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Strong intl performance; multiple levers ahead

ADSEZ delivered a strong operating performance in Q2FY27, with 23% YoY EBITDA growth supported by improved international port performance and strong growth in the Marine and Harbour businesses. Domestic cargo volumes grew 3.8% YoY to 118.5mmt, supported by 7% growth in domestic container volumes, while Gangavaram and KP ports were impacted by the Odisha cyclone. International cargo volumes grew 147% YoY to 24mmt, driven by CWIT and NQXT, with international port EBITDA margin reaching 47.7% from 41.8% in Q1. Marine performance benefited from higher fleet deployment and improved vessel utilisation, while logistics growth was supported by higher container volumes and ramp-up of new ICDs. Overall market share stood at 27.6%, while container market share was 44.4%. Management remains focused on expanding domestic port capacity to 1bn tonnes by FY31E.

We remain positive on ADSEZ’s diversified growth outlook with strong cargo visibility. Ramp-up of CT-5, Colombo Phase II and Vizhinjam’s improving EXIM, empty container yard expansion and additional coal volumes from Tata UMPP at Mundra, should support growth across the ports’ ecosystem in the near term. Increasing contribution from international ports, timely capacity additions at domestic key ports, Marine, Harbour and Logistics businesses, along with the ramp-up of newer segments, are expected to deliver sustainable EBITDA growth. With strong cash flow generation capability and a robust balance sheet providing flexibility for organic and inorganic opportunities, we believe ADSEZ is well positioned to capture incremental market share over the longer term. We increase our FY27E/28E EBITDA estimates by ~2% each and expect ADSEZ to deliver revenue/EBITDA/PAT CAGR of 15%/14%/19% over FY26-29E. The stock is trading at EV of 14.4x/12.3x FY28/29E EBITDA. Maintain ‘BUY’ with revised TP of Rs2,248 (earlier Rs2,243) valuing at same 18x EV of Sept’28E EBITDA

Strong revenue growth aided by international ports, marine & logistics businesses: Consolidated revenue growth of 24% YoY to INR113bn (+5% QoQ; PLe: INR106.7bn), led by international ports, marine, logistics and other businesses. Marine business revenue grew 57% YoY to INR10.1bn, led by global fleet expansion and foray into subsea services. Marine fleet increased to 138 vessels (127 YoY) during Q2FY27. Logistics business revenue grew 21% YoY to INR12.7bn, led by scale-up of the integrated “shore-to-door” network. Logistics EBITDA grew 8% YoY to INR2.37bn, while margins declined 220bps YoY to 18.6%. Domestic cargo volumes grew 3.8% YoY to 118.5mmt, driven by domestic container volumes (+7% YoY). Mundra volumes grew 8.3% YoY, while Vizhinjam grew 20% YoY. Gangavaram and Krishnapatnam were impacted by the cyclone during Q2FY27. International cargo volumes grew to 24mmt, with strong margins of 47.7%, driven by CWIT’s container volumes and NQXT. All-India market share declined to 27.6% from 28.1% YoY, while container market share stood at 44.4% (45.9% YoY). Domestic ports revenue/tonne improved 9% YoY to INR606 (INR556 in Q2FY26), while international ports revenue/tonne stood at INR742 (INR1,126 in Q2FY26).

Higher Intl volumes contributed to higher EBITDA: Domestic ports EBITDA/tonne improved 7% YoY to INR439, led by higher container volumes. International ports EBITDA/tonne grew 30% YoY to INR354 (INR273 in Q2FY26). Ex-forex EBITDA grew 23% YoY to INR68.1bn (+4% QoQ; PLe: INR64bn), with margins at 60% (-50bps YoY). Segmental EBIT of ports grew 30% YoY to INR51.2bn, with margins improving 570bps YoY to 51.8%, mainly driven by improved international business. Segmental EBIT of logistics declined 19% YoY to INR1.1bn, with margins declining 353bps YoY to 7.1% (10.9% in Q2FY26). PAT grew 16% YoY to INR36.2bn (flat QoQ; PLe: INR32.4bn), with the effective tax rate at 18%.

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