Adani Ports stock may extend rally on 'overweight' call from Morgan Stanley

Shares of Adani Ports and Special Economic Zone (ASPEZ) are expected to continue rising on June 4, following Morgan Stanley's 'overweight' rating on the stock with a target price of ₹1,517 per share. This optimistic outlook follows the announcement that the Adani group company has acquired a container terminal at Tanzania Port through a consortium joint venture (EAGL), obtaining a 95% stake for $39.5 million.

Adani International Ports Holdings Pte Ltd (AIPH), a fully owned subsidiary of Adani Ports, has entered into a 30-year concession agreement with the Tanzania Ports Authority. This agreement grants AIPH the rights to operate and manage Container Terminal 2 at the Dar es Salaam Port in Tanzania.

“The Dar es Salaam Port is a gateway port with a well-connected network of roadways and railways,” Adani Ports and Special Economic Zone (APSEZ) said in a statement.

East Africa Gateway Ltd (EAGL) has entered into a Share Purchase Agreement to acquire a 95% stake in Tanzania International Container Terminal Services Limited (TICTS). This stake is being purchased from Hutchison Port Holdings Limited (and its affiliate Hutchison Port Investments Limited) and Harbours Investment Limited for a total of $39.5 million.

CT2, which features four berths, boasts an annual cargo handling capacity of 1 million TEUs (twenty-foot equivalent units). In 2023, it managed 0.82 million TEUs, representing approximately 83% of Tanzania’s total container volumes, according to a regulatory filing by APSEZ. Additionally, APSEZ disclosed to stock exchanges that TICTS achieved a turnover of $43.7 million in 2023.

“The signing of the concession for Container Terminal 2 at Dar es Salaam Port is in line with APSEZ’s ambition of becoming one of the largest port operators globally by 2030,” said Karan Adani, Managing Director, APSEZ.

In its report, Morgan Stanley observed that cargo volumes for Adani Ports remained unchanged year-on-year in May 2024 but demonstrated a 5% increase year-to-date in FY25. Nevertheless, the shutdown of Gangavaram Port led to a volume loss of 6 million metric tonnes during April-May 2024.

Shares of Adani Ports closed 10.6% higher at ₹1,590.00 on the National Stock Exchange (NSE). Year-to-date, the stock has surged 51%, significantly outperforming the benchmark Nifty 50, which has increased by approximately 7% over the same period. Over the past 12 months, Adani Ports stock has soared 114%, more than doubling investors' returns.

Adani Ports and Special Economic Zone Ltd (APSEZ), a subsidiary of the Adani Group, is engaged in the development and operation of ports, terminals, and logistics parks within a multi-product special economic zone. The company provides a range of services, including dry bulk cargo, breakbulk cargo, liquid cargo, container cargo, as well as dredging and marine services.

APSEZ operates several ports, including Tuna, Mundra, Dahej, Hazira, Murmugao, Vizhinjam, Kattupalli, and Ennore. Additionally, APSEZ offers logistics services such as inland container depots, contract logistics, coastal shipping, and inland waterways. The company's operations extend to Bangladesh, India, Singapore, Australia, and Myanmar. APSEZ is headquartered in Ahmedabad, Gujarat, India.