The impact of US President Donald Trump's aggressive tariff policy will have a limited impact on Adani Ports and Special Economic Zone Ltd.'s India cargo volume, according to company executives.
Cargo bound for the US only accounts for a small portion of India's trade, and hence, the tariff hit will be small, the management told analysts during the HSBC Global Investment Summit held this week.
"Management pointed out that even if volume from India to the US is lower due to tariffs, India can make up for it from other countries. Specifically for ADSEZ, the impact would be even more limited," HSBC said in a note.
Trump signed a proclamation to implement a 25% tariff on auto imports on Thursday, which will go into effect on April 2.
A broader announcement of the so-called reciprocal tariffs is expected on April 2 — a bid to drive down other countries' barriers and shrink US trade deficits.
Those tariffs will see the US apply rates on a country-by-country basis to counter barriers levied on American imports. Trump, though, has signalled some trading partners may receive possible exemptions or reductions in duties, according to a Bloomberg report.
Expanding Logistics Business
Adani Ports also wants to become an integrated logistics service provider and will conduct some small M&A in both upstream and downstream for its logistics business.
The Adani Group company expects capex of Rs 45,000-50,000 crore in domestic ports and Rs 15,000-20,000 crore for its logistics business over the next five years.
This translates to a capex of Rs 12,000-14,000 crore every year. Given its strong cash position, Adani Ports would be able to fund the capex by their internal cash flows, HSBC said.
HSBC maintained its 'buy' rating on the stock and kept its target price at Rs 1,600, indicating 35% upside potential over the previous close.
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