Why brokerages are bullish on this Adani Group stock

Market


Adani Ports and Special Economic Zone (APSEZ) shares were trading over 5% higher at 799 per share on the BSE in Thursday’s trading session. Brokerage firm Centrum Broking sees further upside on the Adani Group stock as it has maintained its ‘Buy’ rating as it said that APSEZ has achieved a formidable position in the ports industry at a time when the industry is consolidating. 

“Adani Logistics has a restricted presence so far in the warehousing space through its existing MMLPs. The company targets to increase its standalone grade‐A warehousing space materially from 0.4 mn sqft currently to 60 mn sqft by FY26. It targets 30 mn sqft over the next three years, of which ~50% will be organic and balance will be through acquisitions,” the brokerage said.

Centrum further added that Adani Group has a deep understanding of the transportation business, with its presence in airports, ports, highways, rail logistics, etc, and remains well placed to take advantage of emerging opportunities such as grade‐A warehousing.

“APSEZ remains comfortably placed to fund its growth ambitions. There may be some interim downward pressure on returns due to rapid scale up plans in logistics/warehousing but the impact can be mitigated by capex rationalization, increase in capacity utilization, and improved pricing/profitability in the ports business,” said the brokerage note

Another brokerage firm ICICI Securities has a ‘Buy’ on Adani Ports with a target price of 875 per share and stop loss of 678 with a time frame of three months.

“The open interest in Adani Ports has declined significantly amid the resilience shown by the stock. The stock had made a high of 900 in June 2021. Factually, in the last couple of months, profit booking was seen repeatedly from 750-760. However, since October 2021, shorts have been continuously reducing, indicating closure of short positions. We believe fresh longs may be added in the stock if it sustains above 760 levels for fresh upsides,” ICICI Securities note said.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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