Adani Ports target price increased by Kotak Equities as outperformance is likely to continue

“Essentially, ADSEZ is sitting on a capacity bank 5-6X of its existing capacity while key peers will have to add assets at higher capital cost to scale beyond 2X existing capacity. ADSEZ has bought (and thus taken out) most existing non-major concessions available where significant capacity additions can happen,” said a report by Kotak.

Adani Ports grew its volumes by 14% year-on-year (YoY) in April-May 2024 versus the Indian market’s low-to-mid single-digit growth in this period, including the Gangavaram Port’s loss of 6 mn tons (impacted by strike/shutdown) to both datasets.

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Adani Ports’ key ports’ assessment suggests a potential of growing existing capacity by 5-6X over time, which gives the company a big advantage, as its cost of capacity expansion would be lower versus peers.

Unlike ADSEZ, most of its peers own assets where the scale-up of existing capacity 2X would be difficult—own terminals (fixed capacity), apart from select non-major ports, adds Aditya Mongia of .

The company has added five assets in India over the past decade in Dhamra, Kattupalli, Krishnapatnam, Gangavaram and Sarguja Rail. These assets presently have a combined EBITDA of Rs 5,000 crore, equivalent to their combined net debt adjusting for loans given to the parent.

The has suggested that reinvestment value at a low single-digit share of SoTP remains a key upside risk.

Adani Ports shares were trading at 1.7% higher at Rs 1,428 around 12:30 pm on BSE today.

(Disclaimer: The views expressed by experts are their own and do not necessarily reflect those of The Economic Times)