is adequately de-linked from Group companies’ operational and stock performance due to improved governance. It has maintained a ‘buy’ rating on the stock with an unchanged target of Rs 1,025.
At Tuesday’s close of Rs 842.35, the price target suggests a 22 per cent potential upside on the counter.
Nomura said group-linked concerns are subsiding for Adani Ports as cash flows improve, adding that the company is likely to stay on course with its governance commitments.
It noted that Adani Ports has honored its commitment on not providing related-party loans since FY16 and also minimising share pledges.
“With limited exposure to Group companies, we view ADSEZ as well insulated from Group performance. Further, over FY16-22 Adani entities’ cash flows have improved, and adequately cover interest expenses, and relative leverage levels (net debt/EBITDA) has dropped . Additionally, individual entities have also witnessed a lowering of share pledges, leading to adequate headroom to refinance maturing debt and less of a need to pledge ADSEZ shares in a major manner,” it said.
Nomura said logistics Adani Ports volumes stood at 91 million tonnes in June quarter and further monthly volumes are trending at 30-31 million tonnes. This rate is higher than 350-360 million tonnes guided by management for FY23, it noted.
“Further, Adani Logistics (ALL) has witnessed significant gain in container train market share from
(CCRI IN, Neutral). With a capex plan of Rs 23,000 crore and a focus on logistics and warehousing, we expect market share gains to accelerate for ALL and warehousing over FY23-25F,” it said.
That said, the brokerage has cut its FY23 Ebitda estimate by 14 per cent as it pushes back the Gangavaram consolidation to H2FY23, but largely retains FY24 Ebitda estimates. The brokerage said lower-than-estimated volumes and higher debt are key downside risks to the stock’s prospects.
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