Buy JSW Infrastructure for the Target Rs 400 by Motilal Oswal Financial Services Ltd
Volume growth remains steady; expansion projects to drive the next growth phase
* JSW Infrastructure’s (JSWINFRA) consolidated revenue grew 18% YoY to INR14.4b (in line). During 1QFY27, the company handled cargo volumes of 31 MMT in 1QFY27, up 6% YoY. Volume growth was impacted by lower throughput at the Fujairah terminal due to the ongoing Middle East crisis. However, this was largely offset by strong performance at Jaigarh Port, driven by higher volumes from anchor customers. Additionally, healthy growth at South West Port, Dharamtar, and Ennore Bulk Terminal, along with interim operations at the Tuticorin terminal, supported the overall increase in cargo volumes.
* EBITDA grew 16% YoY to INR6.7b (in line). EBITDA margin stood at 46.6% (vs. our estimate of 45.9%). The margin contracted ~90bp YoY and~390bp QoQ. APAT declined ~2% YoY to INR3.5b (6% below estimates).
* Port revenue grew 11% YoY to INR12b. The logistics segment recorded revenue of INR2.37b.
* JSWINFRA is executing multiple expansion projects across ports and logistics, with INR165b capex planned in FY27 and FY28. Backed by a strong balance sheet and rising cargo diversity, JSWINFRA aims to scale port capacity to 400MTPA and logistics revenue to INR80b by FY30, positioning it well for long-term growth. We maintain our FY27E and FY28E estimates and expect major port expansions to be completed by the start of FY28, while the logistics business is also likely to scale up. We estimate a volume/revenue/EBITDA/APAT CAGR of 19%/ 39%/34%/31% over FY26-28. We reiterate our BUY rating with a TP of INR400 (premised on 19x FY28 EV/EBITDA).
Highlights from the management commentary
* Management indicated that, under normalized Middle East operations, port EBITDA would have been higher by INR650-700m during the quarter.
* Cargo volumes are expected to reach ~127mt in FY27.
* The company expects operations at the Fujairah terminal to normalize by Aug’26. Eight storage tanks are expected to resume operations by end-July/early August, with three additional tanks by September to October.
* Management remains committed to the Oman project, highlighting its strategic location outside the Strait of Hormuz, which has become increasingly important amid regional geopolitical uncertainties. The tendering process has started, and the company expects the concession agreement to be executed over the next 1- 2 months.
* Execution remains on track across major port and logistics infrastructure projects, with total planned capex expected at INR165b for FY27 and FY28 (INR130b for ports and INR35b for logistics).
Valuation and view
* Management retained its FY27 guidance of achieving a revenue of INR68.5b and an EBITDA of INR30b. Its long-term vision includes expanding the port capacity to 400MTPA by FY30 and building a logistics platform delivering INR80b in revenue and a 25% EBITDA margin. Backed by aggressive yet disciplined capex, customer diversification, and multimodal infrastructure expansion, JSWINFRA remains wellpositioned for structural growth across India’s maritime and logistics value chain.
* We expect JSWINFRA to strengthen its market dominance, driven by incremental volume from Jaigarh and Dharamtar ports post-commissioning of the Dolvi Steel plant's new capacity. This, along with a healthy rise in logistics revenue, is expected to drive a 39% CAGR in revenue and a 34% CAGR in EBITDA over the same period. We reiterate our BUY rating on the stock with a TP of INR400 (based on 19x FY28 EV/EBITDA).
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