APSEZ Performance & Adani Transition: Analyst Backing

New Delhi, Aug 7 (PTI) Adani Ports and Special Economic Zone's (APSEZ) robust first quarter revenue growth and margin improvement across major business verticals won the backing of leading brokerages, who saw the company as a long-term proxy for India's trade and infrastructure growth.

Leading brokerages, including Goldman Sachs, HSBC, Kotak, and Jefferies, have issued a unanimous 'BUY' rating on APSEZ, as a positive sentiment followed a robust first-quarter performance.

The company also announced that Gautam Adani will cease to be a Key Managerial Personnel (KMP) and will now serve as the non-executive chairman, transitioning from his earlier role as Executive Chairman.

In a note, Jefferies said Q1 EBITDA was 14 per cent above its estimates, led by domestic ports margin improvement and 2.0-2.9 times year-on-year revenue rise in logistics and marine.

"Management reiterated its focus on absolute EBITDA growth, as the company intends to deliver end-to-end solutions vs pure volume growth," it said, adding FY26 volume guidance at 505-515 million tonnes (12-14 per cent rise yoy) was maintained.

HSBC Global Investment Research said the company delivered robust Q1 revenue growth and margin improvements across major business verticals. "Strong ramp-up of new assets, turnaround in international port and logistics margins underscore intact earnings trajectory."

Port throughput grew 11 per cent to 121 million tonnes, backed by 6 per cent growth in domestic and a 4 times jump in international. New asset additions (Vizhinjam and Gopalpur) offset weakness in Mundra, which saw a 6 per cent throughput decline due to geopolitical restrictions and embargoes, and softer coal handling due to lower thermal energy demand.

"We lift FY26-28 EBITDA (estimate) by 2 per cent, reflecting better-than-expected margin improvement," it said, adding Vizhinjam and Colombo terminals should strengthen its capacity and pricing power.

Goldman Sachs said while tariff-related uncertainty will remain, APSEZ's strong portfolio of port assets leverages it for market share gains (as ports of Vizinjham, Colombo and Tanzania ramp up in FY26 and Gangavaram regains its volumes), resulting in 12.5 per cent volume growth.

Kotak Institutional Equities said APSEZ grew its EBITDA 30 per cent year-on-year, while facing head-on specific issues on imported coal and the transhipment business. "The port business continues to expand margins. It continues to add brownfield capacities judiciously and make its presence felt in new markets."

Reported financial numbers came in better than expectations. Logistics and Marine revenue drove the growth, analysts at Goldman Sachs said in their report.

For the quarter, the company reported a 21 per cent year-on-year increase in revenue to Rs 9,126 crore, while net profit rose 6.5 per cent to Rs 3,314.6 crore compared to the same period last year.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) rose 13 per cent to Rs 5,494 crore, although margins narrowed to 60.2 per cent from 64.1 per cent in the same quarter last year.

APSEZ has given a revenue guidance of Rs 36,000 crore to Rs 38,000 crore for the current fiscal (FY26) and an EBITDA forecast of Rs 21,000 crore to Rs 22,000 crore. The capex estimate has been put at Rs 11,000 crore to Rs 12,000 crore.

"Strong ramp-up of new assets and a turnaround in international port and logistics margins underscore an intact earnings trajectory," said HSBC.

Jefferies appreciated the management's continued focus: “Management reiterated its commitment to absolute EBITDA growth as the company shifts towards delivering end-to-end solutions, rather than purely volume-driven growth.