IGI Logo

Clear line of sight to scale & profitability

Quick Pointers:

* Capacity to increase from c.633mmt to ~1–1.2bmt in 5 years.

* International port margins expected to rise to ~45% (Tanzania 30-40%, NQXT ~65%, Colombo ~50%) from ~26% currently.

ADSEZ reported a strong cons operating performance in Q2FY26, driven by 12% cargo volume growth and robust growth in marine & logistics businesses. Domestic cargo volume growth was at 8% due to decline in EXIM coal and iron ore volumes, partly offset by pick up in Mundra volumes post geopolitical issues. Intl’ ports delivered ~80% volume growth on low base, improved Haifa volumes, CWIT commencement, and CT 2 operations at Tanzania. Overall market share rose to 28% and container market share to 45.5%. The logistics and marine businesses delivered robust performance, with EBITDAs growing by 1.4x and 3.8x YoY, respectively. Logistics biz momentum is expected to continue as ADSEZ ramps up rail capacity, warehouses and MMLPs.

With a scaled network of domestic and international ports and a rapidly expanding logistics and marine segments, ADSEZ is well placed to benefit from India’s rising trade flows. Well planned capacity additions (1.1–1.2bmt in 5 years) and investments in MMLPs/rail/warehousing would strengthen ADSEZ’s integrated transport utility model. Cost efficiencies to generate industryleading margins and strong cash flows, while leverage stays comfortable at 1.8x Net Debt/EBITDA. We expect ADSEZ to deliver revenue/EBITDA/PAT CAGR of 17%/15%/20% over FY25–28E. The stock is trading at EV of 13.3x/11.1x FY27/28E EBITDA. Maintain ‘Buy’ with TP of Rs1,777 valuing at 18x EV of Sep’27E EBITDA.

Revenue grew 30% aided by strong container, marine and logistics: Cons revenue increased 30% YoY to Rs91.7bn (+0.5% QoQ; PLe of Rs90bn), driven by 12% YoY growth in ports and 76% YoY growth in logistics segment revenue. Domestic cargo volumes grew 8% YoY to 114mmt driven by container volumes (13% YoY). International volumes grew 81% YoY to 9.7mmt driven by CWIT’s container volumes. All-India market share improved to 28.1% from 27.4% with container market share of 45.9%. Domestic ports revenue per ton increased 3.7% YoY to Rs431. Intl ports revenue per ton declined 26% YoY to Rs1,088.

Superior EBITDA margins led by Mundra port: Ex-forex EBITDA increased 27% YoY to Rs55.5bn (1% QoQ; PLe of Rs52bn) with margins at 60.5% (down 128bps YoY). EBITDA margins declined at Dhamra, Kattupalli and Karaikal ports impacted by lower coal & iron ore volumes. Domestic ports EBITDA per ton increased 3.2% YoY to Rs286; while intl ports EBITDA per ton increased 24% YoY to Rs263. Segmental EBIT of ports grew 21% YoY to Rs39.5bn with margins declining 346bps YoY to 49%. Segmental EBIT of logistics grew 304% YoY to Rs1.31bn with EBIT margins improving 129bps YoY to 10.9%. PAT grew 27% YoY to Rs31.1bn (-6% QoQ; PLe of Rs33bn); effective Tax rate stood at 14.6% Vs 16.4% in Q2FY25.

Please refer disclaimer at https://www.plindia.com/disclaimer/

SEBI Registration No. INH000000271