Jefferies initiates coverage on JSW Infra; maintains buy rating on Adani Ports

Jefferies maintained an underperform rating on Gujarat Pipavav and reduced its target price to Rs 140 a share from Rs 232 earlier.

Jefferies India has initiated coverage on JSW Infrastructure and remained positive on Adani Ports & SEZ and increased share price target. For JSW Infra, Jefferies has increased its target price to Rs 375 from Rs 309 a share while for Adani Ports it increased target price to Rs 1,910 from Rs 1,482 a share. Meanwhile, the brokerage maintained an underperform rating on Gujarat Pipavav Port Ltd and reduced its target price to Rs 140 a share from Rs 232 earlier.

Jefferies expects private sector ports to continue their double-digit volume and EBITDA growth, driven by market share gains, acquisitions, and expansions. All-India port cargo is projected to grow at a 6% CAGR from FY24-30, up from the 5% average of the past decade, with port capacity increasing by 1.3-1.4x. Private players like Adani Ports, JSW Infra, and Dubai Port are expanding their operations.

Jefferies said Adani Ports, as a market leader with a 27% share, is expected to see core port EBITDA growth of over 15% due to increasing volumes and operating leverage. Its higher target price is based on a 19x EV/EBITDA for September 2026, which is above the 10-year average of 14.8x, reflecting improved visibility on new port additions and robust volume growth. Risks include potential negative news about group leverage and possible disappointment in market share gains at acquired ports.

The brokerage also said JSW Infra is poised for a 20% EBITDA CAGR, excluding any inorganic growth opportunities. The company plans to expand its capacity 2.4x to 400 MMT by FY30 from 170 MMT currently and has entered logistics through the acquisition of Navkar Logistics. It anticipates 20%+ growth from its current base, supported by group volumes ensuring strong utilisation. Its higher target price based on a 32x EV/EBITDA for September 2026, reflects its current trading multiple. Risks include potential delays in group capex plans impacting volume growth.

Jefferies believes Pipavav will struggle to maintain market share due to Adani Group's dominance at Mundra Port. The company is negotiating a concession extension with the Gujarat Maritime Board, which could set a precedent. Its target price assumes no extension; if an extension with a 30% revenue share is granted, the target could rise to Rs 199, though this also poses downside risk. Upside risk lies in renewing at the current single-digit revenue share, it added.

India handles 1.5 billion tons of cargo along its 7,000+ km coastline. The 'Maritime 2030' vision aims for 1.8-2.5 billion tons by FY30, with Jefferies estimates at 2.2 billion tons and faster growth in containers. Petroleum products and coal are key bulk drivers. Port utilization has increased from 53% to nearly 60% over the past 5-7 years, with tariffs rising with inflation.

The Ministry has identified 81 PPP projects under the national monetization pipeline, with five worth $1 billion approved and $100 million awarded so far. The plan is for private sector involvement in 80% of major port capacity and 95% of new capacity through PPPs, Jefferies report added.

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