Jefferies up after Q3 results, Adani Group 2 stocks a buy

Jefferies On Adani Ports

“Q3FY23 results were weak due to higher consolidation spend, and we reduce FY23E-25E EPS by 5%. Adani Ports share price is currently more linked to group issues. When the ICD touched a high in 2015-16, the stock traded at nearly 50% below the premium to replacement cost and traded below its average multiple till the dust settled. Rs.450-650 is the implied range, however we believe it should be re-rated to our target price to focus on fundamentals 800 with the buy tag.

Operationally, with a market share of 14% to 22% in FY2015, Adani Ports continues to go from strength to strength and should have 29% by FY2025. However, according to the brokerage, downside risks include negative news flow on group leverage and aggressive value acquisition of Concor.

Jefferies on Ambuja Cements

Ambuja Cements management hints at results call: Around 100 billion capex in 18 months on key efficiency initiatives/cap upgrades; reiterated stance for double cap in 5 years, though missing near-term targets; capitalizing on group proximity; The ACEM-ACC merger is not on the table yet. While ACEM’s volume growth may outpace the industry in the medium term, low visibility and weak industry pricing cut EBITDA by 12-14% for the near term; But we maintain buy with a revised target price of 490.”

Given that Ambuja/ACC are already operating at 85%+ utilisation, a clearer outlook on expansion will put comfort on volume projections. With only Ametha’s organic potential expanding (in ACC), visibility of improved performance in the near term is low, the note added.

The Adani group is 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 given above are those of individual analysts or broking companies and not of Mint.