Motilal Oswal Financial Services has reiterated its BUY call on Adani Ports and Special Economic Zone (APSEZ), revising the target price to Rs 1,800, implying an upside of about 22% from current levels. The upgrade reflects improving earnings visibility, supported by strong cargo momentum, expanding container volumes, and the strategic acquisition of the North Queensland Export Terminal (NQXT) in Australia.

Why the Investment Thesis for Adani Ports Is Strengthening

Adani Ports & SEZ is entering a decisive phase of scale-led growth. With the closure of the NQXT acquisition, APSEZ has materially strengthened its earnings base through long-term, take-or-pay contracts that enhance cash flow visibility. Domestic and international cargo volumes continue to grow at a pace well above industry averages, while integrated logistics and marine services are emerging as high-margin growth engines. Backed by disciplined capital allocation, a deleveraging balance sheet, and rising return ratios, Motilal Oswal believes APSEZ is firmly positioned to become India’s largest integrated transport utility by the end of the decade.

Motilal Oswal’s Investment Call and Valuation Framework

Motilal Oswal maintains a BUY rating on Adani Ports & SEZ with a revised target price of Rs 1,800, based on a valuation multiple of 16x FY28E EV/EBITDA. At the current market price of around Rs 1,473, the stock is trading at 16.7x FY26E EV/EBITDA, which the brokerage considers reasonable given the company’s scale, asset quality, and multi-year growth visibility.

The valuation case is reinforced by consistent free cash flow generation, improving leverage metrics, and sustained EBITDA margins of around 60%, among the highest in the global ports industry.

NQXT Acquisition: A Structural Boost to Earnings Visibility

The acquisition of North Queensland Export Terminal (NQXT) marks a pivotal strategic milestone. NQXT is a deep-water coal export terminal in Australia with a capacity of 50 million metric tonnes per annum, operating under a take-or-pay contract of 40 mmt, which ensures predictable revenue streams.

On a pro forma basis, the acquisition lifts APSEZ’s FY26 EBITDA guidance to Rs 223.5–233.5 billion, compared with the earlier Rs 210–220 billion. Cargo volume guidance has also been revised upward to 545–555 mmt, reflecting the immediate scale benefits of the transaction.

Importantly, the acquisition was executed through a non-cash transaction, with APSEZ issuing 143.8 million shares to promoter entities, resulting in a modest increase in promoter shareholding to 68.02%. Motilal Oswal views this as balance-sheet neutral and strategically accretive.

Volume Momentum: Containers Lead the Growth Narrative

Cargo volumes remain a core strength of the APSEZ story. In December 2025, the company reported 9% year-on-year growth in total cargo volumes, driven by a sharp 18% surge in container traffic. International container volumes and the ramp-up of new ports played a critical role in this acceleration.

For the third quarter of FY26, total volumes grew approximately 10%, broadly in line with internal estimates. Year-to-date cargo volumes reached ~367 mmt, reflecting 11% growth, while container volumes expanded by an impressive ~21%.

Motilal Oswal highlights that APSEZ’s domestic port volume growth over the past decade has been nearly three times the industry average, underlining the company’s competitive positioning.

Market Share Expansion Anchors Long-Term Growth Visibility

Scale leadership continues to translate into market share gains. APSEZ currently operates 15 ports and terminals across India, with an aggregate domestic capacity of 633 mmt, in addition to four international ports spanning Israel, Sri Lanka, Tanzania, and Australia.

Domestic market share increased to 28.1% as of September 2025, up from 27.4% a year earlier. Even more notable is the steady expansion in container market share, which has risen to 45.9% from 36% since March 2020.

Capacity additions at Colombo, Dhamra, and Vizhinjam are expected to further strengthen the growth pipeline over the next few years.

Integrated Logistics: Building a High-Stickiness Ecosystem

Logistics is rapidly evolving into a strategic growth pillar. Through Adani Logistics Limited, the group is building a nationwide, end-to-end logistics ecosystem covering container trains, multimodal logistics parks, warehousing, trucking, and last-mile delivery.

The logistics arm now operates 12 multimodal logistics parks, 132 container trains, and over 3.1 million square feet of warehousing space, supported by a hybrid trucking model that combines owned assets with third-party fleets. Planned capital investments of Rs 50 billion by FY30 are expected to enhance return on capital employed while deepening customer wallet share.

Marine Services: A High-Margin Engine Scaling Rapidly

The marine business is emerging as a powerful earnings lever. APSEZ operates a diversified fleet of 127 vessels, spanning tugs, barges, multipurpose support vessels, and offshore assets. Strategic acquisitions such as Ocean Sparkle and Astro Offshore have accelerated scale and profitability.

In the second quarter of FY26, marine revenues surged 237% year-on-year to Rs 6.4 billion, with EBITDA margins expanding to 52.7%. Management is targeting a doubling of marine revenues from FY25 levels, positioning the segment as both capital-efficient and globally scalable.

Financial Outlook: Strong Growth with Balance-Sheet Discipline

Motilal Oswal forecasts robust financial performance over FY25–28, with revenue, EBITDA, and PAT expected to grow at CAGRs of approximately 15%, 15%, and 18%, respectively. Net debt-to-EBITDA is projected to improve steadily, declining from 2.1x in FY25 to around 1.0x by FY28.

Return ratios remain healthy, with RoE near 19–20% and RoCE above 14%, reinforcing the quality of earnings and capital allocation discipline.

Stock Levels, Valuation Comfort, and Investor Takeaway

Current Price (CMP): Rs 1,473
Target Price: Rs 1,800
Upside Potential: ~22%
Valuation Basis: 16x FY28E EV/EBITDA

Motilal Oswal believes APSEZ’s diversified asset base, rising containerization, global expansion, and integrated logistics strategy provide durable competitive advantages. With improving earnings visibility and a clear path to scale, the brokerage reiterates its BUY recommendation for long-term investors seeking exposure to India’s infrastructure and trade growth story.

Disclaimer: Investment in securities is subject to market risks. Investors are advised to conduct their own due diligence before making investment decisions.