Adani Ports set to surpass revised cargo volume guidance of 400 MMT for FY24

The company’s monthly cargo run rate, reaching approximately 35 MMT, suggests a strong likelihood of surpassing its revised guidance of 400 MMT for FY24, brokerage firm Motilal Oswal said in a note.

With a robust logistics business, APSEZ saw a 21 per cent year-on-year increase in rail volume in FY24. Its extensive pan-India presence, coupled with strong pricing power and a major proportion of sticky cargo, contributes to its consistent market share gains.

The company’s investment in infrastructure for its logistics business is expected to enhance longterm cash flows and earnings. With a net debt-to-EBITDA ratio of 2.5 times as of December 2023, APSEZ maintains a favourable leverage position. EBITDA is earnings before interest, taxes, depreciation and amortisation.

The port operator anticipates major growth in the logistics sector, highlighted by its achievement of the highest quarterly rail volume and expansion in warehousing capacity. Furthermore, the addition of rakes and expansion plans signify its commitment to future growth in the logistics segment, the Mumbai-based brokerage highlighted.

Despite the potential impact of the Red Sea crisis on its traffic, currently constituting approximately 10 per cent of its total volume, APSEZ remains resilient. However, continued disruption could affect volumes in the long term.

Based on its strong performance and growth prospects, Motilal Oswal analysts project a 10 per cent volume growth and a compound annual growth rate (CAGR) of 15 per cent, 16 per cent, and 18 per cent in revenue, EBITDA, and profit after tax (PAT), respectively, over financial year 2024-2026 (FY24-26).

Considering these factors, analysts reiterate a ‘buy’ rating, with a revised target price of Rs 1,600, underlining the company’s potential to exceed its cargo volume guidance for FY24.