Adani Ports and Special Economic Zone Limited (APSEZ), India’s largest private port operator and a critical component of the Adani Group’s infrastructure portfolio, plays a pivotal role in the country’s trade and logistics ecosystem. With an extensive presence across domestic and international ports, integrated logistics, and a rapidly expanding marine services business, APSEZ is transforming into a fully integrated transport utility. Its strategic focus on efficiency, capacity expansion, and diversified operations drives consistent growth.
Management Commentary
The management of Adani Ports and SEZ reported a strong performance for Q1 FY26, showcasing growth across its diversified business segments: Ports, Logistics, and Marine.
The international portfolio led the performance, with revenue rising 22% year-on-year and EBITDA margin improving from 13% to 21%. Haifa Port in Israel delivered its highest-ever quarterly revenue, supported by a 29% surge in cargo volumes. Similarly, ports in Tanzania and Colombo contributed significantly, consolidating APSEZ’s international growth momentum.
The logistics division recorded a remarkable doubling of revenue to ₹1,169 crore, driven by strong growth in trucking and international freight services—both high return-on-capital employed businesses. EBITDA margin expanded from 27% last year to 29.6%, reflecting the benefits of an integrated model that leverages infrastructure, technology, and network scale. Management emphasized that logistics growth is broad-based, spanning rail, inland container depots (ICDs), trucking, and freight forwarding.
The marine business emerged as another growth driver, with revenue rising nearly threefold to ₹541 crore. This was supported by fleet expansion through acquisitions, taking APSEZ’s vessel count to a record 118. Marine EBITDA margin improved sharply to 55% from 40% last year, underlining efficiency gains and stronger utilization.
On the domestic front, APSEZ handled 6% higher cargo volumes, increasing market share to 27.8% from 27.2% in Q1 FY25. Mundra, the company’s flagship port, faced temporary headwinds due to geopolitical disruptions and government restrictions under Operation Sindoor, which affected transshipment cargo flows. However, management highlighted that container volumes recovered strongly in July, showing 10% growth over June. Other ports, including Gangavaram and Dhamra, displayed resilience, with new berths and infrastructure investments offsetting commodity-led volume pressures in iron ore.
Financially, APSEZ demonstrated strong discipline, with net debt-to-EBITDA maintained at 1.8x. Ratings agencies recognized this improvement, with S&P Global revising its outlook to “Positive” from “Negative” while reaffirming its BBB rating. The company reaffirmed its FY26 guidance, citing confidence in container and coal volume recovery, supported by growth from Colombo, Vizhinjam, and Gangavaram ports.
Looking ahead, APSEZ reiterated its long-term vision of handling 1 billion tonnes by 2030, supported by capacity expansions in containers, investments in rail-sea-rail (RSR) networks, tank farm development, and selective international acquisitions. The management underlined that APSEZ is no longer just a port company but an integrated transport utility with diversified earnings streams, ensuring resilience against commodity fluctuations and geopolitical uncertainties.
Question and Answer Session Highlights
Question
Domestic volumes grew but Mundra faced a decline. Why was the drop significant at Mundra when other Gujarat ports did not report similar weakness?
Answer
Mundra is India’s last port of call for several shipping lines, handling large volumes of transshipment cargo. The embargo on cargo from a neighboring country and disruptions from geopolitical issues impacted transshipment volumes. Gateway cargo, however, grew by about 4%. With conditions stabilizing, container volumes at Mundra have already shown a strong recovery since July.
Question
Logistics revenue has doubled year-on-year. What are the key growth drivers behind this improvement?
Answer
Growth is broad-based across all logistics verticals—rail, ICDs, trucking, and freight forwarding. The integrated model, supported by infrastructure and technology, is driving efficiency and margin improvement. Trucking and freight forwarding in particular contributed strongly, while bottom-line benefits are improving as APSEZ builds scale.
Question
EBITDA margins at Dhamra Port have moderated. What explains this?
Answer
The dip was temporary, largely due to fluctuations in iron ore volumes and a higher share of coastal coal during the quarter. These seasonal variations are expected to normalize over the year, and margins should stabilize.
Question
The Q1 run-rate seems slightly below the full-year FY26 guidance. How will APSEZ catch up?
Answer
Two factors explain the lower run-rate: geopolitical issues affecting Mundra and early arrival of monsoon, which reduced energy demand and thermal power generation. With container volumes already recovering and coal demand expected to rise in Q2, APSEZ expects to meet guidance. Strong contributions from Colombo, Vizhinjam, and Gangavaram further support this outlook.
Question
Why are EBITDA margins improving even when cargo volumes are slightly lower?
Answer
Margins are supported by three factors: increasing market share, higher revenue per ton, and optimization of cost per ton. As APSEZ evolves into an integrated transport utility, logistics and marine contribute significantly. While these businesses have lower percentage margins than ports, they add strongly in absolute terms, driving overall EBITDA growth.
Question
What is the return on capital expectation for logistics, and how is the business structured?
Answer
The logistics business is run on a hybrid model—rail and ICDs are asset-heavy, while trucking and freight forwarding are asset-light. This combination ensures balanced returns. The company targets to deliver returns well above market benchmarks, with ROCE significantly exceeding the 10% cost of capital over time.
Question
Vizhinjam reported unusually high EBITDA margins this quarter. Is this sustainable?
Answer
The margin included government support of ₹92 crore, available for the first four quarters of operations. Excluding this, EBITDA margin stood at a healthy 45%. As operations scale, margins are expected to normalize and improve with volume growth.
Question
What is the long-term cargo growth strategy to achieve 1 billion tonnes by 2030?
Answer
APSEZ plans to expand container capacity across key ports, develop Rail-Sea-Rail coal logistics, and invest in liquid tank farms. Internationally, the company is prioritizing brownfield acquisitions over greenfield projects to ensure faster returns. Logistics and marine businesses will be scaled through technology platforms and vessel acquisitions.
Question
What differentiates APSEZ in logistics compared to competitors?
Answer
The company leverages a proprietary technology platform that integrates multimodal operations efficiently and improves asset utilization. Additionally, APSEZ invests in workforce quality, providing training, housing, and welfare, which enhances reliability and performance in a traditionally unorganized logistics sector.
Question
How does APSEZ see growth beyond 2030—towards 2035?
Answer
By 2035, APSEZ aims to cover the entire trade chain—from waterfront to last mile—through ports, logistics, and marine services. The focus is on providing full end-to-end visibility for customers, scaling international assets like Haifa, and ensuring resilience against geopolitical risks by diversifying across routes and commodities.
Question
S&P revised its outlook to positive. What is the status with Moody’s and Fitch?
Answer
APSEZ is in active discussions with other rating agencies. With a strong P&L, disciplined leverage (net debt-to-EBITDA at 1.8x), and high-quality assets, management expects agencies to recognize the progress over time.