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Business News/ Markets / Stock Markets/  2 Adani Group stocks to buy as Jefferies remains bullish post Q3 results
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2 Adani Group stocks to buy as Jefferies remains bullish post Q3 results

Jefferies has recommended Buy ratings on two Adani Group stocks - Adani Ports and Ambuja Cements after Q3 results

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After their respective earnings for the third quarter ended December 2022 (Q3 FY23), global brokerage Jefferies has recommended Buy ratings on two Adani Group stocks - Adani Ports and Special Economic Zone (APSEZ) and Ambuja Cements.

Jefferies on Adani Ports

“Q3FY23 results were weak due to higher consolidation expenses, and we lower FY23E-25E EPS by 5%. Adani Ports’ share price is more linked to group issues currently. In 2015-16 when ICDs touched a high, stock bottomed around 50% premium to replacement cost and traded below its average multiple until the dust settled. Rs450-650 is the implied range, though we believe as fundamentals come back to focus it should re-rate to our target price of 800 with Buy tag."

Operationally, Adani Ports is continuing to move from strength to strength, with 22% market share from 14% in FY15 and should be 29% by FY25E. Though, downside risks, as per the brokerage include negative news flow on group leverage, and aggressive price acquisition of Concor.

Jefferies on Ambuja Cements

"Ambuja Cements management on results call indicated: around 100 bn capex over 18 mths on major efficiency initiatives/Cap upgrades; reiterated stance to double cap in 5 yrs, though near term targets missing; capitalizing on group adjacencies; ACEM-ACC merger not on table for now. While ACEM's volume growth could outpace industry in medium term, low visibility for near term and weak industry pricing drive 12-14% cut in EBITDA; but we maintain BUY with revised target price of 490."

Given Ambuja/ACC are already operating at 85%+ utilisation, a clearer outlook on expansions would have driven comfort on volume estimates. With organic capacity expansion of Ametha only (in ACC), visibility on near term vol outperformance is low, the note added.

The Adani Group has been diversifying its business interests and last year bought cement firms ACC and Ambuja Cements from Switzerland's Holcim for $10.5 billion.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Published: 09 Feb 2023, 09:28 AM IST
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