Adani Ports & Special Economic Zone Ltd. signed an agreement to acquire a controlling stake held by promoters in Gangavaram Port Ltd.
Is Adani Ports a good buy?
India’s largest port operator signed an agreement with DVS Raju and family to acquire 58.1% stake in the multi-cargo facility for Rs 3,604 crore, according to a statement on exchanges.
Adani Ports had announced the acquisition of Warburg Pincus’ 31.5% stake in Gangavaram Port, located in the northern part of Andhra Pradesh close to Vizag, on March 3, and together with this acquisition, it would have an 89.6% stake in the port.
The acquisition is in line with the company’s strategy of east coast to west coast parity and will provide an access to growth from new hinterland markets as it has coverage in resource rich and industrial belt in eastern, central and southern India.
Adani Ports’ Exchange Filing
The acquisition is subject to approvals under applicable laws, including from the Competition Commission of India and the Government of Andhra Pradesh.
Gangavaram Port has a capacity of 64 million metric tonnes. “With a master plan capacity for 250 MMTPA with 31 berths, it has sufficient headroom to support future growth,” Adani Ports said. Gangavaram Port also has the potential to have a capacity of 250 MMT.
According to Antique Stock Broking, the acquisition of the Gangavaram Port stake has been done at a very attractive valuation. “The company continues to consolidate its market leadership in the ports sector and would benefit the most from India’s increasing contribution to global trade,” the brokerage had said in a note on March 4.
On March 15, Adani Ports also announced that it will partner John Keels Holdings Plc. and the Sri Lankan Port Authority to develop the west container terminal in Colombo.
Shares of Adani Ports gained as much as 4.6% in early trade to Rs 755 apiece. The stock is up for the third straight session.
- Of the 25 analysts tracking the company, 20 have a ‘buy’ rating, four suggest a ‘hold’ and one recommends a ‘sell’, according to Bloomberg data.
- The stock crossed its 12-month consensus price target of Rs 729 on Tuesday.