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Diversified growth strategy enhances long-term earnings visibility

We recently met with the management of APSEZ to gain insights into the company’s growth outlook across ports, logistics, and marine services. Here are the key highlights:

* Management remains confident of sustaining high double-digit revenue growth, driven by strong container momentum, capacity expansions at key ports, and the integration of NQXT, which saw volume growth of ~15% YoY in Apr’26 (vs. ~13% in FY26). Growth during the month was primarily driven by robust container throughput (+17%) and dry cargo (+17%) primarily due to the acquisition of NQXT. The company witnessed subdued dry bulk volumes across certain domestic terminals, which impacted both overall volumes and margins during the period. However, management remains optimistic about a recovery in coal volumes, supported by expectations of subdued monsoon and government directives for coal-based power plants to operate at higher utilization levels to meet rising power demand.

* APSEZ is also strengthening its logistics and global marine and offshore services business through strategic expansion initiatives. The company has announced the acquisition of Jaypee Fertilizers & Industries to gain access to ~243 acres of land in Kanpur, in line with the company’s ambition to expand its MMLP network from 12 to 16 and warehousing capacity by 4x by 2031.

* The company, via its subsidiary Adani Harbour International FZCO, acquired a 51% stake in Argentina-based Meridian Transportes Marítimos S.A., supported by Meridian’s existing 10-year contract with Southern Energy S.A. for the deployment of six vessels in Argentina. Further, through its marine arm Astro Offshore, APSEZ has partnered with Oceaneering International to expand into offshore and underwater marine operations in Europe, including underwater construction, cable laying, and pipeline installation.

* With improving earnings visibility and limited downside risk from ongoing geopolitical tensions, APSEZ is well-positioned to sustain growth, aided by ongoing expansions of port capacity, marine services and integrated end-to-end logistics. These factors reinforce APSEZ’s vision to become India’s largest integrated transport utility by 2031, with logistics and marine emerging as key growth engines alongside its core ports business. Further, in a positive development, the US Department of Justice has permanently dropped the criminal case against Adani Group, which is a rerating catalyst for the stock. We reiterate our BUY rating with a revised TP of INR2,050 (based on 16x FY28E EV/EBITDA).

Scale leadership and rising market share underpin long-term growth outlook

* APSEZ operates the largest private port network in India, with 15 ports and terminals across the west, south, and east coasts. The network offers a total capacity of 653mmt. It also operates four international ports in Israel, Sri Lanka, Tanzania, and Australia.

* The company has commissioned the Haldia bulk terminal in Mar’26, with a capacity of ~4mtpa and a draft of 8.5m, supported by a dedicated rail line and integrated conveyor system.

* APSEZ’s domestic market share stood at 26% as of Mar’26. Management highlighted that its domestic port volume growth over the past decade has been more than two times the industry growth rate.

* The container market share has also expanded steadily to 45.5% from 36% during Mar’20-Mar’26. Key capacity expansions, such as the automated Colombo West International Terminal and new berths at Dhamra, along with the rapid ramp-up of Vizhinjam, are strengthening APSEZ’s growth pipeline.

* Looking forward, management retains its target of 850mmt of domestic and 150mmt of international cargo volumes by 2030, with deeper integration into DFC-linked hinterland corridors and industrial clusters driving long-term growth.

Logistics business – Accelerating the shift to a unified logistics ecosystem

* As APSEZ aims to become India's largest integrated transport utility company by 2031, it is strengthening its capabilities across all logistics segments (ports, CTO, warehousing, last-mile delivery, ICDs, etc.). This enables the company to offer end-to-end services, capture a higher wallet share, and ensure cargo volumes remain sticky.

* Adani Logistics (ALL) has expanded its services to cover container train operations, container handling in logistics parks, and warehouses, offering storage and trucking solutions. With 12 multi-modal logistics parks, 132 trains, 3.1m sq. ft. of warehousing space, and 1.3mmt of grain silos, ALL aims to establish a nationwide presence by further developing logistics parks and warehouses.

* APSEZ maintains significant capital investments planned for logistics operations of INR70-90b over FY27-FY31. Further, the company maintains a hybrid model, owning 937 trucks and operating over 26,000 trucks via third parties. It is also expanding value-added services like freight forwarding to improve RoCE.

Marine services: A swiftly scaling, high-margin growth engine

* Marine operations have emerged as another high-growth vertical within APSEZ, with a diversified fleet of 127 vessels (excluding 46 vessels operated by Adani Harbor across APSEZ ports), including tugs, anchor-handling tug supply vessels, multipurpose support vessels, workboats, and barges.

* The company, via its subsidiary Adani Harbour International FZCO, acquired a 51% stake in Argentina-based Meridian Transportes Marítimos S.A., supported by Meridian’s existing 10-year contract with Southern Energy S.A. for the deployment of six vessels in Argentina. Further, through its marine arm Astro Offshore, APSEZ has partnered with Oceaneering International to expand into offshore and underwater marine operations in Europe, including underwater construction, cable laying, and pipeline installation. ? 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 FY26, marine revenue jumped 134% YoY to INR26.8b, with EBITDA surging to ~INR13.5b. The surge was driven by vessel additions, integration of acquired entities, and higher demand from Tier-1 customers.

* The marine business’s RoCE stood at 13% in FY26.

Valuation and view

* With strong cash flows, a healthy cash balance of INR122b, and net debt-toEBITDA at 1.9x, APSEZ is well-positioned for further expansion. Capacity enhancements at key ports, ongoing infrastructure projects, and global port acquisitions provide visibility for stable growth in FY27 and beyond.

* APSEZ’s diversified cargo mix and ongoing infrastructure investments are expected to support its volume growth. We anticipate APSEZ to report 11% growth in cargo volumes over FY26-28. This growth is likely to drive a CAGR of 17%/18%/22% in revenue/EBITDA/PAT over FY26-28E. We reiterate our BUY rating on the stock with a revised TP of INR2,050 (premised on 16x FY28E EV/EBITDA).

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