Adani Ports Q4 earnings beat estimates. Should you buy this stock?

Adani Ports posted a 5% year-on-year (YoY) rise in consolidated net profit for the March quarter at Rs 1,159 crore. For FY23, the company reported a 9% YoY growth in net profit to Rs 5,310 crore, and revenue grew 22% to Rs 20,852 crore.

Consolidated revenue grew 40% on year to Rs 5,797 crore for the reporting quarter. The Adani Group firm recorded its highest-ever port cargo volumes at 339 million tonnes in FY23, a 9% growth from the year-ago period.

The stock was trading nearly 2% lower on BSE at Rs 722.60 in early trade on Wednesday.

Here is what brokerages are recommending on the stock:

Kotak Institutional Equities: Buy | Target: Rs 835
We marginally cut our estimates and increased FV to Rs 835 from Rs 810 on a roll-forward basis. The company guides for healthy growth and reduction in leverage. ADSEZ reported in-line results adjusted for the Haifa consolidation. We continue to build in a high 14% CoE and would await further progress on the reduction in cash flow items linked to ICD given/received (gross amount high though down 50% YoY) and further clarification/reduction in large outstanding security deposits given to EPC contractors against capital commitment (have declined for the second-straight year).

Goldman Sachs: Buy | Target: Rs 800
Goldman Sachs has a ‘Buy’ rating on Adani Ports for a price target of Rs 800. The Q4 earnings were in-line with modest growth amid the balance sheet focus. PAT was impacted by exceptional loss on sale of Myanmar port. FY24 net debt/EBITDA guidance of 2.5x from 3-3.5x in FY23.

Nuvama: Buy | Target: Rs 956
Nuvama retains a ‘Buy’ with a DCF-based target price at Rs 956. Sailing in the right direction, Adani Ports & SEZ (APSEZ) ended FY23 on a strong note with an all-time-high revenue and EBITDA, beating consensus on operational metrics. Core operational results were strong and ahead of estimates. Adani Ports continues to diversify and expand across the logistics value chain. Its aggressive expansion in logistics is quite synergistic to the ports business.

JM Financial: Buy | Target: Rs 850
We raise our estimates by up to 3-4% to reflect 4QFY23 performance and outlook. We maintain BUY rating with SoTP-based March 2024 target price of Rs 850 (earlier Rs 800). Adani Ports adjusted EBITDA of Rs 3,270 crore for 4QFY23 was above JM Financial’s estimates. PAT was also higher than street estimates, the brokerage said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)