Adani Port and Special Economic Zone (APSEZ) is one of the largest port operators in India and the world. The company’s share price has been on a stellar run in the past week, surging over 10% and hitting a new 52-week high of Rs 1,000 on Friday. What is driving this rally and what do analysts expect from the stock in the future? In this article, we will explore the factors behind APSEZ’s strong performance, the company’s growth prospects, and the outlook of various brokerage firms on the stock.
APSEZ is not only a port operator, but also a diversified infrastructure conglomerate with interests in logistics, power, airports, and gas distribution. The company has been expanding its presence across India and abroad, acquiring new assets and enhancing its operational efficiency.
One of the main reasons behind APSEZ’s share price rally is its impressive performance in the second quarter of fiscal year 2024. The company posted a consolidated net profit of Rs 2,054 crore for the quarter, up 36% from Rs 1,510 crore in the same period last year. The company’s revenue also rose by 24% year-on-year to Rs 4,557 crore, as compared to Rs 3,667 crore in Q2 FY23. This was mainly due to a 20% increase in cargo volumes to 76 million tonnes (MT), as well as an improvement in operating margins from 63% to 66%. APSEZ’s earnings beat market expectations, as analysts had projected a net profit of Rs 1,900 crore and revenue of Rs 4,300 crore for the quarter. The company also declared an interim dividend of Rs 5 per share for its shareholders.
Another factor that has boosted APSEZ’s share price is its acquisition of Gangavaram Port Limited (GPL), which was completed in September 2023. APSEZ acquired a 58.1% stake in GPL from DVS Raju and family for Rs 3,604 crore, and another 31.5% stake from Warburg Pincus for Rs 1,954 crore. With this acquisition, APSEZ became the largest port operator in India with a market share of over 30%, handling over 400 MT of cargo annually. The company now operates 12 ports across India, including Mundra, Dahej, Hazira, Dhamra, Kattupalli, Ennore, Vizag, Krishnapatnam, Dighi, Goa, and Kandla.
GPL is a strategic asset for APSEZ, as it is located near the Visakhapatnam Port and handles a variety of cargo such as coal, iron ore, fertilizers, and steel. GPL has a capacity of 64 MT per annum and handled 34.5 MT of cargo in FY23. APSEZ expects to increase GPL’s capacity to over 100 MT per annum in the next few years.
APSEZ has been diversifying its portfolio into new segments such as airports, power generation, gas distribution, and logistics. The company has been expanding its presence in these segments through acquisitions and investments in the past few years.
For instance, APSEZ acquired a 74% stake in Mumbai International Airport Limited (MIAL) and a 100% stake in Navi Mumbai International Airport Limited (NMIAL) in August 2023, making it the largest airport operator in India with a combined passenger capacity of over 100 million per annum.
Similarly, APSEZ acquired a 49.9% stake in Snowman Logistics Limited (SLL) in January 2023, strengthening its position in the cold chain logistics segment. SLL is the largest cold chain service provider in India with a network of 31 warehouses and a capacity of over 1 lakh pallets.
Moreover, APSEZ has been investing in power generation and gas distribution projects, such as the 1,200 MW Udupi Power Plant, the 1,320 MW Raigarh Power Plant, and the Adani Gas Limited (AGL) joint venture with TotalEnergies. These projects are expected to enhance APSEZ’s energy security and cater to the growing demand for clean energy in India.
APSEZ’s stock has received a positive outlook from various brokerage firms and analysts, who have praised its strong earnings growth, diversified portfolio, and attractive valuation. The company has delivered a compounded annual growth rate (CAGR) of 25% in revenue and 28% in net profit over the past five years.
Some of the target prices and ratings given by different analysts for APSEZ’s stock are as follows:
- Motilal Oswal: Buy rating with a target price of Rs 1,150, implying an upside of 15% from the current level.
- ICICI Direct: Buy rating with a target price of Rs 1,100, implying an upside of 10% from the current level.
- HDFC Securities: Buy rating with a target price of Rs 1,080, implying an upside of 8% from the current level.
- Edelweiss: Buy rating with a target price of Rs 1,050, implying an upside of 5% from the current level.
In conclusion, APSEZ’s share price has been on a surge in the past week, driven by its strong Q2 earnings, acquisition of Gangavaram Port, expansion into new segments, and positive outlook from analysts. The company has emerged as a leading infrastructure player in India and abroad, with a diversified portfolio and robust growth prospects.
Do you think APSEZ’s share price will continue to rally in the future? What are your views on the company’s performance and strategy? Share your thoughts in the comments section below or subscribe to our newsletter for more updates on APSEZ and other stocks.
This post Adani Port Share Price Surges 10% in a Week; Here’s What Analysts Say About the Stock was originally published at Finance Crave
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