Buy Adani Ports; target Rs 170: Emkay

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26 Aug, 2025 12:21

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Emkay's research report on Adani Ports

• Visibility on cargo volumes remains intact, contracted/ container cargo volumes CAGR of 15 percent/23 percent over FY13-15E, driving total volume CAGR of 16.5 percent over FY13-15E
• Newer assets to turn Earnings accretive (Dahej, Hazira, CT-III), earnings contribution to surge higher from 6.9 percent in FY13 to 10.9 percent/14.6 percent in FY14E/15E.  Possible PSA/strategic tie-ups to help earnings
• Abbot divestment and completion of big-ticket capex to propel APSEZ into a high FCF zone in the next 2 years (FY13-15E)
• Best-in-class core asset, earnings accretion from newer ports to help garner earnings CAGR of 18.7 percent from FY13-15E. Remains our top-pick in the infra space for stable returns.

"We have valued APSEZ based on DCFs for individual projects , arriving at an SOTP valuation of Rs170 per share. We have valued Mundra Port (core operating asset) at Rs136 per share, constituting around 80 percent of the total value. Mundra Port, given its strategic position and diversified mix of cargo, is expected to deliver strong volume growth. The company having delivered a track record of maintaining superior realizations and margins has emerged as the preferred port due to superior infrastructure, which facilitates faster transit of cargo, thereby reducing the overall cost of handling for logistic companies and end-users."

We expect the stock to give stable long-term returns, given the company’s attempts to reduce concerns over leverage by divestment of Abbot Point, the trending down of the peak intensity, and strong earnings growth, which would ultimately generate free cash flow. We retain our Buy rating on the stock with a target price of Rs 170 from Rs 176, as we have adjusted volumes for the container terminal-3 (included in the phase-1 expansion of our valuations) and the Mormugao Port project," says Emkay Global Financial Services research report.

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