Buy Adani Port and SEZ; target of Rs 1777: Prabhudas Lilladher

Prabhudas Lilladher's research report on Adani Port and SEZ

ADSEZ reported a strong cons operating performance in Q1FY26, driven by a healthy 11% cargo volume growth and robust growth in logistics and marine business. Domestic cargo volume growth was tad weaker at 6% due to geopolitical issues during the quarter and lower iron ore volumes at Dhamra. International volume growth was underpinned by the commencement of operations at the fully automated container terminal at Colombo Port. The logistics and marine businesses delivered exemplary performance, with revenues growing by 2x and 2.9x YoY, respectively. Over next few quarters, logistics business is expected to continue with a strong momentum as company transforms itself into an integrated transport utility company. ADSEZ has guided cumulative capex of Rs150-200bn till FY29E for logistics business and aims to achieve EBITDA of Rs35bn over the next 5 years.

Outlook

We expect ADSEZ to deliver revenue/EBITDA/PAT CAGR of 17%/15%/20% over FY25–28E. The stock is trading at EV of 12.6x/10.5x FY27/28E EBITDA. Maintain ‘Buy’ with TP of Rs1,777 valuing at 18x EV of Sep’27E EBITDA.