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Strong volume recovery to support sustained earnings growth

* All-India major port volumes increased 8.9% YoY in July’26 and 6.8% in FY27’YTD, led by strong POL (+10%) and coal (+17%) growth, while container volumes remained flat YoY. Non-major port volumes grew 3.5% YoY, supported by POL (+7%) and coal (+9.6%), whereas container volumes increased marginally by 1%. APSEZ outperformed the industry, handling 50mt of cargo in Aug’26, a 19% YoY rise. Growth was driven by strong traction in dry cargo (+25%) and containers (+15%), primarily led by NQXT, along with a recovery in container volumes following the slowdown caused by port disruption amid the Middle East crisis. On a YTD basis, APSEZ’s cargo volumes rose 15% YoY to 234.4mt (+16%), supported by healthy container (+15%) and dry bulk (+17%) volume growth.

* APSEZ’s domestic volumes grew just 2% YoY in 1QFY27, impacted by temporary disruptions at certain ports, with volumes expected to recover as these disruptions normalize and Krishnapatnam ramps up. At Mundra, container operations were impacted by the Middle East disruption, with the transshipment mix increasing to ~27% in 1QFY27 versus the normal 23–24%, as Middle East-bound containers accumulated at the port amid congestion.

* Despite muted domestic volume growth, the company delivered an expansion in EBITDA margins, supported by a favorable cargo mix, improved operating efficiencies, higher contribution from value-added ancillary services, and a strong EBITDA contribution from international ports.

* With strong volume recovery in Aug’26, particularly in dry cargo and containers, and improving earnings visibility, APSEZ remains well positioned to sustain its growth trajectory despite ongoing geopolitical uncertainties. Continued expansion of port capacity, marine services, and integrated end-toend logistics should support long-term growth. These initiatives reinforce APSEZ’s ambition to become India’s largest integrated transport utility by 2031, with Logistics and Marine emerging as key growth engines alongside its core Ports business. We reiterate our BUY rating with a TP of INR2,130, based on 17x 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 27.6% as of Jun’26. Management highlighted that its domestic port volume growth over the past decade has been more than twice 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.

* Going forward, management retains its target of achieving 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 has earmarked significant capital investments of INR70-90b for its logistics operations 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 135 vessels (excluding 47 vessels operated by Adani Harbor across APSEZ ports), including tugs, anchor-handling tug supply vessels, multipurpose support vessels, workboats, and barges.

* Through its subsidiary Adani Harbour International FZCO, the company 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, while EBITDA surged to ~INR13.5b, driven by vessel additions, integration of acquired entities, and higher demand from Tier-1 customers. However, margin moderated to 45% in 1QFY27 and is expected to gradually recover toward the 55% level recorded in 1QFY26 as conditions normalize. ? The marine business’s RoCE stood at 13% in FY26.

Valuation and view

* With strong cash flows, a healthy cash balance of INR124b, 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%/21% in revenue/EBITDA/PAT over FY26-28E. We reiterate our BUY rating on the stock with a TP of INR2,130 (premised on 17x FY28E EV/EBITDA).

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