Adani Ports & Special Economic Zone remains Bernstein’s top pick in its Industrials and Infrastructure coverage, with the brokerage retaining an Outperform rating and a price target of Rs 1,973. Based on the stock’s September 8 close of Rs 1,710, the target implies around 15% upside.
Bernstein’s latest note highlights three key reasons for its bullish view: rising coal demand, Adani Ports’ structural position in containers and dollar-linked revenues, and the easing of several overhangs that had weighed on the stock.
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Coal Demand, Power Cycle In Focus
Bernstein expects rising power demand to support higher coal consumption, making Adani Ports a potential beneficiary. The brokerage noted that power demand has picked up by more than 10% in recent months and expects domestic coal production to remain supportive, although imports could also rise as coal inventories at Indian power plants remain relatively low.
The brokerage said the government’s push to extend the mandate for imported coal-fired power plants to operate could further support coal volumes through ports.
Adani Ports handled around 45% of India’s container volumes, according to Bernstein, making containers a key structural growth driver. The brokerage expects the company to benefit from increasing penetration of containers and its ability to move closer to customers, potentially improving pricing power.
It also highlighted the company’s exposure to dollar revenues, with around 40% of revenue linked to US dollars, providing another support to the investment case.
Three Risks Ease
First, it expects the Mundra port concession to receive treatment similar to the Gujarat Pipavav concession, reducing the risk around the expiry of Mundra’s concession in 2031.
Second, the overhang around Adani Ports’ acquisition of UK-based port operator AB Ports has eased, with the brokerage saying the deal is no longer an immediate concern.
Third, Bernstein pointed to stronger group financial health as reducing the potential burden that could otherwise fall on Adani Ports.
The brokerage also highlighted Adani Ports’ 22% EBITDA CAGR over the past three years, while noting that share pledges have been eliminated.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)
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