Buy Adani Ports and SEZ; target of Rs 1400: Motilal Oswal

Motilal Oswal's research report on Adani Ports and SEZ

Adani Ports & SEZ (APSEZ) handled 408.7mmt (+7% YoY) of cargo volumes over Ap’24-Feb’25 (11 months of FY25). During the same period, cargo volume handled at major ports in India grew ~3% YoY. Hence, APSEZ continues to grow over 2x the industry rate, driven by higher efficiency at existing ports and inorganic expansion along the eastern coastline of India. The management highlighted its focus on doubling handled volumes over the next five years. This growth will be driven by domestic ports, with volume guidance excluding any potential inorganic opportunities that may arise. The logistics business is set to drive port volume growth, as the company expands end-to-end services and adopts advanced technology to boost efficiency and reduce turnaround time.

Outlook

We expect APSEZ to report 10% growth in cargo volumes over FY24-27. This would drive a CAGR of 14%/15%/19% in revenue/EBITDA/PAT over FY24-27. We reiterate our BUY rating with a TP of INR1,400 (premised on 15x Sep’26E EV/EBITDA).