Adani Ports international port growth and margin expansion underpin long-term outlook

Investment View and Valuation

Motilal Oswal Financial Services Ltd retained its Buy rating on Adani Ports & SEZ with a target price of Rs 2,130, compared with the current market price of Rs 1,720. The valuation is based on 17 times FY28E EV/EBITDA.

The broker expects international port growth, capacity additions, infrastructure projects and global port acquisitions to support the long-term outlook. It also cited Rs 12,400 crore of cash and net debt to EBITDA of 1.9 times as of June 2026 as balance-sheet strengths.

Q1 FY27 Financial Performance

Adani Ports delivered a steady Q1 FY27 performance, supported by international port growth and EBITDA-margin expansion. Consolidated revenue increased about 19 per cent year-on-year to Rs 10,800 crore, broadly in line with the broker's estimate. EBITDA rose about 19 per cent year-on-year to Rs 6,500 crore, 5 per cent above the broker's estimate.

Cargo Volumes and Port Performance

Adani Ports handled 138.1 million metric tonnes of cargo in Q1 FY27, up 15 per cent year-on-year. Domestic cargo volume rose 2 per cent to 115.3 million metric tonnes, while international cargo volume increased 196 per cent to 22.8 million metric tonnes, aided by consolidation of NQXT and Colombo terminals.

The company's all-India cargo market share was 27.6 per cent, compared with 27.8 per cent in Q1 FY26. Container market share stood at 44.8 per cent, versus 45.2 per cent a year earlier. Mundra contributed 37 per cent of total volume and 51.2 per cent of domestic volume, indicating greater diversification across ports.

The temporary shutdown of a key customer plant reduced Krishnapatnam volumes by around 2-2.5 million metric tonnes. Management expects volumes to recover when the plant resumes operations. Middle East disruption also materially affected container operations in April and May.

Logistics and Marine Operations

The logistics segment remained muted, with revenue flat year-on-year at Rs 1,170 crore. Rail volumes fell 19 per cent amid the Middle East crisis, weak Morbi tile exports and the movement of cargo from containers to breakbulk because of higher freight costs.

Asset-light trucking and international freight network service revenue grew 26 per cent year-on-year and 28 per cent sequentially, contributing 53 per cent of logistics revenue. Management continued to expand the integrated logistics network through domestic dwarf containers, a dedicated reefer train, agri-silo expansion and an agreement to build four ASD tugboats.

Marine revenue increased 67 per cent to Rs 900 crore, while EBITDA grew 6 per cent to Rs 400 crore. The vessel fleet expanded to 135 from 118 in June 2024.

Guidance and Growth Outlook

Management retained its FY27 revenue guidance of Rs 43,000-45,000 crore and EBITDA guidance of Rs 25,000-26,000 crore. It also retained its target to handle about 1 billion metric tonnes of cargo by FY31.

Motilal Oswal broadly retained its FY27 and FY28 estimates. The broker forecasts 11 per cent cargo-volume growth over FY26-28, translating into revenue, EBITDA and profit after tax compound annual growth rates of 17 per cent, 18 per cent and 21 per cent, respectively.

Key Risks and Sensitivities

• The geopolitical situation in Israel remains a swing factor for international margins.
• Ongoing Middle East disruption could continue to affect container operations and logistics volumes.
• The temporary shutdown of a key customer plant has affected Krishnapatnam volumes, although management expects recovery after the plant resumes operations.