Buy Adani Ports & SEZ Ltd for the Target Rs. 1,700 by Motilal Oswal Financial Services Ltd
Charting a transformational journey!
* APSEZ’s ports business continues to outpace the industry, with domestic volume growth nearly three times the sector over the past decade, market share expanding to 27.8% in 1QFY26 (+60bp YoY), and container share rising to 46%. New assets such as Vizhinjam and Colombo, along with overseas operations such as Haifa, provide incremental growth and geographic diversification.
* The logistics arm, anchored by Adani Logistics Ltd (ALL), has scaled rapidly across container train operations, ICDs, warehouses, and trucking, with 12 multi-modal logistics parks, 132 trains, 3.1m sq. ft. of warehousing, and 1.2mmt of grain silos, offering true “shore-to-door” solutions. Significant capital deployment into trucking—INR10–15b in FY26 and INR50b by FY30— under a hybrid model of owned and third-party trucks, together with freight forwarding, is designed to boost RoCE.
* Marine services, strengthened by acquisitions and now operating 118 vessels, are positioned to deliver 3x growth by FY27.
* With integrated end-to-end offerings, APSEZ captures higher customer wallet share and builds cargo stickiness, while its diversified and scalable model underpins sustainable growth. This positions APSEZ to achieve its goal of becoming India’s largest integrated transport utility by 2029, with logistics and marine emerging as key growth engines alongside its dominant ports franchise. We reiterate our BUY rating on the stock with a TP of INR1,700 (implying 29% potential upside).
Building scale and market leadership in ports
* APSEZ operates the largest private port network in India with 15 ports and terminals across the west, south, and east coasts, offering a total capacity of 633MMT, along with four international ports in Israel, Sri Lanka, Tanzania, and Australia.
* APSEZ’s domestic market share rose to 27.8% as of Jun’25 from 27.2% in Jun’24, with management highlighting that its domestic port volume growth over the past decade has been nearly three times the industry growth rate.
* Container market share has also expanded steadily to 46% from 36% during Mar’20-Jun’25. Key capacity expansions, such as the automated Colombo West International Terminal and new berths at Dhamra, along with the rapid ramp-up of Vizhinjam, strengthen the growth pipeline.
* Looking ahead, APSEZ targets 850MMT of domestic and 150MMT of international cargo volumes by 2030, with deeper integration into DFC-linked 1,000 hinterland corridors and industrial clusters driving long-term growth.
Logistics business – growing exponentially!
* As the company aims to become India's largest integrated transport utility company by 2029, it is strengthening its capabilities in all logistics segments (ports, CTO, warehousing, last-mile delivery, ICDs, etc.). Hence, it offers end-toend services to its customers, thereby capturing a higher wallet share and making the cargo sticky in nature.
* ALL expanded its services to cover container train operations, container handling in logistic parks, and warehouses offering storage and trucking solutions. With 12 multi-modal logistics parks, 132 trains, 3.1m sq. ft. of warehousing space, and 1.2mmt of grain silos, ALL aims to establish a nationwide presence by further developing logistics parks and warehouses.
* With significant capital investments planned for the trucking operations— INR10–15b in FY26 and INR50b by FY30—APSEZ maintains a hybrid model, owning 937 trucks but operating over 26,000 via third parties. It is also expanding value-added services like freight forwarding to improve RoCE.
Marine services: A fast-growing, capital-efficient growth engine
* Marine operations have emerged as another high-growth vertical within APSEZ, with a diversified fleet of 118 vessels, including tugs, anchor handling tug supply vessels, multipurpose support vessels, workboats, and barges.
* The business has been strengthened by acquisitions such as Ocean Sparkle in 2022 and Astro Offshore in 2024, along with the establishment of TAHID to manage international operations in the MEASA region.
* In 1QFY26, marine revenue nearly tripled YoY to INR5.4b, with EBITDA surging to ~INR3b and margins expanding to 55%. The surge was driven by vessel additions, integration of acquired entities, and higher demand from Tier-1 customers.
* Management has guided for a threefold increase in marine revenue by FY27, positioning the segment as a profitable and capital-efficient business that complements port operations while extending APSEZ’s reach across global shipping routes.
Valuation and view
* With strong cash flows, a healthy cash balance of INR169b, and net debt to EBITDA at 1.8x, Adani Ports is well-positioned for further expansion. Capacity enhancements at key ports, ongoing infrastructure projects, and global port acquisitions provide visibility for sustained growth in FY26 and beyond.
* APSEZ’s diversified cargo mix and ongoing infrastructure investments are expected to support its target of 505–515MMT cargo handling in FY26. We expect APSEZ to report 10% growth in cargo volumes over FY25-27. This would drive a CAGR of 16%/16%/21% in revenue/EBITDA/PAT over FY25-27. We reiterate our BUY rating with a TP of INR1,700 (premised on 16x FY27E EV/EBITDA).
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