Nuvama has reiterated its ‘buy’ rating on Adani Ports and Special Economic Zone Ltd., as it expects revenue and Ebitda growth for the ports operator. The research firm has a target price of Rs 1,960 per share, implying an upside potential of over 63% from the current levels.

This positive outlook is also driven by strategic initiatives in the logistics business and technology-driven advancements in its port operations.

At the recently held APSEZ Investor Day 2024, the company reaffirmed its target to handle 1 billion tonnes of cargo by 2030. This goal is expected to be largely fueled by growth in domestic cargo, projected at a 12% compound annual growth rate, while international cargo will grow selectively through partnerships with local operators in key markets like South East Asia, Africa, and the Middle East, the brokerage noted.

Nuvama foresees APSEZ’s consolidated revenue and Ebitda growing at a CAGR of 20% and 18%, respectively, from fiscal 2024 to fiscal 2029. The logistics segment is expected to be a major growth driver for the company, with a forecasted revenue and Ebitda CAGR of 46% and 48%, respectively, over the same period. The company’s logistics business will focus on a range of services including container and non-container movement, warehousing, and multimodal logistics parks.

One of the key highlights for APSEZ is the ongoing development of the Vizhinjam port, India’s first semi-automatic transshipment terminal, which is set to begin operations in December 2024. The port is expected to handle 1 million twenty-foot equivalent units initially, with a target capacity of 3 million TEUs by 2028, the note added.

The company has also shown strong balance sheet management, with its net debt to Ebitda ratio, improving from 3.3 times in fiscal 2021 to 2.0 times in first half of fiscal 2025, Nuvama said.

The key risk to the investment remains any adverse developments at the group level, the research firm said.

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