Is Adani Ports the next big winner? Investec decodes; check target price

Investec has initiated coverage on Adani Ports with a 'Buy' rating, saying the company's integrated network offers a competitive edge, evident from the sharp volume/margin gains at acquired assets

Adani Ports and SEZ share price: Foreign brokerage firm Investec has initiated coverage on Adani Ports, an Indian multinational port operator and logistics company, with a 'Buy' rating, saying the company's integrated network offers a competitive edge, evident from the sharp volume/margin gains at acquired assets. The Adani Group company operates 17 ports/terminals alongside rapidly growing logistics and marine businesses. 

 

According to analysts at Investec, following the recent acquisition-led volume growth, the next leg of growth should come from scaling existing ports (rev CAGR of 15 per cent over FY25-30E). "This should help Adani Ports deliver strong CFs and continue the deleveraging trend, providing the optionality to win new port concessions," the brokerage said.

 

 

Investec values the company at 12x FY28E EV/Ebitda and arrives at a target price of ₹1,715. The target implies a 22 per cent upside from Friday's closing price of ₹1,409.4. 

 

At 02:50 PM, the Adani Ports stock was trading at ₹1,439.5, up over 2 per cent on the NSE. In the last two sessions, the stock has gained around 3.5 per cent. The stock's 52-week high was at ₹1,494 and 52-week low was at ₹995.65 on the NSE. The company's total market capitalisation stood at ₹3.1 trillion.

Here's why Investec holds a positive outlook on Adani Ports & SEZ:

Integrated ports and logistics company: Adani Ports has grown from managing a single port in FY10 to operating 17 ports and terminals across India and overseas. The company is now integrating its extensive port network with its rapidly expanding logistics operations to offer end-to-end supply chain solutions and harness network synergies. Additionally, APSEZ has significantly strengthened its marine services segment in recent years through strategic acquisitions.

 

Ports - Organic expansion to drive volume growth: According to the brokerage, following a period of acquisition-led domestic volume growth over the past 5–7 years, Adani Ports is now focusing on scaling up operations at existing ports to fuel the next phase of growth. Key drivers include Vizhinjam (transhipment, Phase II), Dhamra (coastal coal), and Mundra (containers, crude). Volumes at international ports are also projected to grow more than fivefold between FY25 and FY30, led by the recent NQXT acquisition. While efficiency improvements and higher capacity utilisation have already pushed pre-tax RoIC above 20 per cent at domestic ports, returns from international assets are expected to improve steadily as these operations mature.

 

Logistics is a key focus area: The company management aims to grow logistics by capturing a larger share of customer spend, leveraging Adani Group volumes, and using technology to boost margins. Though RoIC may stay under 10 per cent by FY30 due to early investments, these moves strengthen its competitive position.

 

Strong cash flow and deleveraging: Since FY17, Adani Ports has funded capex and acquisitions through internal accruals. Operating cash flow of over ₹1 trillion between FY25-30E is expected to cover ₹700 billion in capex and accelerate deleveraging. Net gearing has already dropped from 1.5x a decade ago to 0.6x in March 2025, and is projected to be near zero by FY30E.

 

In its note, Investec said the current valuation of 12x FY28E EV/Ebitda is attractive given the company's ability to deliver a 13 per cent Ebitda CAGR over FY25-30E from existing ports. The DCF of existing ports and businesses alone justifies the current market price, while the company’s strong balance sheet provides significant optionality.