Adani Ports and Special Economic Zone Ltd stock has fallen by about 10% to ₹1,376 since the West Asia conflict began on 27 February. The fall would have been steeper if not for the company’s business updates highlighting that it had clocked 11% year-on-year growth in cargo volumes to 46 million tonnes (MT) in March. Riding on the strong showing in March, FY26 volume growth came in at 11% to 501 MT, slightly lower than management’s guidance of 505-515 MT.
Analysts from JM Financial Institutional Securities and Nomura Financial Advisory and Securities (India) believe Adani Ports overcame the estimated loss of container volumes linked to Mundra Port in March with gains from transshipment volumes, as many international ports shied away from Middle-East-bound cargo owing to congestion worries. The analysts noted that about 15% of Mundra Port’s container traffic is linked to the Middle East.
Against the backdrop of the ongoing conflict, the company’s international ports business has stayed resilient. Volumes at the Haifa port in Israel increased month-on-month from 0.59 MT to 0.77 MT. Haifa’s March volumes grew even after adjusting for fewer days in February. While the Haifa port contributes just about 2% of Adani Ports’ total volumes, the trend highlights the war has had no impact on volumes so far. Similarly, the Colombo terminal handled the highest ever monthly volume at 134,960 twenty-foot equivalent units. Logistics rail volume and wagon volumes, primarily based in India, grew month-on-month by 6% and 18%, respectively, in March.
Adani Ports has deftly navigated war-related volume growth concerns in March. While a prolonged conflict in the Middle East could prove a headwind to container-linked volumes, there is a tailwind from the restarting of Tata Power’s Mundra power plant, which relies on imported coal at Mundra Port.
As of now, JM Financial estimates the war’s impact on port traffic is likely to last for the current quarter, Q1FY27. It has therefore reduced its FY27 Ebitda estimate by 7% while leaving the FY28 estimate largely unchanged. It has cut the target price of Adani Ports stock from ₹1,800 to ₹1,725, citing the 10-year G-sec yield rising from 6.7% to 7%. But two points are worth noting here. One, rising bond yields make equities less attractive in general, so this is not specific to Adani Ports stock. Two, even after cutting the target price, there is still about 25% upside from the current price.
Other brokerages such as Motilal Oswal and Nomura echo this positive outlook. They have set price targets of ₹1,820 and ₹1,850, respectively, valuing the stock at an EV/Ebitda multiple of 15, based on FY28 estimates.
For long-term investors looking beyond FY28, the ongoing expansion of Mundra port and its timely completion will be critical. The current capacity of 264 MT at Mundra will eventually be expanded to 514 MT with ₹45,000 crore of capital expenditure. This will expand the port's multi-purpose cargo handling capabilities, including LNG in cryogenic ships. Its completion will help achieve management’s goal of almost doubling FY26 total volumes to 1,000 MT by 2030/FY31. That would mean achieving a compound annual growth rate (CAGR) of 15% on a larger base, higher than the 13% CAGR achieved in volumes over FY17-FY26. Investors will keenly watch management’s delivery on this target.