Ahmedabad, March 11 Adani Ports and Special Economic Zone Ltd (APSEZ) is well positioned to capitalise on India's long-term growth potential due to its businesses' thematic alignment with the nation's development, a Macquarie Equity Research report has said, giving the country's leading ports operator an ‘outperform’ rating.
Macquarie said that the Adani Group company offers a diversified port and cargo mix support resilience and the increasingly integrated nature of logistics offerings should aid further customer lock-in.
The visibility of healthy recurring operating cash flows remains high, supported by mix and customer partnerships. Initiate at Outperform,” Macquarie said in its note.
“We are optimistic on APSEZ' long-term growth prospects supported by its diversification efforts, execution track record, and expansion plans in turn supported by high operating cash flow (OCF) generation. Valuations look reasonable,” according to the global financial institution.
Adani Ports is India's largest port operator and aims to grow at twice the rate of the country's cargo volume.
Macquarie believes the diversity of cargo handled, the locations of its ports, hinterland connectivity, customer partnerships, and its early-mover advantage are favourable factors.
The network effect of a rapidly growing logistics business is further supportive. Management's target for the company's logistics business (inland transportation, warehousing, etc.) is a 40-45 per cent revenue CAGR over FY25-29, it noted.
The company, which handled its highest-ever monthly cargo volume of 39.9 million metric tonnes (MMT) in January, up 13 per cent year-on-year, plans capex of Rs 800 billion over FY25-29 for organic domestic business growth (vs Rs420 billion organic over FY15-24).
“This includes domestic ports (Rs 450-500 billion) and logistics (Rs 200-250 billion). APSEZ will also evaluate international port expansion opportunities.
APSEZ's average OCF/EBITDA stood at 75 per cent over FY20-24. The brokerage expects cash-flow generation to remain strong given a 50 per cent sticky cargo in-port cargo mix and continuing diversification efforts.
APSEZ Mundra has achieved a historic monthly cargo volume of 17.20 million metric tonnes in January, surpassing the previous record of 17.11 million metric tonnes, the highest ever by any Indian port in the history of maritime trade.
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