Adani Ports share price: Adani Ports shares can rally up to Rs 1,960, says Nuvama after visiting Vizhinjam port

Japanese brokerage firm Nuvama has reiterated its ‘buy’ rating on Adani Ports and Special Economic Zone (APSEZ) at a target price of Rs 1,960 apiece, as it anticipates revenue and EBITDA growth for the ports operator through FY29, the brokerage said after participating in the company’s investor day at its Vizhinjam port.The brokerage firm’s target price of Rs 1,960 per share for APSEZ, underscores an upside potential of over 64% from the current levels. Nuvama said its positive outlook is driven by strategic initiatives in the logistics business and technology-driven advancements. The shares of the company were trading as much as 2% higher on Monday at Rs 1,213.45 on BSE.

Adani Ports and Special Economic Zone reaffirmed its target to handle 1 billion tonnes of cargo by 2030 at its investor day held at its Vizhinjam port. Nuvama said this goal is expected to be largely fueled by growth in domestic cargo, projected at a 12% compound annual growth rate, while international cargo will grow selectively through partnerships with local operators in key markets like South East Asia, Africa, and the Middle East.

The brokerage sees the company’s consolidated revenue and EBITDA growing at a CAGR of 20% and 18%, respectively, from fiscal 2024 to fiscal 2029. The logistics segment is expected to be a major growth driver for APSEZ, with a revenue and EBITDA CAGR guidance of 46% and 48%, respectively, over the same period. APSEZ’s logistics business will focus on a range of services including container and non-container movement, warehousing, and multimodal logistics parks, Nuvama noted.Also read | RBL Bank shares down nearly 5% on ending credit card partnership with Bajaj Finance

Nuvama Institutional Equities sees group level adverse developments as key risks for the company, and said that APSEZ remains focused on maintaining strong balance sheet discipline, noting that its net debt to EBITDA has already improved from 3.3 times in FY21 to 2 times in H1FY25, well within the ceiling of 3.5 times.”APSEZ expects 18% CAGR in OCF to touch Rs 345 billion in FY29 (FY24–29), implying a strong 95% OCF/EBITDA ratio (94% in FY24). Moreover, this theoretically implies cumulative OCF of Rs 1.3 lakh crore in FY24–29, comfortably covering its capex, without considering tapping any refinancing measures,” the brokerage said.Nuvama said that one of the key highlights for the company is the ongoing development of the Vizhinjam port, India’s first semi-automatic transshipment terminal, which is set to begin operations in December 2024. The port is expected to handle 1 million twenty-foot equivalent units initially, with a target capacity of 3 million TEUs by 2028, the brokerage said.

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