Buy Adani Ports & SEZ; target of Rs 1,550: Motilal Oswal

Motilal Oswal's research report on Adani Ports & SEZ

Adani Ports & SEZ (APSEZ) reported a revenue growth of 19% YoY to INR68.9b in 4QFY24 (in line). During the quarter, APSEZ recorded 26% YoY growth in cargo volumes to reach 108.8 MMT. EBITDA margin came in at 58.6% in 4QFY24 vs. our estimate of 59.4% (up 220bp YoY, down 190bp QoQ). While EBITDA grew 24% YoY to INR 40.4b, APAT increased 11% YoY to INR 22.9b (in line with our estimate).

Outlook

APSEZ is anticipated to outpace India's overall growth, driven by a balanced port mix along India's western and eastern coastlines and a diversified cargo mix. The company continues to invest heavily in the ports and logistics business to drive growth. The newly launched trucking segment enables APSEZ to provide the last-mile connectivity solution to its customers. We expect APSEZ to report 11% growth in cargo volumes over FY24-26. This would drive a CAGR of 14%/15%/19% in revenue/EBITDA/PAT over FY24-26. We largely retain our estimates and reiterate our BUY rating with a revised TP of INR 1,550 (premised on 17x FY26E EV/EBITDA).