According to the research firm, company management’s focus is shifting to striking a balance between growth and debt. Goldman Sachs cited organic port volume growth, sales in Myanmar ports, new investments in Sri Lankan ports and minor bottlenecks at Haifa port (Israel) despite the ongoing war.
In a note on Wednesday, the research firm said, “We believe shares should perform well after this, especially if there is a surprise gain in the second half of the year…” Goldman Sachs believes the company will exceed its FY2024 volume guidance.
The brokerage firm has maintained a ‘buy’ rating on the stock, and a target price of Rs. 820 to Rs. 855, which gives an upside potential of 7.85 percent.
The research firm updated its estimates after including second-quarter earnings, and raised volume estimates by 3% due to stronger volumes and a ramp-up in new ports. According to the research firm, “Our FY25/FY26 revenue/EBITDA estimates have been raised by 3-4%…”
Guidance for FY24
For a company that achieved volumes of 240 million tonnes in the first seven months itself, Goldman Sachs is considering guidance of 37-390 million tonnes for the financial year as ‘conservative’.
The company for the financial year Rs. Also maintained EBITDA guidance of Rs 14,500-15,000 crore, an increase of 19 percent YoY. Accordingly, it is expected that the net debt-to-EBITDA will also come down to 2.5 times compared to 3-3.5 times last fiscal.
Main exposure and street view
Adani Ports has a market share of 43 percent and 29 percent in all India container and overall port volumes respectively. Goldman Sachs said this could affect the company in the event of a sustained slowdown in export and import volumes.
It said free cash flow generation could be affected by increased capital expenditure or acquisitions and market sentiment on cash flow risks could remain ‘high’.
At 2:14 pm on the NSE, shares of Adani Ports were up 0.14 percent against the Nifty 50 almost unchanged at Rs. was trading at 792.95.
According to Bloomberg data, 19 out of 20 analysts tracking Adani Ports maintained a ‘buy’ rating on the stock, while one advised ‘hold’. Average 12-month analyst price targets suggest a potential upside of 19 percent.
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