Ports Sector Update : War disruptions to impact FY27 volumes by PL Capital
Quick Pointers
* Fall of intercepted debris at JSW’s Fujairah liquid terminal and vessel availability at India impacted volumes
* Higher transshipment volumes aided ADSEZ but war disruptions to limit volume growth in FY27
We expect our Ports coverage universe to report Revenue/EBITDA/PAT growth of 13%/13%/9% YoY (0%/-1%/17% QoQ) in Q4FY26, supported by seasonally strong volumes and resilient realizations, despite near-term disruptions due to ongoing West Asia crisis. ADSEZ is expected to continue outperforming, driven by robust container volumes and incremental transshipment opportunities across Mundra, Vizhinjam and CWIT post closure of Strait of Hormuz, aiding volumes. In contrast, JSWINFRA’s performance is likely to remain muted partly impacted by disruption at the Fujairah Liquid Terminal and shutdown at Vijayanagar steel plant, although recovery in Paradip volumes and strong rail logistics traction should provide partial offset.
Ongoing global supply chain disruption is likely to impact trade flows leading to curtailment in cargo volumes. While Q4 is still not much impacted, any prolongation of war and resultant inflation can impact global economic growth and impact container volumes. Planned capacity additions at ports are on track for both companies. We moderate our FY27 volume assumptions by ~4% for both companies and curtail valuation multiples by 10% but remain constructive on the space from long term perspective. Structural drivers such as rising containerization, continued scale-up in port-linked logistics, and strong capacity expansion pipeline across key assets still remain. Top Pick: ADSEZ, JSWINFRA.
ADSEZ to sustain strong volume momentum:
ADSEZ has reported strong volume growth (12.6% YoY) in Q4FY26, led by robust container volumes across its ports. Recently affected bulk segment is also improving aided by strong improvement in coking coal (on continued steel production) and gradual pick up in thermal coal (on better domestic power demand). Restart of Tata UMPP at Mundra to aid coal volumes from FY27, while iron ore volumes remain largely flattish YTD. Marine and logistics businesses are expected to post strong growth, aided by higher fleet utilisation and continued expansion in rail and inland logistics operations. We expect ADSEZ to deliver 14% YoY (-1.4% QoQ) EBITDA growth, driven by higher container volumes and better cargo mix.
JSWINFRA is expected to deliver modest volume growth of ~3% YoY in Q4FY26, impacted by disruption at the Fujairah liquid terminal, where damage to one of the tanks (due to an intercepted drone incident) led to additional tanks being emptied, resulting a loss of March volumes and current war situation can result in ~35% lower FY27 volume from the facility. Additionally, the shutdown of BF3 at the Vijayanagar plant is expected to impact volumes at its ports. However, recovery in Paradip iron ore, coal volumes and rail infra business is expected to support overall throughput. We expect EBITDA margins for JSWINFRA to improve to ~50% in Q4FY26.
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SEBI Registration number is INH000000933
