adani ports share price: Adani Ports a defensive stock? Nothing else explains the up move, says Mahantesh Sabarad

“In terms of the ongoing offer from Adani as far as and Ambuja is concerned, my only worry has got to do with how that will be integrated into the Adani Group of companies. The Adani Group has high levels of debt while ACC and Ambuja are virtually debt free. So one wonders what kind of debt levels they will assume under Adanis’ ownership, says market veteran Mahantesh Sabarad.


We had a gangbuster July and August. The market rally has been nothing short of stellar. What is next now? Is this as good as it gets?
Let me put perspective to that market rally. In the past two months, we have seen the Nifty go up close to 2,500 points but from a valuation perspective, the Nifty PE has moved about 3 points or 3 multiples from roughly about 18-18.5 to 20-21.5. Now the 3 times or 3 multiple movement in the valuation tells me that unlike the Nifty move which was pretty sharp, the valuation uptick not been that sharp partly because Q1 results were factored in and therefore, when we moved our estimates forward, valuations looked a tad bit better.

Having said that, after this stupendous rally, one should see some bit of moderation in the Nifty levels and I would not be surprised if that moderation continues well into this month as well.

Does it make sense to buy cement stocks? Between ACC and Ambuja, which is the better one?
Do we buy cement stocks at this juncture? I would say yes because there are two factors that are influencing this choice of cement companies; one is that capex is gradually coming up post Covid, post better profitability of corporates and we are looking at projects moving ahead, that is one part.

The second part is that we have had a huge shock in terms of commodity prices early into this calendar year which is now wearing off and we have commodity prices coming off their highs and that definitely aids the likes of cement companies going forward. We are going to enter winter in a few months’ time when general construction activity will start building up. All these factors tell me that yes, cement stocks are something that one should look at buying. In terms of the ongoing offer from Adani as far as ACC and Ambuja is concerned, my only worry has got to do with how that will be integrated into the Adani Group of companies.

The Adani Group has high levels of debt and these cement companies – ACC and Ambuja – are virtually debt free. So from that perspective, it becomes a little bit of a problem as one wonders what kind of debt levels they will assume under Adanis’ ownership. So I would be neutral on that. You could choose either.

Piramal Enterprises’ financial business is an NBFC which is cheap by any yardstick after the DHFL acquisition. It is the pharma business which is underpriced. The stock started off well but despite the fact that the business would be demerged, there are no buyers there?
I think it is the NBFC business that was primarily driving the Piramal stock in the recent past. It has got its foot in the real estate game and that is where opinions are divided because unlike classic NBFCs which is retail focussed Piramal’s NBFCs largely wholesale focussed and that brings in a lot of risks, given that the exposure does not necessarily be to top rung or risk-free clients. So I would be very sceptical of this stock.

Why is going higher when everything is going down?
It amazes me. Adani Ports has become a defensive stock I would reckon in such markets and therefore what we saw on Friday was a defensive move. There does not seem to be any other fundamental move that we can ascribe to the stock going up.