Adani Ports downgraded to ‘Hold’ by InCred Equities; target price raised
InCred Equities has downgraded Adani Ports and Special Economic Zone (APSEZ) to 'Hold' on the back of limited near-term upside potential and economic slowdown risks, despite raising the FY26F/27F EBITDA by 3% and target price to Rs 1,476.
- Jul 18, 2025,
- Updated Jul 18, 2025 2:58 PM IST
InCred Equities has downgraded Adani Ports and Special Economic Zone (APSEZ) from 'Add' to 'Hold', citing limited near-term upside potential after a 25 per cent rise in stock price over the past six months. The financial advisory firm raised its target price to Rs 1,476 from Rs 1,457, factoring in a 15 per cent CAGR in Ebitda for FY25-27F. The stock's recent performance, trading at 16.1x FY26F EV/Ebitda, marks a 14 per cent premium to its seven-year average of 14.1x.
The decision comes despite a positive outlook for APSEZ's volume growth, with expectations of a 12 per cent year-on-year increase in FY26F. This is driven by new terminal operations and a rebound at Gangavaram post-maintenance in 1QFY25. The projected volume growth contrasts with sector averages, as APSEZ anticipates an 8% CAGR over FY25-27F, compared to broader market expectations.
APSEZ's balance sheet remains robust, despite significant capital expenditure and acquisitions totaling Rs 64,600 crore from March 2021 to 2025. This spending was balanced by Rs 436bn in cash profits, a Rs 10,600 crore increase in net debt, and a Rs 8,300 crore share issuance. Such financial maneuvers have helped maintain stability.
Financial metrics further highlight APSEZ's stability, with a decrease in net external debt to Ebitda from 3.6x (FY21-23) to 2.1x in FY25. Additionally, forex debt constitutes 81 per cent of the FY25 gross debt of Rs 45,800 crore, underscoring the company's strategic financial positioning.
Despite these strengths, InCred Equities notes that prolonged economic slowdown poses a risk to APSEZ, while a sharp surge in volume could offset such challenges. The firm remains cautious about potential market fluctuations affecting stock performance.
The broader context of Adani's listed entities (excluding Ambuja Cements) reveals a mixed debt scenario, with some companies, like Adani Green Energy Ltd, having higher NED/Ebitda ratios. However, APSEZ's lower debt ratio of 2.1x stands out positively within the group.
In terms of future outlook, APSEZ's strategic investments and operational improvements are expected to bolster long-term growth, although immediate gains may be constrained by external economic factors. Competitors in the logistics and infrastructure sectors will closely watch these developments, adjusting their strategies accordingly.
As the market continues to evaluate economic trends, APSEZ remains a significant player in the logistics sector. However, investors are advised to consider the potential impact of economic slowdowns on the company's near-term financial performance.
InCred Equities has downgraded Adani Ports and Special Economic Zone (APSEZ) from 'Add' to 'Hold', citing limited near-term upside potential after a 25 per cent rise in stock price over the past six months. The financial advisory firm raised its target price to Rs 1,476 from Rs 1,457, factoring in a 15 per cent CAGR in Ebitda for FY25-27F. The stock's recent performance, trading at 16.1x FY26F EV/Ebitda, marks a 14 per cent premium to its seven-year average of 14.1x.
The decision comes despite a positive outlook for APSEZ's volume growth, with expectations of a 12 per cent year-on-year increase in FY26F. This is driven by new terminal operations and a rebound at Gangavaram post-maintenance in 1QFY25. The projected volume growth contrasts with sector averages, as APSEZ anticipates an 8% CAGR over FY25-27F, compared to broader market expectations.
APSEZ's balance sheet remains robust, despite significant capital expenditure and acquisitions totaling Rs 64,600 crore from March 2021 to 2025. This spending was balanced by Rs 436bn in cash profits, a Rs 10,600 crore increase in net debt, and a Rs 8,300 crore share issuance. Such financial maneuvers have helped maintain stability.
Financial metrics further highlight APSEZ's stability, with a decrease in net external debt to Ebitda from 3.6x (FY21-23) to 2.1x in FY25. Additionally, forex debt constitutes 81 per cent of the FY25 gross debt of Rs 45,800 crore, underscoring the company's strategic financial positioning.
Despite these strengths, InCred Equities notes that prolonged economic slowdown poses a risk to APSEZ, while a sharp surge in volume could offset such challenges. The firm remains cautious about potential market fluctuations affecting stock performance.
The broader context of Adani's listed entities (excluding Ambuja Cements) reveals a mixed debt scenario, with some companies, like Adani Green Energy Ltd, having higher NED/Ebitda ratios. However, APSEZ's lower debt ratio of 2.1x stands out positively within the group.
In terms of future outlook, APSEZ's strategic investments and operational improvements are expected to bolster long-term growth, although immediate gains may be constrained by external economic factors. Competitors in the logistics and infrastructure sectors will closely watch these developments, adjusting their strategies accordingly.
As the market continues to evaluate economic trends, APSEZ remains a significant player in the logistics sector. However, investors are advised to consider the potential impact of economic slowdowns on the company's near-term financial performance.