UK-based brokerage firm Investec has initiated coverage on Adani Ports and Special Economic Zone (APSEZ) with a ‘Buy’ rating and a target price of ₹1,715, indicating a potential upside of 23.5 per cent from the previous closing level. Following the announcement, Adani Ports’ shares were trading nearly 2 per cent higher at ₹1,434.10 on the BSE on Tuesday morning.
In its initiation note, Investec said the current valuation of 12x FY28E EV/EBITDA is attractive, given APSEZ’s ability to deliver 13 per cent EBITDA CAGR over FY25–30 through its existing ports. The brokerage arrived at the target price by valuing the stock at 16 times EV/EBITDA for September 2027. It added that its discounted cash flow analysis of existing ports and businesses alone justifies the current market price, while the company’s strong balance sheet provides significant optionality for future growth.
Investec expects Adani Ports to generate operating cash flow of over ₹1 trillion between FY25 and FY30, more than sufficient to meet its capital expenditure plans of ₹700 billion and support continued deleveraging. Net gearing has already declined from 1.5x a decade ago to 0.6x as of March 2025 and is projected to become negligible by FY30.
According to the brokerage, after several years of acquisition-led domestic volume growth, the company’s next phase of expansion will come from scaling its existing ports, with revenue expected to grow at a 15 per cent CAGR over FY25–30. Key growth anchors include Vizhinjam for transshipment in Phase II, Dhamra for coastal coal, and Mundra for containers and crude. International port volumes are projected to rise more than fivefold over the same period following the NQXT acquisition.
Investec noted that efficiency gains and improved utilisation have pushed return on invested capital at domestic ports above 20 per cent pre-tax, while returns from international ports are expected to improve gradually as these assets mature. Although logistics ROIC may remain below 10 per cent through FY30 due to early-stage investments, the brokerage said these assets enhance APSEZ’s competitive position by capturing a larger share of customers’ logistics spend, unlocking network effects and leveraging Adani Group volumes through technology deployment.
The firm highlighted that since FY17, Adani Ports has funded all capital expenditure and acquisitions through internal accruals, demonstrating strong cash generation capabilities that are expected to continue driving deleveraging and give the company flexibility to win new port concessions. From operating a single port in FY10, the company now runs 17 ports and terminals across India and overseas and is integrating its port network with a rapidly scaling logistics business to offer end-to-end solutions and build a substantial marine services portfolio.
