Goldman Sachs has maintained its 'Buy' rating on Adani Ports & Special Economic Zone Ltd (Adani Ports) and revised its target price on the stock to Rs 855 compared with Rs 820 earlier, saying the stock should do well from hereon, especially if growth in H2 surprises. The foreign brokerage is expecting the Adani group firm to report a volume of 407 million tonnes, which would be far higher than the company's FY24 volume guidance of 370-390 million tonnes.

In addition, Goldman Sachs sees the logistics business of Adani Ports to keep seeing healthy growth. It said Adani Ports should have a unique fully integrated logistics business (ports-inland, logistics-warehousing), which should drive market share gains and pricing power over the medium-to-long term.

The brokerage has raised its FY25/FY26 revenue and Ebitda estimates for Adani Ports by 3-4 per cent and, thus, upped its share price target. On Thursday, the Adani Ports stock was trading at Rs 793.60 on BSE, up 0.25. Goldman Sachs’ target price suggest a 7.73 per cent upside over this price.

Adani Ports delivered 17 per cent YoY volume growth in Q2, with strong performance at the larger ports. Despite the strong growth in H1 and the improving balance sheet, the stock is down 7 per cent on a three-month basis. Adani Ports shares are up 3 per cent 3 per cent year-to-date and trading at 12.5 times one-year forward EV/Ebitda, which is close to their long-term Mean 1STDEV.

"With management’s focus shifting towards balancing growth and debt, organic port volume growth continuing, resolutions around Myanmar (sale) and Sri Lanka (fresh investments from JV partners) port achieved, and Haifa Port (in Israel) seeing minimal disruption due to the ongoing conflict, we believe the stock should do well from hereon, especially if growth in 2H surprises," Goldman Sachs said.

Among risks to its target price, Goldman Sachs said Adani Ports has 42.5 per cent plus share in all-India container and 29 epr cent market share in the overall port volumes. Hence, a sustained slowdown in EXIM volumes could significantly impact Adani Ports' port volume growth, thus, impacting earnings.

"Further increases in capex or acquisitions could impact free cash flow generation and keep the market perception of risk on cash flow high," it said..