed confidence in achieving double-digit growth.

Brokerage company HSBC has also hiked the target price to ₹1,560 for Adani Ports.