Adani Ports On Track To Beat FY24 Throughput Target, Says HSBC; Lifts Stock TP

Global brokerage HSBC said Adani Ports & Special Economic Zone Ltd. (ADSEZ) is well on track to beat its 400 million metric tons (MMT) cargo volume target in the current fiscal year ending March 2024 (FY24).

“We reiterate our Buy rating on ADSEZ and like its ability to consistently ramp up throughput with market share and margin expansion,” HSBC said in an investor note.

The brokerage also raised its target price on the stock to 1,560 rupees from 1,370 rupees per share. Shares of ADSEZ closed at 1,327.05 rupees yesterday on the BSE in Mumbai trading.

India's largest private port operator’s throughput rose 33% year-on-year to 35.4 MMT in February, taking total cargo volume to 382 MMT in the initial 11 months of FY24.

HSBC lifted its throughput assumptions for FY24-FY26E by 2% to reflect the company’s solid port throughput growth in January-February 2024.

“For FY24E, we now forecast 417 MMT of throughput (from 410 MMT previously), which implies 10% YoY growth for overall throughput in March 2024 to 35 MMT,” it said.

The brokerage also raised its EBITDA forecasts for the company by 1% in FY24E and 3%-4% in FY25-FY26E on higher port throughput assumptions and slightly higher margins for its logistics business.

HSBC said it views ADSEZ as a long-term play on India’s trade and infrastructure growth.

“We think its diverse and sticky cargo (54% of total as of FY23) should buffer the impact of near-term trade uncertainties, while vertical integration and the addition of Vizhinjam and Colombo terminals should strengthen its capacity and pricing power, particularly in the east coast of India,” it noted.

HSBC expects a 19% CAGR in ADSEZ’s EBITDA in FY23-FY26E and return on invested capital to rise to 16% in FY26 from 10% in FY23.

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