Adani Ports and Special Economic Zone’s logistics business is expected to catch up with the ports business and drive cargo growth over the next 3-4 years as the company is doubling down on expanding warehousing capacity, rakes, industrial parks and agri silos.
The logistics business contributed around 8 per cent of Adani Ports’ total revenue in the third quarter of FY24 and around 3 per cent of its EBITDA, a focus area for investments. It has a market share of 12 per cent now. In an earnings call to discuss the company’s results, Managing Director Karan Adani said it was in the growth phase but did not divulge any specific investment figures for the segment.
Overall, the expected capex this year is in the region of ₹7,000-₹7,500 crore, having already spent ₹5,500 crore so far.
By FY28, the rake capacity in the logistics segment will be tripled to over 300 to cater to both the bulk and container cargo. Two multimodal logistics parks are coming up, one near Mumbai and the other in the north, which will be commissioned over the next 3-4 years. It now has 11 logistics parks, which are seen to rise to 15 over the next two years. It has a warehousing capacity of 2.4 million square feet, and the aim is to take it to over 60 msf, or 15 per cent of total market capacity, with a pan-India presence.
On a lower base, the logistics business is growing faster than the ports business. In the last five years, its EBITDA has gone up 45 per cent compared to the port’s EBITDA which has risen 20 per cent.
Over the next three years, the return on capital employed in this segment is expected to double to 12-13 per cent.
In the first nine months of FY24, Adani Logistics’ revenue rose by over a fourth to ₹1,519 crore, EBITDA by around 23 per cent and the margin was around 29 per cent. It handled rail cargo volumes of 437,081 TEUs (twenty equivalent units), up 22 per cent on year.
Analysts said that the logistics business has the potential to grow at 30 per cent annually over the next 3-4 years, as it can offer end-to-end solutions with the ports at the centre of the business.