Adani Ports & SEZ Shares Rebound as Israel Concerns Prove Minimal Impact

Adani Ports & SEZ Shares Rebound as Israel Concerns Prove Minimal Impact

Dil Bar Irshad | October 10, 2023 | 02:09 PM IST | Breaking News | Follow on Google News

Adani Ports & SEZ Shares Rebound as Israel Concerns Prove Minimal Impact

Adani Ports & SEZ Shares Rebound as Israel Concerns Prove Minimal Impact

Adani Ports & Special Economic Zone Ltd’s share price made a strong rebound, surging by over 3% during Tuesday’s trading session. This recovery followed a nearly 5% dip on Monday, prompted by concerns over the conflict in Israel, where the company owns a strategically significant port. Adani Ports’ share price opened at an intraday low of ₹799.95 per share on the Bombay Stock Exchange (BSE) but later reached an intraday high of ₹817.

Minimal Impact Expected on Adani Ports

Analysts have expressed confidence that the events unfolding in Israel will have a minimal impact on Adani Ports & Special Economic Zone. This sentiment contributed to the resurgence in the Adani Ports stock price.

Adani Ports issued a statement on Monday via an exchange filing, stating that they are closely monitoring the crisis in Israel and have a robust business continuity plan in place. The company emphasized that the conflict primarily affects South Israel, while Haifa port, their key asset, is situated in the North. The statement assured the safety of their employees and highlighted that Haifa’s contribution to APSEZ’s cargo volume is relatively small, at only 3%.

For the current financial year (April 2023 to March 2024), Adani Ports anticipates Haifa Cargo volumes to range from 10-12 million metric tons (MMT) out of a total cargo volume guidance of 370-390 MMT. During the initial six months (April to September 2023), APSEZ’s total cargo volume was approximately 203 MMT, with Haifa contributing around 6 MMT.

Adani Group Stocks Show Resilience

On Tuesday, other stocks within the Adani group also displayed resilience. Shares of Adani Enterprises, Adani Power, Adani Energy Solutions, Adani Green Energy, Adani Total Gas, Adani Wilmar, ACC, Ambuja Cements, and NDTV recorded gains ranging from 0.5% to 3%.

Analyst Perspectives on Adani Ports

1. CLSA – Conflict as an Opportunity: According to international brokerage CLSA, the 5% decline in Adani Ports & SEZ’s share price due to war concerns presents an opportunity to invest in this significant asset. Haifa Port’s contribution to Adani Ports is only 1.3%, and CLSA believes that potential operating leverage and long-term real estate development upside make it an attractive investment. They maintain a ‘buy’ rating on the stock with a price target of ₹878, suggesting an 11% potential upside from the current market price of ₹789.90.
2. InCred Equities – Minimal Impact Predicted: InCred Equities suggests that even in a worst-case scenario, the impact of events in Israel on Adani Port would be minimal. The Israeli ports, including Haifa, have a limited effect on Adani Ports’ volume numbers for FY24. They estimate a maximum theoretical impact of Rs30 per share, which is 3-4% of the current market price of APSEZ. InCred Equities has a ‘hold’ rating on the stock.
3. Motilal Oswal Financial Services – Bullish Outlook: Motilal Oswal Financial Services has a ‘buy’ rating on Adani Ports, with a price target of ₹1,010, implying a 28% potential upside from the current market price of ₹790. They highlight Adani Ports’ market leadership in the ports segment, its focus on value-added areas like logistics, and strategic acquisitions, such as the 70% stake in Israel’s Haifa Port, acquired for $1.2 billion in FY23.

In conclusion, despite initial concerns, the market appears to have minimal apprehension regarding the impact of the Israel conflict on Adani Ports & Special Economic Zone, as various analysts express confidence in the company’s resilience and growth prospects.

Dil Bar Irshad

Dil Bar Irshad is a seasoned journalist, hails from Jammu Kashmir's Doda, covers political, social, business stories, index stories.