Buy Adani Ports & SEZ; target of Rs 1780: Motilal Oswal

Motilal Oswal's research report on Adani Ports & SEZ

Adani Ports & SEZ (APSEZ) reported a revenue growth of 6% YoY to INR70.7b in 2QFY25 (in line). Cargo volumes grew 10% YoY to 111mmt. The growth was primarily driven by containers (+19% YoY). In 1HFY25, APSEZ managed ~27% of the country’s total cargo and ~45% of container cargo. EBITDA margin came in at 61.8% (est. 59%), up 90bp YoY/240bp QoQ. EBITDA grew 13% YoY to INR43.7b (in line). APAT rose 11% YoY to INR24.6b (in line). During 2QFY25, port revenue grew 12% YoY to INR56.4b. Port’s EBITDA margin was 72% in 2QFY25 (flat YoY) Logistics revenues grew 22% YoY to INR5.9b. EBITDA margin in the Logistics business stood at 27% in 2QFY25 (30% in 2QFY24).

Outlook

We largely retain our estimates for FY26/27 and expect APSEZ to report 10% growth in cargo volumes over FY24-27. This would drive a CAGR of 15%/15%/21% in revenue/EBITDA/PAT over FY24-27. We reiterate our BUY rating with a revised TP of INR1,780 (premised on 18x Sep-26 EV/EBITDA).