Adani Ports, JSW Infra bet big on logistics to boost cargo volumes

Business Standard

16-05-2025

The top two private port operators in India are betting big on their logistics expansions to capture extra cargo while offering integrated transport services.
'With incrementally less availability of lucrative port assets that can drive cargo volumes, port operators have naturally shifted their focus on deriving value in the upstream integration, i.e. the logistics space. The synergies being derived through end-to-end service capability for importing or exporting cargo, along with handling of the domestic cargo, are driving the port operators to invest in building hinterland assets,' said Varun Gogia, assistant vice-president and sector head, corporate ratings, Icra.
Adani Ports and Special Economic Zone (APSEZ), India's top private port operator, operates 12 multimodal logistics parks (MMLPs), 132 rakes, over 3.1 million square feet of warehousing space, more than 6,000 containers, and 937 trailers and tipper trucks.
The company has 18,250 hectares of industrial land and is also building a land bank of over 1,528 acres in and around different industrial clusters across India, integrated with hinterland logistics (rail, road, etc.).
During the Q4 FY25 earnings call, the company's management expressed its ambition to exhibit custody over cargo rather than just control and become an integrated transport utility company.
In logistics, APSEZ has a truck management platform and a freight forwarding business. 'These are capitalised businesses. They come with very high return on capital employed (ROCE),' said D. Muthukumaran, CFO, APSEZ, adding that the growth in logistics may come inorganically.
Meanwhile, JSW Infrastructure (JSW Infra) is keen to pursue an asset-light, inorganic model for its logistics expansions. In FY25, the company acquired a majority stake in Navkar Corporation, a logistics firm, for Rs 1,644 crore.
Lalit Singhvi, whole-time director and CFO at JSW Infra, stated that the company is looking for more inorganic logistics growth opportunities and has submitted bids to the National Company Law Tribunal for certain acquisitions. The company aims to leverage acquisitions of container freight stations and inland container depot businesses.
JSW Infra has two Gati Shakti Cargo Terminals (GCT). It is planning to participate in more such opportunities to build a pan-India logistics network, creating 15–20 GCT centres in the next five years to achieve industry-leading ROCE.
The company has 100 acres of undeveloped land in Panvel and Morbi. It also aims to leverage the land being given under the Gati Shakti programme.
The company is targeting a logistics revenue of Rs 8,000 crore and a 25 per cent Ebitda margin by FY30, led by adopting an asset-light model via GCTs, synergies with the JSW Group, opportunities in the logistics sector, and major cleanup in accounts, analysts at Ellara Capital noted.
Industry experts believe that the integration strategy of APSEZ and JSW Infra is a natural extension of their port businesses. The firms are eyeing a higher customer wallet share by offering end-to-end solutions, which tend to increase customer stickiness, improve port efficiency, and eventually boost cargo volumes and revenue diversification in a traditionally fragmented field.
Manish Goel, founder and managing director, Equentis Wealth Advisory Services, said, 'APSEZ benefits from scale, a pan-India port presence, and early investments in multimodal connectivity and warehousing, making it one of the few players capable of offering genuine end-to-end solutions. Meanwhile, JSW Infra leverages the group's industrial backbone. With steady captive cargo and access to in-house infrastructure, it enjoys operational certainty and volume visibility—two critical ingredients in logistics.'
APSEZ's logistics revenue in FY25 grew by 38.6 per cent to Rs 2,881 crore, while its Ebitda increased by 18.9 per cent to Rs 642 crore. The margins, however, declined to 22 per cent in FY25 from 26 per cent in FY24.
The expansion plans are set to reduce APSEZ's overall Ebitda percentage but increase ROCE, being capital-light businesses, the company said. It has guided the trucking revenue, which stood at Rs 428 crore in FY25, to grow by 3–4 times in FY26.
Meanwhile, JSW Infra reported a logistics revenue of Rs 250 crore and an Ebitda of Rs 41 crore. For FY26, the company has guided the logistics revenue to grow by 50 per cent year-on-year, driven by rake additions, terminals, and GCT initiatives.
However, the strategic logistics expansions by the port operators may have mixed financial implications, as logistics is a low-margin business.
According to Vijay Agrawal, managing director – investment banking, Equirus, ports deliver high Ebitda margins (60–70 per cent) and ROCE (12–17 per cent), while logistics generates lower margins (15–25 per cent) with ROCE (12–15 per cent). 'For example, APSEZ's logistics contribute 12 per cent of revenue but only 4 per cent of Ebitda. JSW Infra is better positioned with low leverage and a 54 per cent margin at the group level, though logistics returns are yet to materialise fully.'
APSEZ has planned a capex of Rs 20,000–20,500 crore to invest in land, new trucks to enhance last-mile connectivity, agri-silos, trains, MMLPs, and warehouses, while JSW Infra has earmarked Rs 9,000 crore for expanding its logistics business between FY25 and FY30.
Goel believes that huge capital outlays by operators pose a clear risk to return metrics. 'For APSEZ, logistics yields around 18 per cent Ebitda margin—lower than core port operations. As capital intensity rises, this margin pressure could dilute overall profitability. The company's net debt-to-Ebitda ratio is also expected to increase, adding to financial strain.'
Moreover, challenges like a volatile trade environment amid global uncertainties such as tariffs and geopolitical tensions, difficulties in execution amid potential delays in land acquisition, regulatory clearances, or construction, and scarcity of skilled human capital also persist.
However, experts believe that the operators' logistics plans can still be worth it, as these are long-term investments with strategic methods of expansion, such as using asset-light and inorganic models.
Pratik Mundhada, director, India Ratings & Research, said, 'Most of the port operators are adopting asset-light model, which would have positive impact on ROCE, even with a lower operating margin in the downstream logistics business. However, incremental operating profit would continue to support the valuation.'
With their logistics play, the port operators aim to control the cargo movement with better coordination and direct access to the beneficial cargo owners by eliminating the middlemen and agents, saving costs for the owners.
Additionally, Agrawal believes that, despite thinner profitability, these bets are viable long-term plays due to India's logistics demand, policy support, and integration benefits—but they may dilute short-term returns. 'These investments will yield results on an overall basis with increased throughput at the port, operational efficiencies, and top line.'