ICICIdirect has Adani Ports, Ambuja Cements among its picks

ICICIdirect has Adani Ports, Ambuja Cements among its picks

Domestic brokerage ICICIdirect has two Adani group stocks namely Adani Ports SEZ Adani Ports and Ambuja Cements among its top March picks. Its target of Rs 500 on Ambuja Cements suggests a potential 35 per cent upside over Thursday's closing of Rs 370.85. The target of 800 for Adani Ports suggests an upside of 28 per cent over Thursday's closing price of Rs 623.20.

Adani Ports Ltd, the largest commercial port operator in India, has 25 per cent of the port cargo movement, according to ICICIdirect. Adani Ports, ICICIdirect said, has embarked on becoming India's largest integrated transport utility company by 2030 and strengthening its capabilities in all logistics segments namely ports, CTO, warehousing, last mile delivery and ICDs. Adani Ports will be able to offer end to end service to its customers, capturing higher wallet share and making the cargo sticky in nature.

The brokerage believes that DFC connectivity to Mundra will allow for faster port evacuation, faster transit time and higher volume generation for Adani Ports.

Adani Ports is backed by strong FCF generating assets 14 ports, 81 trains, 9 MMLPs, 1.4 million square feet of warehousing, 620 kms of rail tracks, etc., and has a 15 per cent-plus RoCE. It has a comfortable debt to equity ratio close to 1. It said we have valued Adani Ports on a SOTP basis with a target price of 800.

On Ambuja Cements Ltd, ICICIdirect said Ambuja Cement is one of India's largest cement player with capacity of 31.5 million tons spread across North 35 per cent South 24 per cent West 20 per cent and East 21 per cent. The new management plans to increase capacity, including ACC capacity of 36.1 million to 140 million tons, in the next 5 years. The market share of Ambuja Cements has been lost to other large players over the past five years, with no major new capacities in place during the period, according to ICICIdirect.

We expect volume growth to get ramped up, going ahead, due to the aggressive new promoter. The group's exposure to energy and logistics will help to improve cost dynamics and increase supply chain efficiencies. Cost savings of Rs 300 -- 350 per tonne from the current run rate are expected, as per our rough estimates. The company has a strong balance sheet with debt free status, it noted.