Adani Ports & Special Economic Zone Ltd. appointed MSKA & Associates as its statutory auditor after Deloitte resigned from the post. While auditor resignations are viewed as a negative, replacement with a reputed auditor gives some comfort, according to Jefferies.
BDO International, of which MSKA & Associates is an independent member firm, is considered among the top six auditors globally, compared to Deloitte which is considered among the top four, the note said. "MSKA & Associates are statutory auditors of Nifty 50 companies, including HDFC Bank," Jefferies said in a note on Monday.
Auditor resignations have seen negative stock reactions, the note said. It cited KPMG's resignation as auditor of UPL Ltd.'s Mauritius arm in October 2020. However, shares of UPL following the announcement corrected by 7–18% in the next few sessions and gradually recovered over six–12 months, Jefferies noted.
Deloitte cited the lack of a wider audit role as the reason for its resignation in a letter submitted with the company's exchange release.
The company was first appointed as the auditor in May 2017 for a duration of five years, and then reappointed in July 2022 for a term ending in 2027.
The new auditors have been appointed from Aug. 12 until the date of the next annual general meeting in 2024.
Jefferies on Adani Ports
Maintains a target price of Rs 890, implying a potential upside of 11%.
Brokerage expects core port Ebitda growth to remain upward of double digits, replicating the market share gain at acquired ports as seen in Mundra.
It highlights the management's guidance for Ebitda growth of 13-17% year-or-year for FY24, and 9-15% year-on-year volume growth.
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