Shares of Adani Ports and Special Economic Zone are on a bull run as group stocks recover from the carnage caused by the Hindenburg report. Adani Ports shares, which crashed 48.11% from Rs 761.20 level on January 24 to the 52-week low of Rs 394.95 on February 3 have recovered a majority of losses till date. In the current trading session, the Adani Ports stock was trading at Rs 696 today, recovering 76.22% from the 52-week low level on BSE.
According to a report by the financial services firm Motilal Oswal, the Adani Ports & SEZ stock has 100 per cent buy ratings.
Abhijeet from Tips2trade said, “A strong pullback from technically oversold levels also aided by prepayment of loans has led to a sharp recovery in Adani Ports stock price. Technically, Rs 716 will act as a strong resistance. A daily close below Rs 681 should be used to exit buy positions and wait for a dip near Rs 600 to initiate fresh buy positions for higher targets.”
In the current trading session, Adani Ports stock was trading flat at 695.35 against the previous close of Rs 697.20. The large cap stock opened lower at Rs 684 on BSE. Adani Ports shares have lost 4.65 per cent in one year and fallen 14.87 per cent since the beginning of this year.
Market cap of the firm stood at Rs 1.50 lakh crore on BSE. Total 6.32 lakh shares of the firm changed hands amounting to a turnover of Rs 43.69 crore on BSE. The stock hit a 52-week high of Rs 987.90 on September 20, 2022.
Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher said, “The stock has witnessed a huge erosion in a very short span of time from around Rs 1,000 levels to hit the low of Rs 395 almost losing 60% of its price value post the Hindenburg report. Market players wanted to grab the opportunity once the intensity of the report eased out and thereby witnessed a strong recovery. The pullback witnessed reached the first target of around Rs 580 zone and thereafter a breakout saw the stock reaching the 2nd target of Rs 700 zone. From here, the next upside target visible is near Rs 760-780 levels till the levels of Rs 650-660 is maintained intact. A decisive breach below the Rs 650 zone would again trigger for a slide with next support zone of Rs 580 levels.”
In terms of technicals, the relative strength index (RSI) of Adani Ports stands at 63.3, signaling it’s trading neither in the overbought nor in the oversold zone. Adani Ports stock has a one-year beta of 1.6, indicating very high volatility during the period. Adani Ports shares are trading higher than the 5 day, 20 day and 50 day moving averages but lower than 100 day and 200 day moving averages.
JM Financial has initiated coverage on Adani Ports with a ‘Buy’ rating and a one-year target price of Rs 800, suggesting a potential upside of 36 per cent on February 28. The domestic brokerage said it expects Adani Ports to remain the market leader in India with volume growth of 16 per cent, translating into revenue growth of 15 per cent, Ebitda growth of 15 per cent and PAT growth of 13 per cent, compounded annually over FY23-25E.
JM Financial said Adani Ports may generate cumulative operating cash flow (OCF) of Rs 26,100 crore in FY24-25 and have a capex of Rs 12,000 crore, resulting in Rs 14,000 crore of free cash flow, substantially higher than its debt-repayment obligations of Rs 11,000 crore.
Kotak Institutional Equities has assigned a ‘Buy’ call on Adani Ports while pegging the stock at a fair value of Rs 810.
Domestic brokerage ICICIdirect assigned a target of Rs 800 on the Adani Ports stock, suggesting a potential upside of 28 per cent over the closing price of Rs 623.20 on March 2. ICICIdirect said Adani Ports Ltd is the largest commercial port operator in India with 25 per cent share of port cargo movement.
Adani Ports, ICICIdirect said, has embarked on becoming India’s largest integrated transport utility company by 2030 and is strengthening its capabilities in all logistics segments namely ports, CTO, warehousing, last mile delivery and ICDs. Adani Ports will be able to offer end to end service to its customers, capturing higher wallet share and also making the cargo sticky in nature. Besides, the brokerage expects DFC connectivity to Mundra is expected to provide faster port evacuation, quicker transit time and would enable higher volume generation for Adani Ports.
“Adani Ports is backed by strong FCF generating assets (14 ports, 81 trains, 9 MMLPs, 1.4 million square feet warehousing, 620 km of rail tracks etc) with a 15 per cent-plus RoCE. Further it has a comfortable debt to equity ratio close to 1. We have valued Adani Ports on SOTP basis with a target price of Rs 800,” it said.
Adani Group stocks fell on January 25 after a report by Hindenburg Research alleged accounting frauds, stock manipulations and money laundering by the Adani Group. Adani Group called Hindenburg’s report as maliciously mischievous and unresearched, which, it said, adversely affected the Adani Group, its shareholders and investors.
Adani Group had said that the timing of the Hindenburg report’s publication clearly betrays a brazen, mala fide intention to undermine the group’s reputation with the principal objective of damaging the follow-on public offering from Adani Enterprises, which is the biggest FPO ever in India.
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