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Steady quarter; long-term outlook remains strong

* Adani Ports & SEZ (APSEZ) reported revenue growth of ~19% YoY to INR108b in 1QFY27 (in line). Cargo volumes grew 15% YoY to 138.1mmt, driven by international volume.

* EBITDA margin came in at 60.4% vs. our estimate of 57.8% (+20bp YoY, +430bp QoQ). EBITDA grew ~19% YoY to INR65b (5% above our estimate), while APAT increased ~10% YoY to INR37b.

* Its all-India cargo market share stood at 27.6% in 1QFY27 (vs. 27.8% in 1QFY26). Its container segment market share stood at 44.8% (vs 45.2% in 1QFY26).

* Domestic port revenue/EBITDA stood at INR69.6b (12% YoY)/INR51.5b (11% YoY). International port revenue/EBITDA stood at INR17.5b (80% YoY)/ INR7.3b (256% YoY). Logistics revenue/EBITDA stood at INR11.7b (flat YoY)/ INR2.2b (3% YoY).

* APSEZ delivered a steady performance in 1QFY27, supported by strong growth in its international port operations following the consolidation of NQXT from 4QFY26. While domestic cargo volumes remained subdued due to temporary disruptions at certain ports, the company reported an expansion in EBITDA margins, aided by a favorable cargo mix, improved operating efficiencies, a higher contribution from value-added ancillary services and a strong EBITDA contribution from international ports.

* Overall, the company remains well-positioned to outpace broader industry growth, supported by ongoing capacity additions and expansion into valueadded segments such as logistics. We broadly retain our FY27 and FY28 estimates and expect APSEZ to post 11% growth in cargo volumes over FY26- 28. This would drive a CAGR of 17%/18%/21% in revenue/EBITDA/PAT over FY26-28E. We reiterate our BUY rating with a TP of INR2,130 (premised on 17x FY28E EV/EBITDA).

Performance led by strong growth in the international port segment

* APSEZ handled 138.1 MMT of cargo in 1QFY27, up 15% YoY, driven by growth in international volumes. Mundra Port contributed 37%/51.2% to total volume/domestic volume in 1QFY27 (vs. 40%/48% in 1QFY26), marking diversification across ports.

* Domestic cargo volume grew 2% YoY to 115.3MMT, while international cargo volume rose 196% YoY from 7.7MMT to 22.8MMT, driven by the consolidation of NQXT and Colombo terminals.

* Revenue from domestic ports grew 12% YoY to INR69b, driven by a better product mix, premium/emergency service charges during the Middle East disruptions, and growth in ancillary port services leading to higher realizations. EBITDA margins stood at 74% (vs. 74.8% in 1QFY26).

* Revenue from international ports rose 80% YoY to INR17.5b, and EBITDA grew 256% YoY, fueled by the consolidation of NQXT and better operations at the Colombo Port

Valuation and view

* With strong cash flows, a healthy cash balance of INR124b, and a net debt-toEBITDA ratio of 1.9x, APSEZ is well-positioned for further expansion. Capacity enhancements at key ports, ongoing infrastructure projects, and global port acquisitions provide visibility for sustainable growth in FY27 and beyond.

* We broadly retain our FY27 and FY28 estimates and expect APSEZ to post 11% growth in cargo volumes over FY26-28. This would drive a CAGR of 17%/18%/ 21% in revenue/EBITDA/PAT over FY26-28E. We reiterate our BUY rating with a TP of INR2,130 (premised on 17x FY28E EV/EBITDA).

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