Adani Ports shares: CLSA retains 'Outperform'; highlights logistics, marine growth

Global brokerage CLSA retained its 'Outperform' rating on Adani Ports and Special Economic Zone Ltd (APSEZ) shares, citing growth across its ports, logistics and marine businesses.

CLSA said the company's ports handled traffic at twice the country's growth rate over FY21-26 and gained 300 basis points (bps) in market share year-on-year (YoY). The company has set a FY31 target of 1 billion tonnes (bt) of traffic, implying a compound annual growth rate (CAGR) of 15 per cent, the brokerage said.

APSEZ is guiding for five-year revenue and port earnings before interest, taxes, depreciation and amortisation (EBITDA) CAGRs of 17 per cent and 18 per cent, respectively, through FY31. CLSA expects the logistics and marine businesses to clock EBITDA CAGRs of 27 per cent and 19 per cent, respectively, over FY26-31.

The brokerage said APSEZ remains focused on scaling its international operations and marine businesses while maintaining disciplined capital allocation. It highlighted the company's Colombo container terminal, which reached full utilisation within a year and is expected to double its capacity.

On international expansion, CLSA said the company is focusing on value-accretive opportunities while improving its credit profile. APSEZ has reduced its US dollar debt, lowering its exposure to currency-related volatility, while maintaining net debt-to-EBITDA at comfortable levels. The brokerage also pointed to the company's dollarised asset base as a supporting factor for its international expansion strategy.

CLSA said APSEZ's sustainability initiatives remain on track, with the company targeting net zero by FY40 and planning the electrification of more than 3,000 pieces of equipment.

The brokerage noted that APSEZ is trading at a 2-30 per cent discount to peers on FY28 earnings per share (EPS). It retained its 'Outperform' rating on the stock with a 12-month target price of Rs 2,070.