Kotak Institutional Equities has initiated a bullish stance on Adani Ports and SEZ (APSEZ), assigning a "BUY" rating and targeting a fair value of Rs1,840 per share – underpinned by strong fundamentals, robust growth prospects, and a compelling valuation gap versus its closest competitor. The report identifies APSEZ as the leading player in the Indian port infrastructure space, emphasizing its flagship Mundra port, portfolio diversification, and superior execution as decisive factors. With APSEZ trading at a meaningful discount to JSW Infrastructure (JSWINFRA), Kotak sees significant upside for investors willing to ride India's logistics and maritime boom.

Adani Ports as Long Term Bet

Kotak Institutional Equities recommends Adani Ports and SEZ (APSEZ) as a top "BUY" in the transportation sector, citing its leadership, proven assets, and future-focused growth plan. Despite weaker recent price action, the stock offers a 32% upside to the revised target of Rs1,840—bolstered by expansion at Vizhinjam and steadier returns from incremental investments in core assets like Mundra. Compared to JSWINFRA, APSEZ stands out through portfolio breadth, superior growth in third-party revenues, and a well-capitalized expansion pipeline, all at a substantial valuation discount. Below, we break down the critical takeaways for investors keen on India's logistics evolution.

Kotak Institutional Equities Upgrades APSEZ: BUY With Rs1,840 Target

Kotak calls APSEZ its best bet in the transportation sector, increasing the fair value from Rs1,750 to Rs1,840. The research house highlights APSEZ's distinct advantages relative to JSWINFRA, particularly emphasizing the superior scale, diversity, and capital allocation record of the Mundra port, which has consistently outperformed Jaigarh—the largest port in JSWINFRA's portfolio.

Valuation: Significant Discount to JSWINFRA Despite Stronger Prospects

Currently, APSEZ trades at a 40% discount on a one-year forward EV/EBITDA basis and a 25% discount based on FY2030 numbers relative to JSWINFRA, even though APSEZ's future estimates are more realistic and rooted in ongoing expansion at existing ports. This valuation gap presents an attractive opportunity for long-term investors.

Key Asset Analysis: Mundra Dominates Jaigarh on Critical Metrics

Kotak's comparative analysis shows Mundra port as a more lucrative and scalable asset than Jaigarh on several parameters:

Mundra's balanced revenue mix, ability to scale third-party business, and proven record of reinvestment support higher confidence in sustainable value creation.

Expansion Ambitions Grounded in Existing Assets

APSEZ's Rs1 trillion investment program is sharply focused on growing capacity in proven assets like Mundra, Abbot Point, and Vizhinjam. This is in strong contrast to JSWINFRA, whose Rs270 billion expansion is largely centered on greenfield ventures carrying more risk and lower predictability. APSEZ has allocated substantial capital—particularly in organic port growth and logistics infrastructure—ensuring better returns and minimized operational uncertainties.

Volume Growth and Portfolio Diversification

APSEZ has achieved an organic volume CAGR of 12% in the past two years, compared to JSWINFRA's negative organic growth of -2%. The edge is attributed to APSEZ’s diversified cargo mix, with 42% of volumes coming from containers, while JSWINFRA remains overly concentrated and exposed to its group’s Dolvi steel plant. This diversification underpins a resilient and recurring revenue stream, thwarting the risks associated with single-customer concentration and commodity cycles.

Financial Outlook: Robust Growth, Compelling Metrics

Kotak expects APSEZ to deliver:

• EPS growth of 26.1% in FY2025, 17.7% in FY2026, and 13.5% in FY2027
• P/E of 26.6x FY2025E, 22.6x FY2026E, 19.9x FY2027E
• RoE consistently near 19.7%
• EBITDA to scale from Rs190 billion in FY2025 to Rs254 billion by FY2027
• Dividend yield rising from 0.5% to 0.7%

This trajectory is backed by a healthy balance sheet, falling leverage (Net debt/EBITDA to 0.7x by FY2028), and ample free cash flow generation.

Investment Implications: Opportunity Riding on Proven Execution

With the Vizhinjam port expansion now assumed at 5 million TEUs (up from 4 million prior), a diversified asset base, and sector tailwinds, APSEZ is well-positioned for sustained outperformance, according to Kotak. The stock's 52-week range stands at Rs1,605-994, and the recent correction provides an entry point for investors focused on secular logistics growth.

Bottom Line: APSEZ—India's Port Titan at a Discount

Kotak's research pitch is unambiguous: APSEZ, India's preeminent port operator, brings a blend of scale, financial muscle, and visionary capital allocation unmatched by peers. At a deep discount to JSWINFRA despite stronger fundamentals and visibility, APSEZ is positioned as a compelling, high-conviction BUY for investors seeking robust, long-term exposure to India's logistics and trade renaissance.