Adani Ports gains 2% as Ventura initiates buy rating, sees stock rallying up to Rs 1,674 in one year

Shares of Adani Ports and Special Economic Zone (APSEZ) climbed as much as 2.2% on Wednesday to Rs 1,142.35 on the BSE after brokerage firm Ventura Securities assigned a ‘buy’ rating to India's largest private port operator, at a target price of Rs 1,674, indicating a potential upside of over 46% from current levels.

Ventura Securities highlighted APSEZ’s robust business model, which integrates Special Economic Zone (SEZ) infrastructure with comprehensive logistics and maritime solutions. "APSEZ stands out as the largest and fastest-growing port operator in India, leveraging its strategic port locations and end-to-end logistics to deliver superior growth and profitability," the brokerage firm said.

APSEZ operates 15 domestic ports with a combined capacity of 633 MMT and three international ports, including the under-construction Colombo Port. Mundra, its flagship port, accounts for a significant portion of operations and is witnessing investments in key industries like renewable energy, steel, and cement, the brokerage noted. The Vizhinjam port in Kerala, set to become a major transshipment hub, further strengthens its strategic positioning.

Ventura Securities also made a note of APSEZ's resilience amidst market volatility, citing a 7% year-over-year (YoY) increase in total cargo handled to 332.4 MMT in FY24, driven by a 19% YoY growth in container volumes. The company also undertook strategic acquisitions, including Gopalpur Port and an 80% stake in Astro Offshore, enhancing its offshore capabilities, Ventura said.

The brokerage said it expects APSEZ’s revenue, EBITDA, and net profit to grow at a CAGR of 21.4%, 19%, and 21.9%, respectively, over fiscal 2024 to 2027, supported by expanding capacity and diversified operations. By FY29, the company aims to double port capacity and triple logistics infrastructure. "APSEZ’s strategic investments and operational efficiency are set to drive significant shareholder value, with revenue expected to reach Rs 47,797 crore by FY27," Ventura said.

Despite anticipated pressure on EBITDA margins due to a rising contribution from the lower-margin logistics segment, net margins are expected to improve to 30.7% by FY27, aided by reduced interest costs, the brokerage said, adding that the company’s strong balance sheet, with a manageable net debt-to-equity ratio of 0.7x, underscores its financial stability.

The port operator's capacity expansion, including the launch of the Vizhinjam and Colombo ports and the development of multi-modal logistics parks (MMLPs), positions the company to capitalize on India’s growing maritime trade. Ventura said it expects APSEZ to surpass industry growth, driven by its unique coastal presence and competitive edge in rail connectivity and industrial cluster development.

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