Adani Ports shares rise 3% after Q2 results. Why did Jefferies and Nomura raise target prices?

ETMarkets.com

Strong quarterly earnings and higher guidance prompt Jefferies and Nomura to raise their target.

The company’s revenue from operations came in at Rs 11,340 crore, a 24% surge from Rs 9,167 crore in the corresponding quarter of the previous financial year.

The company also raised its FY27 guidance based on a strong first half performance. “Revenue guidance raised by Rs 1,000 crore to Rs 44,000-Rs 46,000 crore, while EBITDA guidance was upped by Rs 1,000 crore to Rs 26,000-Rs 27,000 crore,” the company said in a regulatory filing.

Buy, sell or hold Adani Ports stock?

Jefferies raised its target price for Adani Ports and Special Economic Zone to Rs 2,180 from Rs 2,160, implying an upside of 24% from the previous close, while retaining its Buy rating. The brokerage said September 2026 quarter EBITDA exceeded its estimates by 4%, driven by a sharp ramp-up in international ports.

Jefferies views Adani Ports as a high-conviction play on India's trade and logistics transformation. Its port assets are expected to support a compound annual growth rate of more than 20% in free cash flow between FY26 and FY31, despite elevated growth capex.

The revised target price factors in 1-4% upward revisions to FY27-FY29 EBITDA estimates, reflecting the September 2026 quarter performance and management guidance. The valuation is based on 16 times estimated September 2028 EV/EBITDA, broadly in line with the company's long-term historical average.

Nomura also raised its target price for Adani Ports and Special Economic Zone (ADSEZ) to Rs 2,150 from Rs 2,080, implying an upside of over 21%. Following a strong first half, the company increased its FY27E revenue and EBITDA guidance by Rs 10 billion to Rs 440-460 billion and Rs 260-270 billion, respectively.

The higher guidance supports progress towards Adani Ports' FY31E revenue and EBITDA ambitions of Rs 915 billion and Rs 520 billion, respectively.

Management indicated that the company's target of achieving 1,000 MTPA capacity could be reached before the previously stated CY30 timeline, provided the current pace of capex is sustained. ADSEZ is also continuing to explore viable inorganic growth opportunities, according to management.

Ashwani Gupta, Whole-time Director & CEO, said the company’s ability to execute at scale with financial prudence enables it to pursue ambitious growth while leveraging balance-sheet strength and compounding cash flows.

“Against this backdrop, Q2FY27 was another stellar quarter. Domestic Ports continue to anchor our earnings, while International Ports, Logistics and Marine are emerging as powerful growth engines. Reflecting strong H1 performance, we are upgrading our FY27 guidance across revenue, EBITDA and capex,” Gupta added.