Adani Ports' Shares Tumble After Q2 Misses Estimates
Shares of Adani Ports & Special Economic Zone Ltd. dropped the most in at least 19 weeks after the company's net income and sales missed analysts' estimates in the quarter ended September.
India’s largest private port operator's profit fell 27% sequentially to Rs 951.7 crore in the July-September period, compared with the Rs 1,351-crore consensus estimate.
Its cargo volumes also declined 9.7% over the preceding three months.
The stock fell as much as 8.6% to Rs 681.1 apiece, but pared some of its losses to trade 5.6% down as of 11:30 a.m. on Thursday.
Trading volume was 2.9 times 30-day average volume for this time of the day. Shares of Adani Ports crossed below the 200-day moving average.
Of the 26 analysts tracking Adani Ports, 23 suggest a 'buy' and three recommend a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 20.9%.
Here's what brokerages had to say:
Maintains 'outperform' with a target price of Rs 825 apiece, implying a potential upside of 10%.
The company's traffic slowed, led by an unsustainable spike in commodities, making user industries such as power unviable.
Likely finalisation of large land monetisation for new factories is the next catalyst.
The company sharpened its focus on ESG and decided to exit its $150-million Myanmar port, which we had flagged as a concern.
Adani Ports has also built a cash chest of Rs 12,000 crore for a potential bid for Container Corporation of India (Concor) divestment. Limited upside drives outperform rating on this strategic asset.
Maintains 'buy' with a target price of Rs 900, implying a potential upside of 20%.
Lower coal offtake impacted performance vis-à-vis estimates.
With its strong free cash flow generating assets, diversified cargo mix and overall leadership in Indian ports, Adani Ports continues to build its strength in other verticals such as rail logistics and warehousing, thereby building a complete integrated logistics solution for Exim and domestic customers.
Remains positive on the long-term growth prospects of the stock.
Dedicated freight corridor connectivity to Mundra (normalised in three to four quarters) is likely to provide faster port evacuation, quicker transit time (logistics vertical). Adani Ports is also developing eight freight terminals on DFC route, thereby providing greater hinterland reach to its customers
Aggressive investments into logistics space, inorganic opportunities such as acquisition of Concor are key triggers to its future price performance
Maintains 'buy' but cuts target price to Rs 915 from Rs 950, implying a potential upside of 22%.
Adani Ports’ volume driven 2.4x profit growth story of FY21-25 should support upside. Exit decision from Myanmar project helps on ESG.
Operationally, Adani group’s execution ability in the ports business can hardly be questioned. It’s the perfect blend of cargo and geographical diversification, with consistent market share growth over the years.
Management walked the talk of reducing promoter pledges post receipt of proceeds from the Adani Green-Total deal. Efficient cash flow utilisation, no incremental inter-group transactions, with a bias to directionally raise the payout remain the commitment.