Adani Ports' Revenue Projected At Rs 50,000 Crore In Next Four Years

Adani Ports and Special Economic Zone Ltd. surpassed its guidance for cargo, revenue, and Ebitda in fiscal year 2024. These metrics continued to grow in the fourth quarter, with net profit rising by 76.87% to Rs 2,014.8 crore in the January-March quarter.

The revenue target for financial year 2025 appears to be attainable, given the increasing volumes.

A look at how the company has beat its own growth guidance and expansion plans.

The company currently operates 15 ports, with the share of Mundra—previously accounting for the majority of volumes—decreasing from 89% to 44% of total cargo volumes. This shift has brought about parity in the West-East coast share, with the East's contribution rising from zero in 2014 to 43%.

The recently acquired Gopalpur Port will further boost revenue from the East Coast.

In fiscal 2021, the port operator projected cargo volumes of 500 million metric tonnes and revenue of Rs 30,000 crore by the end of FY25.

By fiscal 2024, its revenue had already reached Rs 26,700 crore, surpassing expectations. Meanwhile, cargo volumes stood at 398 MMT in 2023, representing a higher growth rate than initially projected at the start of FY21—cargo volumes grew by 20% compared to the anticipated 17% CAGR. Similarly, the revenue achieved a compounded annual growth rate (CAGR) of 29%, outpacing the estimated 24%.

Furthermore, this exceptional performance was accompanied by strong operational results, with Ebitda margins reaching 59%.

The company aims for robust cargo volume growth, targeting 1,000 MMT by 2030. As per its investor presentation, this goal is projected to drive revenue to Rs 50,000 crore by FY29, growing at a CAGR of 16% from FY24—doubling the current levels. The growth will be fueled by Ebitda, with targeted margins reaching an impressive 64%.

Currently approaching 400 MMT, the company operates at a capacity of 627 MMT, allowing for incremental capacity expansion at its own pace. Adani Ports anticipates cash flow generation of Rs 34,500 crore by FY29, achieving an 18% CAGR.

In recent years, the company has strategically expanded its international operations. It oversees Israel’s largest port, Haifa Port, in partnership with the Gadot Group—a significant venture established in 2022 that holds strategic importance for India. In July 2022, the company secured a tender to privatize Haifa Port for NIS 4.1 billion (approximately $1.18 billion), with Adani Ports holding a 70% stake and Gadot retaining the remaining 30% under a concession period until 2054.

Additionally, the company holds operations and maintenance contracts in Australia and Tanzania. In Australia, it manages the Abbot Point Coal Terminal in Queensland through a 99-year lease.

The company's latest international project involves constructing a container terminal in Colombo, Sri Lanka. This agreement, signed in 2022, includes partners John Keells (34% stake) and the Sri Lanka Port Authority (15% stake). During its recent earnings call, the company noted that operations in Sri Lanka will commence this year, although initial volumes are expected to be modest.

The company is India's largest port operator, commanding a market share of 27% in cargo volumes, a significant increase from 10% in 2013. Growth has been fueled by operational excellence, cargo diversification, and business model transformation, according to company statements.

The company plans to enhance capacity across all ports, especially those acquired in recent years, and is focused on commissioning the Vizhinjam Port in India.

The ports business contributes 85% to the company’s EBITDA, while the logistics business is also experiencing significant growth.

The company's current assets include a rail track network, trains, grain silos, warehousing, trucking, and more. It has demonstrated substantial growth across these assets and has set ambitious goals for eight-fold growth in these verticals.

In fiscal year 2024, revenue from the logistics vertical reached Rs 2,100 crore, up from Rs 600 crore in FY19. EBITDA has increased from Rs 100 crore to Rs 500 crore, with a margin of 23%. The company anticipates achieving a 45% CAGR in revenue and EBITDA by FY29.

The current net operating cash flows exceed annual loan repayments, as emphasized. The objective is to reduce the current foreign debt of Rs 6,135 crore to a negligible level by FY27 and then increase it thereafter. This strategy will significantly boost return ratios until FY27 and beyond, as projected, with net operating cash flow from operations expected to surpass debt levels until FY41.

Since March 2022, the average maturity has decreased by seven years to 4.6 years by the end of FY24, and the fund from operations to gross debt ratio has risen from 18% to 28%. Similarly, the FFO/interest coverage has improved from 4.5 times to 5.6 times during the same period.

The net debt/Ebitda ratio has decreased from 3.3 times in fiscal year 2021 to 2.3 times in FY24.

CARE Ratings assigned an ‘AAA’ rating to the company—the highest credit rating in India—making it the first private corporate infrastructure developer to achieve this rating. Additionally, S&P and ICRA upgraded the company's outlook from 'negative' to 'stable' during the year.

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