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Operating performance in line; lower tax outgo drives APAT

Outlook remains bright with expansion underway

* JSW Infrastructure (JSWINFRA) has completed the acquisition of a 70.37% share of Navkar Corporation Limited through its subsidiary, JSW Port Logistics Private Limited (consolidation effective from 11th Oct’24). As such, the results of 4QFY25 are not comparable with those of the corresponding periods.

* Consolidated revenue grew 17% YoY to INR12.8b. During the quarter, the company handled cargo volumes of 31.2m tons (+5% YoY). Volume growth was led by a strong coal terminal performance and new contributions from Tuticorin and JNPA, partially offset by lower iron ore volumes at Paradip.

* EBITDA grew 10% YoY to INR6.4b. EBITDA margins stood at 49.9%. The margins were lower ~300bp YoY and higher ~40bp QoQ.

* APAT grew ~19% YoY to INR4.4b (our estimates of INR4b). Lower tax outgo led to a beat in APAT.

* During FY25, revenue stood at INR44.8b (+19% YoY), EBITDA stood at INR22.6b (+15% YoY), and APAT stood at INR14.5b (+22% YoY). During the year, the company handled cargo volumes of 117m tons (+9% YoY).

* JSWINFRA ended FY25 with strong growth in cargo and profitability and is advancing toward its 400 MTPA port capacity goal by FY30. Driven by the Navkar Corporation acquisition, its logistics arm is targeting 50% revenue growth in FY26, with a goal of reaching INR80b revenue by FY30. With a solid balance sheet, JSWINFRA is well-positioned to achieve 13-15% volume CAGR over the next few years. We broadly retain our FY26 and FY27 estimates. We estimate a volume/revenue/EBITDA/APAT CAGR of 13%/22%/23%/18% over FY25-27. Reiterate BUY with a TP of INR370 (premised on 23x FY27 EV/EBITDA).

Cargo volumes up 5% YoY, driven by third-party cargo; focus on building pan-India ports and logistics network

* During 4QFY25, JSWINFRA handled cargo volumes of 31.2MMT (+5% YoY). The volume increase was driven by robust performance at coal terminals in Mangalore, Ennore, and Paradip, along with contributions from interim operations at the Tuticorin Terminal and the JNPA Liquid Terminal. However, this growth was partially offset by reduced cargo volumes at the Iron Ore terminal in Paradip.

* Third-party volumes saw a stronger increase with 11% YoY growth. The share of third-party volumes in overall volumes stood at 50% in 4QFY25 vs 47% in 4QFY24.

* JSWINFRA is advancing its capex program, expanding ports at Jaigarh, Dharamtar, JNPA, Tuticorin, Mangalore, and Goa, while also investing in the slurry pipeline and logistics. These projects are set for completion between mid-2025 and March 2027.

*The company aims to achieve 400 MTPA port capacity by FY30, supported by capacity expansions and port acquisitions. It also aims to grow its logistics business to INR80b in revenue through an asset-light model and acquisitions.

Highlights from the management commentary

* In FY25, the company made significant progress on key projects, including Tuticorin, JNPA, and the slurry pipeline. The capacity of Southwest Port Goa was increased to 11 MTPA (with approval pending for 15 MTPA), bringing the total operational capacity to 177 MTPA.

* For FY26, management expects a minimum of 10% growth in port volumes and a 50% increase in logistics revenue. EBITDA for Navkar Corporation is projected to rise to INR1b (from INR 500-550m in FY25).

* JSWINFRA plans to invest INR55b in capex for FY26 (INR40b for ports and INR15b for logistics), compared to INR24.4b spent in FY25, reflecting continued momentum in capacity expansion.

* Navkar Corporation is a key focus of JSWINFRA's logistics capex, with plans to invest INR1.7b in FY26 to revitalize its operations and capitalize on previously untapped growth opportunities. JSWINFRA is allocating INR6b in FY26 to acquire rakes and Vertical Cargo Terminals (VCTs), aiming to enhance logistics throughput and terminal efficiency

Valuation and view

* JSWINFRA concluded FY25 with strong growth in cargo volumes, revenue, and profitability, making significant progress toward its goal of achieving 400 MTPA port capacity by FY30.

* Boosted by the Navkar Corporation acquisition, the logistics segment is set for substantial growth, targeting INR80b in revenue by FY30. Backed by a healthy balance sheet and a positive outlook, the company is well-positioned to capitalize on India’s infrastructure development and rising third-party cargo demand, despite global uncertainties.

*We expect JSWINFRA to strengthen its market dominance, leading to a 13% volume CAGR over FY25-27. This, along with a sharp rise in logistics revenues, is expected to drive a 22% CAGR in revenue and a 23% CAGR in EBITDA over the same period. We reiterate our BUY rating with a revised TP of INR370 (based on 23x FY27 EV/EBITDA).

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