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Business News/ Markets / Stock Markets/  Norway excludes Adani Ports from govt pension fund: Should you buy, sell or hold the stock? Here's what experts say
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Norway excludes Adani Ports from govt pension fund: Should you buy, sell or hold the stock? Here's what experts say

Norges Bank said it decided to exclude Adani Ports due to unacceptable risk that the company contributes to serious violations of individuals' rights in situations of war or conflict.

Adani Ports stock may face selling pressure in the near-term, according to analysts. (PTI)Premium
Adani Ports stock may face selling pressure in the near-term, according to analysts. (PTI)

Norway's central bank announced that its executive board has decided to exclude three companies from its government pension fund over ethical concerns. Norges Bank, which manages the sovereign wealth fund, said in a statement it has decided to exclude India's Adani Ports and Special Economic Zone, L3Harris Technologies and China's Weichai Power. 

The decision follows recommendations late last year from Norway’s Council on Ethics, which advises the Oslo-based fund. Norges Bank said it decided to exclude Adani Ports due to 'unacceptable risk that the company contributes to serious violations of individuals' rights in situations of war or conflict.' 

Also Read: Adani Ports Q4 Results: Net profit jumps 76% YoY to 2,040 crore; declares dividend of 6

Billionaire Gautam Adani's port major was on the Norway central banks' watchlist for possible exclusion from investment since March 2022 due to its involvement in a port terminal in Myanmar, according to news agency Reuters.

The company sold that port project last year. In a separate statement, Norway’s Council on Ethics noted that ‘no information on the buyer is available,’ making it impossible to ascertain whether Adani Ports still has ties to the division, said Bloomberg in its report earlier today.

Adani Ports to witness selling pressure in near-term: Analysts

Norges Bank's decision to exclude Adani Ports from its government pension fund due to human rights concerns could potentially lead to some foreign institutional investors (FIIs) re-evaluating their positions. As a sizeable sovereign wealth fund, this divestment may catch the attention of other ethical investors, according to analysts.

‘’The magnitude of any outflow is difficult to predict and will depend on factors like Adani Ports' foreign institutional ownership levels and whether other major funds follow Norges Bank's lead. The stock may see some selling pressure in the near term, though the long-term impact will likely be determined by the company's response and its ability to assuage the concerns raised over alleged rights violations,'' said Atul Parakh, CEO of Bigul.

Also Read: Motilal Oswal raises target price of Adani Ports on strong Q4 earnings; should you buy, sell or hold?

Adani Ports stock: Should you buy, sell or hold?

Broadly, the investor conviction in the company's fundamentals will play a key role in any material outflows. From a fundamental standpoint the Adani ports stock is already trading at an expensive valuation currently and this news can further act as a dampener to the counter. 

‘’The company anyway had a high high debt to earnings before interest, taxes, depreciation, and amortization (EBIDTA) ratio as well. The technical charts however give a completely different picture with a classic cup and handle pattern seen forming on the charts, which is a bullish conventional pattern and signals potential upside from these levels,'' said Rahul Ghose, CEO of Hedged.in and Octanom Tech.

‘’With such contrasting points, it is best to be safe and trade the stock on the long side only once the 1,360 level is taken out on the upside. This trigger point if achieved will take the stock past its previous all time high levels,'' added Ghose. The market experts recommends traders to ‘buy’ the stock only after the 1,360 level.

After Adani Ports delivered a robust performance in the January-March quarter for fiscal 2023-24 (Q4FY24), domestic brokerage firm Motilal Oswal raised its target price (TP) on the port major and reiterated its rating.

The brokerage firm retained its ‘buy’ rating on the Adani Ports, while raising the target price to 1,550. "We largely retain our estimates and reiterate our BUY rating with a revised TP of 1,550 (based on 17x FY26E EV/EBITDA)," said the firm in a note.

The Adani Group company is anticipated to achieve cargo volume growth 2-3 times that of India’s, primarily due to a well-balanced port portfolio along both the western and eastern coastlines, coupled with operational enhancements at recently acquired ports.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, and not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 16 May 2024, 07:49 PM IST
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