Indian Ports & Logistics Sector Analysis

The Indian ports and logistics sector is positioned for secular growth, driven by rising seaborne trade, robust demand for liquid and bulk logistics, inland infrastructure improvements, and industry-specific tailwinds including LPG and ammonia logistics.  With India's seaborne trade accounting for 95% of total trade by volume and 70% by value, the sector has grown at a 4.7% CAGR during FY14-24, with India's share in global seaborne trade expanding from 9.7% to 13.3%.

Key Growth Opportunities

1. Container Traffic Growth:

• Expected 7% CAGR over FY25-30, driven at 1.2x India's economic growth.
• Rising consumption and investment demand fueling containerization.
• Western Dedicated Freight Corridor (WDFC) to boost rail modal share from 21% to 27% by FY30.

2. Coastal Coal Movement:

• Strong growth opportunity with ~95mt in national volume by FY30E vs 56mt in FY24.
• Government push for Rail-Sea-Rail (RSR) movement to bypass rail-rake shortages.
• Benefits both origin ports (Paradip) and destination ports (Ennore, Tuticorin).

3. LPG and Gas Logistics:

• LPG imports expected to grow 6-7% CAGR over FY25-30, driven by rising household consumption and flat domestic production. Despite near-100% LPG coverage, per capita consumption remains low at ~4.5 cylinders annually for PMUY customers, with scope to rise to 6-7 cylinders.
• Industrial LPG demand emerging as propane gains cost advantage over PNG

4. Infrastructure Improvements:

• WDFC practically complete in northern legs, final stretch to JNPT expected by 1HFY27. Benefits already evident with freight trains running at 44-54 kmph average speed vs 25 kmph on conventional network
• Government target to increase port capacity from 1,285mtpa to 2,100-2,240mtpa by FY30

Sector Risks

1. Trade War Impact: Direct shipments between US and India account for only 4-4.5% of overall port volumes, limiting direct impact. However, high-value container trade more affected, with electronics exports largely via air routes

2. Competitive Pressures: Aggressive pricing by well-funded private players affecting margins Modal shift challenges as rail competitiveness improves slowly

3. Execution Risks: Infrastructure project delays common in the sector. Regulatory uncertainty around concession extensions and royalty rates.

 

Cargo/Segment	FY25–30E CAGR	Drivers
Overall Port Cargo	5%	Containers, coal, LPG, iron ore
LPG Imports	6.5–7%	Domestic/industrial demand, flat prod.
Container traffic	~7%	Consumption/investment growth
Liquid Logistics	28%*	Product mix, capacity expansion

*Liquid logistics EBITDA growth for key players.

Individual Stock Analysis

Aegis Logistics & Aegis Vopak Terminals : Target Prices: Aegis - INR 965 (25% upside), AVTL - INR 340 (24% upside)

Investment Thesis: Pure play on rising LPG demand and high-margin liquid/ammonia logistics, without commodity price risk. EBITDA/EPS CAGR of 35%/24% for Aegis and 58%/104% for AVTL over FY25-28. Strong cash generation with 80%+ EBITDA to OCF conversion. Net debt expected to fall despite elevated capex, with AVTL turning almost net cash

Key Positives:

• Rising LPG imports (6.5% CAGR) driven by 4-5% demand growth and flat production. Industrial propane adoption accelerating due to cost advantage vs PNG
• Market leadership in private LPG terminals with superior evacuation infrastructure
• Partnership with Vopak brings global technology and customer access

Risks:

• Competition from PNG in dense urban markets
• Regulatory changes in LPG subsidies

Adani Ports and SEZ (ADSEZ): BUY Target Price: INR 1,783 (22% upside).

Thesis: Integrated logistics leader with diversified multi-cargo portfolio, robust growth in both organic and acquired assets. Network of 633mtpa capacity positions it to benefit from economic growth. Benefits from unmatched hinterland connectivity in western/eastern India, expanding global footprint (new assets in Sri Lanka, Israel, potential East Africa, Vietnam).

Key Positives:

• Strong track record of asset turnaround with RoCE improving to 20%+ for mature assets. Sticky cargo shares at 60% provides volume resilience
• Significantly deleveraged with 90%+ OCF/EBITDA conversion. Group financials improving with reduced related-party transactions
• International expansion along key trade routes (IMEC corridor)

Outlook: 16% EBITDA CAGR (FY25–28E), with cash-EBITDA generation outpacing volume growth. Ambitious capital plan and transition to an integrated logistics & warehousing player drive earnings quality.

Risks: Group leverage/pledge concerns, volume growth slowdown, concession uncertainty, regulatory issues.

JSW Infrastructure: BUY Target Price: INR 395 (34% upside):

Investment Thesis: Proxy on Indian steel demand without commodity risk. Leverages JSW Steel's capacity expansion to 51mt+ by FY31 from current 35.7mt, providing base cargo visibility. Benefits from coastal coal movement at both origin (Paradip) and destination ports. Strong balance sheet with 0.54x net debt/EBITDA vs 2.5x target

Key Positives:

• Capacity expansion to 400mt by FY30 from current 177mt with INR 390bn capex pipeline. First wave growth from Dolvi expansion and Jatadhar slurry pipeline
• Low royalty rates at upcoming ports (Keni, Murbe) vs existing major port terminals
• Expanding into integrated logistics through acquisitions

Outlook: 17% EBITDA CAGR (FY25–28E), positive on sector tailwinds for coal, bulk, and third-party cargo.

Risks:

• Dependence on Group cargo (currently 51%)
• Steel demand volatility
• Execution risks on large capex program
• Policy Shift

PEERS Estimates

Company	EBITDA CAGR FY25–28	FY28E EV/EBITDA	FY28E PE	FY28E ROE
Adani Ports	16%	12.6x	17.9x	18.5%
JSW Infrastructure	30%	17.7x	31.7x	14.4%
Aegis Logistics	35%	14.7x	26.4x	21.0%
AVTL	58%	15.9x	25.5x	19.7%
Concor	9%	13.2x	20.9x	19.6%
GPPV	13%	8.5x	14.7x	22.2%

Conclusion:

The Indian ports & logistics sector stands at an inflection point, with multi-year demand tailwinds driven by growing trade, LPG/chemical logistics, and transformation toward integrated, digital, and sustainable supply chains. The WDFC completion represents a structural positive, though benefits may be more gradual than anticipated. Companies with strong execution capabilities, integrated logistics offerings, and exposure to growth segments like LPG and coastal shipping appear best positioned. Among stocks, ADSEZ and JSWINFRA offer strong sector leadership and margin growth, while Aegis/AVTL provide niche structural growth in LPG and liquids logistics.

Valuations remain attractive for leaders, while incremental capex and policy milestones will set up new triggers for both sector and stock performance. Risks are not trivial, but opportunities in integrated and liquid logistics, as well as privatization, remain compelling for differentiated players.