Indian private ports expected do well: Jefferies

Jefferies advised investors to “dock” in India’s ports companies as they expect private port players to deliver strong margins led by volume growth. The top picks for the brokerage remain JSW Infrastructure and Adani Ports and Special Economic Zone, with 18 to 22% per cent potential upside for the stocks. 

 Private sector port players are expected to deliver 13-21 per cent earnings before interest, taxes, depreciation and amortisation (Ebitda) CAGR in financial year 2025-30, led by 10-16 per cent CAGR in volumes, Jefferies said in its latest note. “Volume growth would be driven by capacity addition, terminal privatisation at major ports and market share gains.”

Government targets private sector presence in 80 per cent of capacity at major ports by 2030 with 95 per cent capacity expansion is planned with private sector participation.”500 million tonne capacity is yet to be privatised, an opportunity for JSW Indra and Adani Ports,” it said, adding that the two players will account for two-thirds of incremental volumes in FY25-30.

Meanwhile, Jefferies noted that amid the tariff uncertainty, JSW Infra is placed better compared to Adani Ports. The note said that bulk and liquid goods, mainly domestic driven, account for 98 per cent of JSW Infra’s volumes, with a low earnings risk from the potential global slowdown. However, the Adani Group company has higher exposure to containers, which are more vulnerable to tariff-spurred trade disruptions.

 JSW Infra is the top pick for Jefferies, with firm visibility of 2.3 times the capacity rise target. “We like the company’s strategy of leveraging JSW group’s expansion plans to drive growth.” Jefferies expects the valuations to remain “punchy” on strong growth beyond FY27 and maintained its ‘buy’ on the stock with a target of ₹355 per share. 

Jefferies expects a 9 per cent FY25-30 domestic volume CAGR at 1.5 times industry growth for Adani Ports, similar to past organic growth trends. The brokerage maintained a ‘buy’ rating for the stock with a target price of ₹1,340 per share. 

Integrated logistics is a new growth area for ports, according to Jefferies. It can enhance customer stickiness and improve port infrastructure utilisation. Adani Ports aims to use its network of 15 ports to offer end-to-end logistics services, which currently contribute 8 per cent of revenue. 

JSW Infra entered the logistics space by acquiring a 70.4 per cent stake in Navkar Corporation in June 2024 and plans to leverage the broader JSW Group’s locations. Jefferies notes that while JSWI’s plans are still at a nascent stage, their ramp-up could be a key risk to Concor’s volume growth and margins.