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Expanding global presence by acquiring Evos in Europe

* Adani Ports and Special Economic Zone (APSEZ) has agreed to acquire 100% stake in Netherlands-headquartered Evos B.V. (Evos) from Igneo Infrastructure Partners. The proposed transaction is an all-cash deal at an enterprise value of EUR2.56b. The transaction values Evos at an equity value of EUR1.18b, implying an acquisition multiple of 11.7x CY25 EV/EBITDA.

* For CY25, Evos delivered revenue and EBITDA of EUR392m and EUR219m, respectively (56% EBITDA margin). The transaction will be funded via debt and is subject to regulatory and other approvals, as well as works council consultation. Pro forma net debt-to-EBITDA for the combined entity stands at 2.76x (based on APSEZ FY26 and Evos CY25 financials) and is expected to be around 2.5x by FY27. As of 2QFY27, APSEZ had a cash balance of INR125b. Evos has 6.3 m cubic meters of storage capacity and handled 37 MMT of throughput during CY25.

* Evos’ operations comprise eight port-based terminals across seven strategic ports in five countries - Netherlands, Germany, Spain, Belgium, and Malta. The company adds a high-margin, cash-generative liquids business to APSEZ’s portfolio with average commercial occupancy at 99% and substantial part of revenue under take-or-pay contracts and CPI-linked contract base.

* The current margin of 56% is expected to improve as APSEZ deploys its resources, improves utilization, and brings in efficiency. The acquired assets are currently generating RoCE of ~7%, compared with ~14% for APSEZ’s international portfolio in 1HFY27. However, management expects the RoCE to improve to double digits over the next 2-3 years as the assets ramp up. ? Similar to APSEZ’s recent NQXT acquisition, Evos is also backed by a similar take-or-pay arrangement with most of the customers. While NQXT was acquired at ~17x EV/EBITDA, the current acquisition at ~11.7x EV/EBITDA appears relatively attractive, offering scope for value creation as the assets scale up.

* With strong cash flows, a healthy cash balance of INR125b, and a net debt-toEBITDA ratio of 1.8x pre-acquisition, APSEZ is well-positioned for expansion. Capacity enhancements at key ports, ongoing infrastructure projects, and global port acquisitions provide visibility for stable growth in FY27 and beyond.

* We have retained our estimates for now and would update our growth forecasts once the acquisition is completed. We anticipate APSEZ to report 14% growth in cargo volumes over FY26-28. This growth is likely to drive a CAGR of 17%/18%/21% in revenue/EBITDA/PAT over FY26-28E. We reiterate our BUY rating on the stock with a TP of INR2,170 (premised on 17x FY28E EV/EBITDA).

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