Broker’s call: Adani Ports (Buy)

Target: ₹1,590

CMP: ₹1,322.30

In our initiating coverage report on Adani Ports & SEZ Ltd in Oct’23, we had highlighted that the company’s improving utilisation levels at its current ports, along with its ramping up of volumes at newly acquired ports, will position the company to exceed its FY24 volume guidance and expand its market share in cargo handling. We reiterated our strong conviction with APSEZ being one of our top ideas for 2024.

APSEZ ended FY24 with 24 per cent volume growth in FY24 volumes, taking the total volumes to 420 MMT, well surpassing even its revised guidance of 400 MMT. In FY24, about 25 per cent of all-India cargo volumes was routed through APSEZ ports. For FY25, the company is targeting cargo volumes of 500 MMT.

Going forward, APSEZ targets to become India’s largest integrated transport utility and world’s largest private port company by 2030. APSEZ has a diversified cargo mix and is looking to increase cargo share of port on the east coast. The operational ramp-up at the recently acquired ports is expected to drive a 10 per cent growth in cargo volumes over FY24-26. This would drive a revenue/EBITDA/PAT CAGR of 14/15/19 per cent over FY24-26.

We reiterate our Buy rating with a TP of ₹1,590 (premised on 17x FY26E EV/EBITDA)