Buy Adani Ports, target price Rs 400: Centrum Broking

Centrum Broking has given buy rating to Adani Ports with a target price of Rs 400. The share price moved up by by 1.51 per cent from its previous close of Rs 341.45. The stock’s last traded price is Rs 346.40.

Adani Ports & Special Economic Zone Ltd., incorporated in the year 1998, is a Large Cap company (having a market cap of Rs 70359.56 Crore) operating in Shipping sector.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 2292.69 Crore, down 21.52 % from last quarter Sales of Rs 2921.19 Crore and down -17.96 % from last year same quarter Sales of Rs 2794.47 Crore. The Company reported net profit after tax of Rs 759.11 Crore in latest quarter.

Investment Rationale
APSEZ has a strong portfolio of cash generating assets and its cargo stickiness partly safeguards against near term growth disruption while also giving it ability to capitalize on growth recovery. The brokerage estimates 4.8% decline in cargo (ex-KPCL) to 212mt in FY21 followed by 13.5% growth in FY22 to 241mt. It expects port EBITDA to grow at 19% CAGR over FY20-22E. Further unwinding of pledges as targeted should be an added positive. It maintains Buy on the stock with a SOTP based target price of Rs 400.

Promoter/FII Holdings
Promoters held 63.6 per cent stake in the company as of June 30, 2020, while FIIs held 17.1 per cent, DIIs 4.3 per cent and public and others 15.1 per cent.