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Integrated business model enhances earnings resilience

ADSEZ delivered a strong operating performance in Q1FY27, with 19% YoY EBITDA growth primarily driven by improved volumes and profitability at international ports, higher transshipment volumes, along with continued momentum in the marine business. Domestic cargo volumes remained subdued due to temporary disruptions, including the shutdown of a key customer at Krishnapatnam and ongoing impact of the Middle East crisis on trade flows. However, better cargo mix (higher liquid share), increased ancillary services and improved domestic port NSR supported EBITDA growth despite muted volume growth. Logistics performance remained soft due to weak EXIM trade, lower rail volumes and disruption in Morbi exports. Overall market share stood at 27.6%, while container market share remained healthy at 44.8%. Management continues to accelerate capacity expansion across key ports, including Mundra and Dhamra, and remains on track to achieve 1bn tonnes of domestic port capacity by FY31E.

Q1FY27 once again highlighted ADSEZ's ability to navigate external disruptions through its diversified business model, with international ports, marine and ancillary services offsetting subdued domestic volumes and weak logistics performance. As the company scales its integrated ports-logistics ecosystem, earnings are becoming increasingly driven by multiple value-accretive businesses rather than cargo volumes alone, improving the resilience of cash flows across cycles. With capacity expansion progressing across key ports, a robust balance sheet and disciplined capital allocation providing ample flexibility for both organic and inorganic growth, we believe ADSEZ remains well placed to deliver superior long-term earnings growth while benefiting from normalization in trade flows and continued expansion of India's logistics infrastructure. We maintain our FY27E/28E EBITDA estimates and expect ADSEZ to deliver revenue/EBITDA/PAT CAGR of 15%/15%/18% over FY26-28E. The stock is trading at EV of 13.9x FY28E EBITDA. Maintain ‘BUY’ with revised TP of Rs2,113 (earlier Rs2,122) valuing at same 18x EV of Mar’28E EBITDA.

Strong revenue growth aided by container, marine & harbour businesses:

Consolidated revenue growth of 17.2% YoY to INR107bn (flat QoQ; PLe: INR108.4bn), driven by 12%/80% YoY growth in domestic/international ports. Domestic cargo volumes grew 2% YoY to 115.3mmt, driven by 8% YoY growth in domestic container volumes. International cargo volumes increased 196% YoY to 22.8mmt, supported by strong container throughput at CWIT and NQXT, resulting in international ports EBITDA margin improving to 41.8%. Overall market share declined marginally to 27.6% (vs 27.8% YoY), while container market share stood at 44.8% (vs 45.2% YoY). Domestic ports revenue per tonne improved 10% YoY to INR604 (vs INR587 in Q4FY26), while intl. ports revenue per tonne stood at INR766.

Higher Intl volumes contributed to higher EBITDA:

Ex-forex EBITDA grew 19% YoY to INR65.4bn (+9% QoQ; PLe: INR61.2bn), with EBITDA margin expanding 20bps YoY to 60.4%. Domestic ports EBITDA per tonne improved 8.8% YoY to INR447. Ports segment EBIT increased 6% YoY to INR44bn; however, EBIT margin declined 8pp YoY to 46.3%, primarily due to higher depreciation. During Q1FY27, ADSEZ finalized the purchase price allocation (PPA) for the Abbot Point Port Holdings acquisition and recognized INR24.03bn of goodwill based on the independent valuer's final report. PAT grew 9% YoY to INR36.2bn (+9% QoQ; PLe: INR34bn). Effective tax rate stood at 14.3%.

Others:

Marine business revenue grew 67% YoY to INR9.01bn, supported by ongoing offshore vessel additions and expansion of its European subsea operations. Marine fleet strength increased to 135 vessels (vs 118 YoY). Logistics revenue remained flat YoY at INR11.73bn, impacted by lower rail volumes due to the ongoing Middle East crisis. Logistics EBITDA grew 3% YoY to INR2.19bn, with margins improving to 18.7% from 18.1%. ADSEZ completed the acquisition of 100% stake in Jaypee Fertilizers & Industries Limited (JFIL) and its subsidiaries for INR15bn on May 21, 2026, which has been accounted for as an asset acquisition. Net debt-to-EBITDA remained stable at 1.9x, in line with Q4FY26.

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