Buy Adani Ports; target of Rs 372: Edelweiss

Edelweiss' report on Adani Ports and Special Economic Zone

"The sharp correction (18% over 8 trading sessions) in Adani Ports’ stock price provides a good buying opportunity. With the demerger of Adani Enterprises (AEL), some of the concerns on Adani Ports with respect to allocation of surplus funds should ebb. In addition, due to the company’s strong balance sheet further inorganic growth should translate into enhancing shareholders’ returns. Robust traction in cargo growth has resulted in management targeting to enhance capacity at Hazira from the earlier ~25MT to ~100MT by 2022. Building in the same, we have revised our target price to INR372 (INR355 earlier). Upgrade to ‘BUY’."

"Adani Ports has been delivering stellar financial performance over the past couple of years despite a tough business environment (25% volume growth against India’s 10% over last 4 years). In addition, it also utilised this opportunity to acquire loss-making scalable assets and successfully turned them around within a year. At CMP, our revised SOTP target price of INR372 (INR355 earlier) offers 25% upside. We upgrade to ‘BUY/SO’ from ‘HOLD/SO’ ", says Edelweiss research report.

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