Adani Ports shares fall 3% despite strong Q1 profit growth
Adani Ports reported an 18.6% jump in first-quarter revenue and record international earnings, but its stock still dropped 3% as analysts highlighted robust cash flows to justify their buy ratings.
Adani Ports and Special Economic Zone shares fell more than 3% on the National Stock Exchange on Thursday. The decline followed the release of the company's first-quarter earnings late Wednesday.
The sell-off occurred despite the logistics conglomerate posting broad-based financial growth across its core operations. Consolidated net profit for the quarter ended 30 June rose 9.2% year-on-year to ₹3,620.40 crore, up from ₹3,314.59 crore in the prior year.
Revenue climbed 18.6% to ₹10,820.80 crore, compared to ₹9,126.14 crore previously, while EBITDA grew 19% to ₹6,541 crore. EBITDA margins held steady at 60.4%.
The operational breakdown revealed a shifting earnings profile. Domestic ports saw revenue increase 12% and EBITDA rise 11%, supported by higher cargo volumes and an improved product mix. Margins in this core segment stayed elevated at 74%.
The most significant growth came from overseas operations. International ports generated their highest-ever quarterly revenue and EBITDA, with revenue surging 80% to ₹1,747 crore and EBITDA soaring 256% to ₹730 crore.
The logistics segment was comparatively flat, with revenue edging up 0.3% year-on-year to ₹1,173 crore and EBITDA growing 3% to ₹219 crore. Ashwani Gupta, Whole-time Director and CEO, noted that international ports, marine, and logistics have "transitioned decisively from scale-up to scale-value, becoming increasingly important drivers of revenue growth and profitability."
Brokerages interpreted the results as a solid foundation for future growth rather than a trigger for profit-taking. Motilal Oswal reiterated its buy rating with a target price of ₹2,130, representing roughly 24% upside from Thursday's trading levels. The firm projects an 11% cargo volume increase over the 2026 to 2028 period.
This volume growth is expected to drive a compound annual growth rate of 17% in revenue, 18% in EBITDA, and 21% in profit after tax. Emkay Research also retained a buy rating with a target price of ₹2,000, representing 16% upside. The firm pointed to strong cash conversion of 89% of EBITDA in fiscal 2026 and a comfortable net debt to trailing twelve-month EBITDA ratio of 1.9x.
This leverage position gives Adani Ports the financial flexibility to pursue accretive mergers and acquisitions. Factoring in the quarterly beat, Emkay raised its revenue estimates for fiscal 2027 and 2028 by 2%, valuing the stock using a sum-of-the-parts methodology.
