Adani Group’s stock surged following Axis Capital’s positive outlook on the recent acquisition of Singapore-based Abbott Point Port. Axis Capital highlighted significant upside potential for the company post-acquisition, boosting investor confidence. The deal is seen as a strategic move that could unlock further growth opportunities for Adani, driving up its stock price in the process.
Price Movement
During Wednesday’s trading session, share price of Adani Ports & Special Economic Zone Ltd reached an intraday high of Rs.1,241.90 per share, rising slightly from the previous close of Rs.1,233.20 per share. The shares have retreated since then and currently trading at Rs.1,236.00 apiece. Over the past five years, the shares have delivered over 360 percent returns.
What Happened
Brokerages have expressed a positive outlook on Adani Ports & Special Economic Zone (APSEZ) following its acquisition of a 100 percent stake in Singapore-based Abbott Point Port Holdings from Carmichael Rail and Port Singapore Holdings.
Axis Capital, which has a “Buy” rating on APSEZ with a target price of Rs.1,518, offering an upside potential of 23 percent, pointed out that the acquisition may cause a minor dilution in earnings per share (EPS) and return on capital employed (RoCE) through FY27. This is expected to result in a 130-150 basis point decline in RoCE and a 2-3 percent decrease in EPS. However, the preferential allotment of shares will be at par.
Axis Capital, which has a “Buy” rating on APSEZ with a target price of Rs.1,518, offering an upside potential of 24 percent, pointed out that the acquisition may cause a minor dilution in earnings per share (EPS) and return on capital employed (RoCE) through FY27. This is expected to result in a 130-150 basis point decline in RoCE and a 2-3 percent decrease in EPS. However, the preferential allotment of shares will be at par.
Axis also sees potential in the acquired asset, particularly in its scalability, including future opportunities like green hydrogen exports. While the initial market reaction may be muted, the brokerage believes the acquisition offers significant long-term value for APSEZ.
Ports Expansion
Adani Ports and Special Economic Zone (APSEZ) is India’s largest private port operator, managing 15 ports and 30 terminals with a total cargo handling capacity of around 633 MMT. Its strong presence on both coasts, with the West handling about 361 MMT and the East about 272 MMT, highlights its balanced network and ability to support diverse trade across India.
On the global front, APSEZ is expanding its reach with operational ports in Haifa, Colombo, and Tanzania, along with an operations and maintenance contract at Abbot Point in Australia. These ventures align with its vision of reviving India’s historic trade routes and strengthening its role in global maritime trade.
Earnings Report
According to its recent financial updates, Adani Ports & Special Economic Zone Ltd reported consolidated revenue of Rs.7,964 crores in Q3 FY25, representing a growth of approximately 15 percent compared to Rs.6,920 crores in Q3 FY24. Additionally, the company’s net profit inclined to Rs.2,518 crores, up 14 percent from Rs.2,208 crores in the same quarter last year.
Ratio Analysis
The company has a Return on Capital Employed (ROCE) of 12.89 percent and a Return on Equity (ROE) of 17.15 percent. Its Price-to-Earnings (P/E) ratio stands at 25.27, lower than the industry average of 49.81. Furthermore, the company maintains a current ratio of 1.94, debt-to-equity ratio of 0.88, and an earnings per share of Rs.49.2.
Written by – Siddesh S Raskar
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