Adani Ports and Special Economic Zone Ltd could gain greater certainty over the future of its Gujarat port operations after the state government signalled plans to extend port concessions, with Investec saying the development would support expansion at Mundra and provide a clearer runway for container growth.
The brokerage said the Gujarat Maritime Board has issued a “Letter of Comfort” to Gujarat Pipavav Port and Adani Ports' Mundra and Pipavav ports, indicating its intention to extend their concessions. Under the process, the port operators have been asked to submit investment plans before the state government decides on the extensions.
The development is significant for Adani Ports because greater certainty over the Mundra concession would support its expansion plans at the port. Investec said the company plans to increase Mundra's container capacity by more than 50% over the next five years and has received environmental clearance for the project.
Investec said the proposed extension should improve long-term visibility for Adani Ports' Gujarat operations, although the final terms and tenure of the concessions remain important.
“We view this as a positive event for ADSEZ,” the brokerage said, adding that the extension could improve the company's ability to invest and expand capacity.
The assessment follows reports that the Gujarat government intends to roll over port concessions for Gujarat Pipavav and Adani Ports' facilities, including Mundra. The final terms are awaited, with the extensions expected to depend on the operators' response to tariff-sharing and investment commitments.
Mundra is Adani Ports' flagship facility and is a key contributor to its domestic port network. Investec said the company is pursuing a significant expansion in container handling capacity at the port as it prepares for future growth in demand and supply.
The brokerage also said the proposed concession extensions would support Adani Ports' development plans for Dahej and Hazira. Adani Ports operates three Gujarat ports, with the concession periods for the facilities ending between 2031 and 2035.
“The concession extension is a positive event for this port,” Investec said, referring to Pipavav, while noting that Adani Ports' concessions in Gujarat also have different expiry dates.
Investec said Mundra was well placed to benefit from growth in container volumes over the coming years. It expects the port to benefit from its strong position in the market, with no major capacity additions planned by rival Adani Ports facilities at Vadinar over the next five years.
The brokerage said Adani Ports has plans to add about 100 million tonnes of container capacity at Mundra over the next five years and has environmental approvals in place for the expansion.
Investec retained its buy rating on Adani Ports, saying the company trades at about 14 times its estimated FY28 enterprise value to EBITDA. The brokerage said it expects the company to deliver a 14% compound annual growth rate in EBITDA between FY26 and FY30 from its existing ports and businesses.
It added that opportunities for inorganic growth and a potential increase in India's global trade, including through free trade agreements, could provide further support to growth.
Jefferies had said on Wednesday that the proposed rollover of Gujarat port concessions could remove an overhang for operators and give Adani Ports greater visibility as it expands capacity at its Gujarat ports.
The brokerage said Mundra, Hazira and Dahej account for 49% of Adani Ports' domestic port capacity. It said Mundra has a capacity of 274 million tonnes a year, while Hazira and Dahej have capacities of 32 million tonnes and 16 million tonnes, respectively.
Jefferies said the concession agreements for Mundra, Dahej and Hazira are due to expire in February 2031, 2033 and March 2035, respectively. It also said Adani Ports has indicated plans to expand capacity at Mundra and Hazira by 34%, with the ports currently operating at utilisation levels of between 66% and 93%.
“This removes a major overhang and lends visibility for the operators,” Jefferies said, referring to the reported plans for concession extensions.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
