Global brokerage CLSA has maintained its 'Outperform' rating on Adani Ports and Special Economic Zone Ltd (APSEZ) shares. The positive outlook is driven by robust performance across its ports, logistics, and marine businesses.
According to CLSA, Adani Ports' facilities managed traffic at double the country's average growth rate between fiscal years 2021 and 2026. This strong performance led to a notable 300 basis points increase in market share year-on-year. APSEZ has ambitious targets, aiming to achieve 1 billion tonnes (bt) of traffic by FY31, which implies a compound annual growth rate (CAGR) of 15 percent.
Financially, APSEZ projects a five-year revenue CAGR of 17 percent and a port earnings before interest, taxes, depreciation, and amortisation (EBITDA) CAGR of 18 percent through FY31. CLSA anticipates even higher EBITDA CAGRs for the logistics and marine segments, expecting 27 percent and 19 percent respectively, over FY26-31.
The brokerage highlighted APSEZ's strategic focus on expanding its international operations and marine businesses, coupled with a disciplined approach to capital allocation. A prime example is the company's Colombo container terminal, which reached full utilization within a year and is now slated to double its capacity. APSEZ has also worked to improve its credit profile by reducing US dollar debt, thereby mitigating currency volatility exposure, and maintaining comfortable net debt-to-EBITDA levels.
Adani Ports is also making strides in its sustainability initiatives, targeting net zero emissions by FY40. This includes plans for the electrification of over 3,000 pieces of equipment across its operations. CLSA noted that APSEZ currently trades at a 2-30 percent discount to its peers based on FY28 earnings per share (EPS), and has set a 12-month target price of Rs 2,070 for the stock.