 "PL Capital hikes Adani Ports target on NQXT acquisition; retains 'Buy'")
PL Capital raised its target price on Adani Ports & SEZ to ₹1,876 per share from ₹1,777, valuing the stock at 18 times the enterprise value (EV) of September 2027E Earnings before interest, tax, depreciation, and amortisation (Ebitda). The brokerage has maintained ‘Buy’ as it builds in stronger volumes and margins following the acquisition of North Queensland Export Terminal (NQXT).
NQXT: High-margin, long-life, dollar-linked asset
The brokerage highlights NQXT as a key milestone in Adani Ports & SEZ ’s international expansion, adding a high-quality, cash-generative, deep-water export terminal with around 65 per cent Ebitda margins and a remaining lease life of about 85 years. The asset, located in resource-rich Queensland and tied into the East–West trade corridor, handled 35mt in FY25, generated about AUD 228 million in Ebitda, and is expected to scale to roughly AUD 400 million Ebitda over the next four years. NQXT has 40 mtpa contracted under long-term take-or-pay agreements, providing strong visibility to revenues and dollar-denominated cash flows.
The transaction values NQXT at an EV of AUD 3.98 billion, implying 17.4x FY25 EV/Ebitda and an estimated 10x on FY29E Ebitda, which PL Capital terms attractive for a long-duration infrastructure asset. ALSO READ | Sundaram Finance vs Poonawalla Fincorp: Here's what market experts say
Balance-sheet neutral, equity-funded acquisition
PL Capital noted that the deal is effectively balance-sheet neutral at the Adani Ports & SEZ level, as it has been structured through a preferential allotment of equity rather than a cash outflow. Adani Ports will issue about 143.8 million new shares (around 6.7 per cent dilution) – 153 Adani Ports & SEZ shares for every 1,000 shares of the holding entity APPH – while NQXT’s existing net debt is absorbed within the transaction EV and backed by contracted cash flows.
Management also plans to monetise certain non-core assets and liabilities at the acquired entity to keep consolidated leverage broadly stable. PL Capital expects net debt/Ebitda to remain below the company’s guided ceiling of 2.5x, supported by strong operating cash flows.
Estimates raised on stronger volumes and margins
While PL Capital had already assumed NQXT’s consolidation from FY26, it had been conservative on volumes at some domestic ports and the logistics business due to uncertainty around US tariffs and issues at certain Indian ports.
Given Adani Ports & SEZ’s robust monthly throughput and healthy H1 profitability, the brokerage has now raised FY26–28 estimates: sales are up 4.9–5.5 per cent, Ebitda by 5.4–6.0 per cent, and earnings per share (EPS) by about 1 per cent. It has increased volume assumptions at Krishnapatnam (KP) and Gangavaram ports, adjusted margins at a few assets in line with the H1 run-rate, and upgraded revenue expectations for harbour and logistics operations, where management focus is rising. A 5 per cent depreciation in the rupee versus the Australian dollar since April 2025 is also seen as supportive for consolidated earnings from NQXT. ALSO READ | Vikran Engineering skyrockets 15% on deal win, ratings upgrade; details
Strong cash flows to fund capex; volume visibility improves
PL Capital underlined that Adani Ports’ strong cash-flow generation – driven by 8–10 per cent volume growth at domestic ports, rising containerisation, higher-margin marine services, rapid scaling of logistics, and increasing international contribution – should comfortably support its elevated capex plans while allowing further deleveraging.
Net debt/Ebitda is projected to trend lower, assuming no large fresh inorganic deals. On the operational side, management has raised its FY26 cargo volume guidance to 545–555 mmt (from 505–515 mmt earlier), helped by domestic demand, better container throughput and the addition of NQXT volumes. PL Capital now expects total throughput to grow at about 14 per cent compound annual growth rate (CAGR) over FY25–28 (including NQXT), reinforcing Adani Ports’ trajectory towards its 1-billion-tonne target by 2030.
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