Avenue Supermarts Sets Target Price of Rs 4410: Prabhudas Lilladher Report

ADSEZ Maintains Strong Operating Performance Amidst Headwinds

Avenue Supermarts (ADSEZ) reported a robust operating performance in Q4FY26, primarily driven by the consummation of NQXT. However, domestic volumes were impacted due to the West Asia crisis and weaker imported coal volumes. Despite this, the company's domestic ports saw an increase in Net Shipping Revenue (NSR) and EBITDA per ton mainly at Mundra, thanks to transshipment volumes post the closure of the strait.

In contrast, other key ports such as Gangavaram, Hazira, Dhamra, and KP experienced a weak performance due to ongoing expansion, higher freight delaying exports, and the negative impact from certain sectors like tiles, scrap, and paper. The company's margins moderated due to adverse cargo mix and lower realisations from a shift towards coastal coal. Despite these headwinds, ADSEZ's performance remained supported by strong growth in marine and steady traction in logistics.

ADSEZ's Market Share and Growth Prospects

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ADSEZ's overall market share stood at 26%, with a container market share of 45.2%. Despite near-term headwinds arising from the West Asia conflict, ADSEZ's long-term structural growth story remains intact, underpinned by its scale, superior asset quality, automation, and disciplined capital allocation. 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 utilisation, mix shift towards asset-light businesses, and operational efficiencies.

Expansion Plans and Capital Allocation

The management targets capacity to scale towards ~1 billion tonnes with ~850 million metric tonnes domestic volumes by 2030, with a total planned capital expenditure of INR1 trillion over 5 years. ADSEZ's 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 environment, and commodity volatility persist, ADSEZ's diversified portfolio and resilient business model position it well for sustained long-term growth.

Financial Projections and Recommendations

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We maintain our FY27E EBITDA estimates and marginally increase FY28E by 1.3%. We expect ADSEZ to deliver revenue/EBITDA/PAT compound annual growth rate (CAGR) of 15%/15%/21% over FY26-28E.

Valuation and Recommendation

The stock is trading at an Enterprise Value (EV) of 16.1x/13.6x FY27/28E EBITDA. We maintain a 'BUY' rating with a revised target price of Rs1,872 (earlier Rs1,810), valuing the company at the same 18x EV of Mar'28E EBITDA.