This Adani group company is expanding globally. Should you buy before the next big rally?

Adani Group stocks: Adani Ports share price declined 4% in intraday trade on Monday, April 21, even as the company revealed plans to acquire Abbot Point Port Holdings.

As part of its ongoing efforts to expand its global footprint, Adani Ports & Special Economic Zone (APSEZ), India’s largest private port operator, on Thursday, announced it will acquire a 100% equity stake in Abbot Point Port Holdings Pte Ltd (APPH), Singapore, from Carmichael Rail and Port Singapore Holdings Pte Ltd (CRPSHPL), a related-party promoter group entity. 

The transaction will be completed on a non-cash basis. APSEZ will issue 14.38 crore equity shares to CRPSHPL in exchange for 100% ownership of APPH. The deal values the North Queensland Export Terminal (NQXT) at AUD 3.98 billion, according to the company's regulatory filing.

As part of the acquisition, APSEZ will also assume other non-core assets and liabilities on APPH’s balance sheet, which are expected to be resolved within a few months of closing—resulting in no net impact on the transaction value. The company said its leverage will remain at similar levels post-acquisition.

Meanwhile, the transaction is subject to requisite approvals, including from the Reserve Bank of India, Foreign Investment Review Board of Australia and majority of minority shareholders. The company hopes to complete the transaction in the next two quarters.

Despite today's drop, Adani Ports shares have bounced back sharply in recent sessions, rising 22% from a low of ₹1,041 on April 7 to ₹1,259 apiece, a three-month high. Between April 2023 and June 2024, the Adani Ports stock witnessed a one-way spike, resulting in multibagger gains of 171%.

NQXT: Strategic rationale behind the acquisition

NQXT is a natural deep-water, multi-user export terminal with a nameplate capacity of 50 million tonnes per annum. It is located in the Port of Abbot Point, approximately 25 km north of Bowen, in North Queensland, on Australia’s east coast.

The terminal operates under a long-term lease from the Queensland Government and has been designated as both a Strategic Port and a Priority Port Development Area. It plays a crucial role in supporting Australia’s resource exports.

NQXT serves eight major customers under long-term “take-or-pay” contracts. In FY25, it handled a record 35 million tonnes of cargo out of 40 MMT of contracted capacity. It exported the cargo to 15 countries, with 88% going to Asia and 10% to Europe. The weighted average mine life of its current customers is around 60 years.

In FY25E, NQXT reported revenue of AUD 349 million and EBITDA of AUD 228 million, delivering EBITDA margins above 90% for APSEZ (excluding pass-through O&M costs), the regulatory filing showed. 

Adani Ports share price outlook: Nuvama remains bullish 

According to Nuvama Institutional Equities, the NQXT acquisition is value-accretive for the company. The brokerage estimates:

• A 6–7% boost to consolidated volume, revenue, and EBITDA in FY26 (around 4% at PAT level)
• A temporary 2% EPS dilution in FY26 (APSEZ expects accretion from the second year onward)
• An estimated 200 bps decline in pre-tax ROCE/ROIC
• No material changes to the company’s net debt/EBITDA ratio (2.1x)

The brokerage has retained its 'buy' rating on Adani Ports stock with a target price of ₹1,770, which indicates an upside potential of 41% from the latest closing price.

According to Kotak Institutional Equities, the Abbot Point port presents a sizable and scalable addition to APSEZ’s long-term growth journey. The asset is also well-protected and diversified with access to low-cost, high-grade mines and long-term take-or-pay contracts, with diversified end-exposure across key Asian geographies. This, coupled with a strong next 4-year prognosis, is well captured inside the rich 17XEV/EBITDA multiple, said the brokerage.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.