Adani Ports and Special Economic Zone Targeted at Rs 1,879: Prabhudas Lilladher Recommendation

Adani Ports and Special Economic Zone Reports Strong Operating Performance in Q4FY26

Adani Ports and Special Economic Zone (ADSEZ) has reported a robust operating performance in the fourth quarter of financial year 2026, largely driven by the consummation of the NQXT project. However, domestic volumes were impacted by the West Asia crisis and weaker imported coal volumes. The transshipment volumes post-closure of the strait supported domestic ports' net selling rate (NSR) and earnings before interest, taxes, depreciation, and amortization (EBITDA) per ton mainly at Mundra. Despite this, other key ports such as Gangavaram, Hazira, Dhamra, and Kattupalli (KP) experienced weak performance due to ongoing expansion, higher freight delaying exports, and negative impacts from sectors like tiles, scrap, and paper.

Margins were moderated due to adverse cargo mix and lower realizations from a shift towards coastal coal. Nevertheless, performance remained supported by strong growth in marine and steady traction in logistics. ADSEZ's overall market share stood at 26%. Despite near-term headwinds arising from the West Asia conflict, the company's long-term structural growth story remains intact, underpinned by its scale, superior asset quality, automation, and disciplined capital allocation.

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The company continues to strengthen its position as an integrated transport utility, with improving return on capital employed (ROCE) across segments driven by better asset utilization, mix shift towards asset-light businesses, and operational efficiencies. Management targets capacity to scale towards approximately 1 billion tonnes with 850 million metric tons (mmt) domestic volumes by 2030, with a total planned capital expenditure of INR 1 trillion over 5 years. The balance sheet remains comfortable with strong cash flow generation, providing flexibility to fund expansion and pursue inorganic opportunities. While near-term risks from geopolitical disruptions, weak export environments, and commodity volatility persist, ADSEZ's diversified portfolio and resilient business model position it well for sustained long-term growth.

Outlook and Recommendation

We maintain our FY27E EBITDA estimates and marginally increase FY28E by 1.3%. We expect ADSEZ to deliver revenue, EBITDA, and profit after tax (PAT) compound annual growth rate (CAGR) of 15%, 15%, and 21% over FY26-28E. The stock is trading at an enterprise value (EV) of 16.1x/13.6x FY27/28E EBITDA. We maintain a 'BUY' recommendation with a revised target price of Rs 1,872 (earlier Rs 1,810) valuing at the same 18x EV of March 2028 EBITDA.