Adani Ports and Special Economic Zone Ltd

NSE:ADANIPORTS

Earnings Call Analysis

Adani Ports Reports Strong Cargo Growth and Strategic Acquisitions

In Q2 FY '25, Adani Ports achieved a 6% revenue growth, 13% EBITDA increase, and a 37% rise in PAT. Notably, cargo volumes rose 9% year-on-year, totaling 220 million metric tons. Key drivers included a 17.6% increase at Mundra and successful acquisitions like Gopalpur Port, projected to contribute 800,000 to 1 million tons monthly. The company expects to meet its full-year volume guidance of 460 to 480 million tons, bolstered by significant growth in logistics and port efficiency. Their net debt to EBITDA stands at 2x, with an outlook to maintain margins around current levels thanks to effective cost pass-through strategies.

Strong Cargo Growth Amid Challenges

In the second quarter of FY '25, Adani Ports and SEZ (APSEZ) reported a 9% year-on-year increase in cargo volume, totaling 220 million metric tons. This growth occurred despite some setbacks, such as inclement weather affecting operations at key ports, including Mundra and Tuna. The management emphasized a strategy emphasizing diverse marine fleet capabilities, exemplified by the acquisition of a majority stake in Astro Offshore, which has introduced 26 offshore support vessels.

Financial Performance Highlights

APSEZ experienced solid revenue, EBITDA, and profit after tax (PAT) growth during Q2 FY '25, increasing by 6%, 13%, and 37%, respectively. For the first half of FY '25, revenue grew by 13%, EBITDA by 21%, and PAT surged by 42%. The impressive growth trajectory positions the company well, as management aims to achieve the upper end of their FY '25 EBITDA guidance, estimating between 2.2 to 2.5 times net debt to EBITDA.

Sustained Market Share Gains

Despite challenging market conditions, APSEZ managed to grow its market share from 26.4% to 27.3% during the first half of FY '25, driven by robust performance in container and dry bulk cargo. Significant growth was noted in key ports, including Mundra (up 17.6%) and Dhamra (up 18.6%). Management expressed confidence in continued growth, especially with the recent acquisition of Gopalpur Port, which has already begun contributing positively to overall volumes.

Logistics Strategy Focus

The logistics segment produced a 27% margin in Q2, a modest improvement from 25% the previous year. Management indicated that recent adjustments to pricing strategies helped mitigate earlier margin pressures, ensuring that cost increases were successfully passed on to customers. The transition from road to rail logistics is expected to continue, with rail volumes increasing by 4%, and management anticipates further growth driven by agri-based commodity movements.

Investment and Expansion Plans

Looking ahead, APSEZ remains committed to expanding its capacity across various ports, including Mundra, Hazira, and Dhamra, as well as new acquisitions. They have outlined a CapEx plan of approximately INR 11,000 crore to INR 12,000 crore in the current year. Management reiterated their vision for long-term growth, with ongoing investments aimed at improving operational efficiency and involving substantial technology upgrades, including digital and greenfield projects.

Outlook and Strategic Goals

For the full year, APSEZ maintains a volume guidance of 460 million to 480 million metric tons, expressing high confidence in achieving this target based on encouraging trends. With the commencement of operations at Vizhinjam Port and ongoing developments in Gopalpur and Tanzania, management expects a favorable operational environment that will prompt sustained cargo growth and enhance revenue streams in the coming quarters.

Credit Ratings and Financial Health

APSEZ's credit ratings have received significant upgrades from multiple rating agencies, now holding a prestigious AAA rating. This reflects the company's strong financial health and operational resilience amidst variable market scenarios. Their net debt to EBITDA ratio stood at a comfortable 2x in the latest reporting period, with expectations to remain within the guided range of 2.2 to 2.5 times.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Adani Ports and SEZ's 2Q FY '25 Earnings Conference Call hosted by Nuvama Institutional Equities. The management is represented by Mr. Ashwani Gupta, Whole-Time Director and CEO, Adani Ports and SEZ; Mr. Pranav Choudhary, CEO, Ports business, Adani Ports and SEZ; Mr. Divij Taneja, CEO, Adani Logistics; Mr. D. Muthukumaran, CFO, Adani Ports and SEZ; Mr. Rahul Agarwal, Head of Investor Relations and ESG Adani Ports and SEZ. [Operator Instructions]

I now hand the conference over to Mr. Achal Lohade from Nuvama Institutional Equities. Thank you, and over to you, Mr. Lohade.

[Achalkumar Lohade, analyst]

Thank you. Good evening, everyone, and a very warm welcome to everyone. On behalf of Nuvama Institutional Equities, I'm pleased to welcome you all to 2Q FY '25 earnings call of Adani Ports and SEZ. We will begin with this -- with the opening remarks from the management, followed by interactive Q&A session.

With this, I hand over the call to Mr. Rahul Agarwal. Thank you. Over to you, Rahul.

[Rahul Agarwal, executive]

Thank you, Achal. Hello, everyone, and a very warm welcome to APSEZ's second quarter earnings call. We will commence this call with Ashwani's opening remarks.

[Ashwani Gupta, executive]

Good evening, everyone, and welcome to APSEZ's H1 FY '25 Earnings Conference Call. During the period, we continued to strengthen our value proposition as an integrated transport utility company with unmatched waterfront to last-mile connectivity solutions.

Our cargo volume increased by 9% year-on-year to 220 million metric tons. Despite disruption in Gangavaram and loss in volume in Mundra and Tuna due to inclement weather, we diversified our marine fleet to add a family of 26 offshore support vessels through acquisition of 80% stake in Astro Offshore. Our logistics assets witnessed all round growth in rakes, MMLPs, warehousing, trucks and agri silos. We have recently closed the acquisition of Gopalpur Port along with the planned commissioning of the Vizhinjam Port in quarter 3, we are on track to deliver our full year cargo guidance.

During quarter 2 FY '25, our revenue, EBITDA and PAT grew by 6%, 13% and 37%, respectively. Our H1 FY '25 revenue, EBITDA and PAT was up by 13%, 21% and 42%, respectively. Our net debt to EBITDA stood at 2x. Based on the momentum we see in the business during the first half of the year, we are well positioned to hit the upper end of our FY '25 EBITDA guidance. CRISIL assigned AAA rating to our bank facilities and NCDs. India Ratings also upgraded its credit rating to AAA, and we became the first private infrastructure operator in India to be rated AAA by four domestic rating agencies.

We thank you, and we now open the floor for Q&A.

[Operator]

[Operator Instructions] The first question comes from Parash Jain from HSBC.

[Parash Jain, analyst]

Thanks for your comments. I have two questions. If you can bring all of us to the speed with respect to developments in Sri Lanka, Vizhinjam, and your recent acquisition? And also any incremental color that you can share with Haifa Port, would be appreciative.

[Ashwani Gupta, executive]

Thank you. Thank you, Paras. Ashwani here. So I think the second half -- so let me talk about something which is very much limited to second half, and then I can talk about years to come. In the second half, we finalized our acquisition transaction in Gopalpur, so definitely, we are seeing a tremendous opportunity in Gopalpur. Very soon, we will be disclosing the volume which we did in October which are encouraging, which means we are getting a good cargo in Gopalpur after we took over. So which means Gopalpur becomes another feather in our cap and that too capitalizing on the opportunity of natural resources in our East Coast. So that's the first thing.

The second thing is Vizhinjam. Vizhinjam is doing better than what we planned. And we see many shipping lines making calls to our Vizhinjam. And while we are ramping up -- while we are learning with our automated terminal, we are improving our efficiency and ready to take more and more vessels as and if they come in.

And number three, as we said, that the full operations of the full length work is also on the track. So which means Vizhinjam is better than the plan in terms of realization of the opportunity. And also, we have already kicked off the second phase of the final phase where we are going to spend INR 20,000 crores as we announced on the next expansion of the Vizhinjam. So which means for us, the first phase is done, and now we are switching our gear to the final phase, which is the full development of Vizhinjam.

Then I would like to take to Sri Lanka. So we welcome the vessel having the cranes. Cranes are being installed, while I'm speaking. And Sri Lanka is also very much on track to start the operations next year in quarter 4. And we already started seeing a lot of leads from our customers to start talking about how they want to use our Colombo terminal. So that's number three.

Number four, we acquired Astro, and we completed the transaction last week. So which means Astro is another feather in our cap, especially on the marine business. And in Astro also, while we are acquiring -- we acquired, we were also acquiring more offshore vessels, and we see the new contracts which are coming up on the offshores.

Number five, surprisingly Haifa is working 24/7. Very busy port. At this moment, I had the opportunity to visit Haifa three weeks before to say thank you to the team who are working under tough circumstances, that is why I personally visited Haifa Port. And I was surprised to see the overflowing cargo of the cars. Obviously, the business mix has changed, and more and more -- the car cargos are arriving because of the South Israelian port not allowed to have the car -- the automotive cargoes, especially the cars which come from East, especially Japan and Korea and China. So these all car cargoes are resulting in getting into our Haifa Port. So which means all the four ports are doing extremely well. And then number five, Tanzania, as we are speaking, Tanzania is also getting into a ramp-up phase, and Tanzania is also doing good. So that's all, I think, on all the five ports, which are either acquired as brownfield or started as greenfield the status as on today.

[Operator]

The next question comes from Asmeeta Sidhu from MetLife Investment Management.

[Asmeeta Sidhu, analyst]

I just have a question regarding the recent labor strike we've seen in the U.S. regarding the port. Was there any implications that was see from the ports under Adani? Or would there have been any implications that would have gone on longer than the 3 days?

[Ashwani Gupta, executive]

To answer to your question very precisely, no, it does not have impact on us.

[Operator]

The next question comes from Mr. Achal Lohade from Nuvama.

[Achalkumar Lohade, analyst]

Just a couple of questions from my end. First, with respect to Gangavaram Port. In the past quarters, the run rate was between 8 million to 10 million tons, while we have seen first quarter was impacted. Second quarter, we have seen the number at around 6.8 million tons. So how do you see this in coming quarters, do we see absolute normalization or it's going to take some more time? And also, if you could comment on the margin profile going forward?

[Ashwani Gupta, executive]

Yes. So talking about the overall business, of course, there is always a tendency to look quarter-to-quarter, but maritime is a business which is, of course, quarter-to-quarter, but also it is to be seen on annual and 2 years and 3 years basis. I think quarter-to-quarter, we may have opportunities, we may have challenges. In the first half, we saw a challenge with the Gangavaram. We saw Tuna, we saw Mundra. Just last week, we are out from the cyclone Dana, especially in Dhamra. So these kinds of things keep on coming, keep ongoing, and we have to be just resilient and agile to take care of these challenges.

Having said that, as I said before, the second half is doing -- first of all, from the cargo viewpoint, with all these agro commodities, with all this fertilizer commodities which are coming now in the second half, in addition to container cargo, in addition, many other cargoes, and Gopalpur, Vizhinjam, all these coming in addition, definitely, we see a good traction in the second half of this year. So now when we look at a little bit mid to long term, this year also -- this half year also we grew almost double than what India grew, right? So which means, in the future, we target to do that. How we can do that, if we all believe in the India growth study, which we do believe in, is more focusing on infrastructure, which is primary cement and steel, we take care of that.

Number two, industrialization, which is container, we are -- we do roughly one out of two containers in India. Number three, energy. Whether it is renewal energy or thermal energy, whether it is coal or it is solar panels or windmills, we do it. And last but not the least, food and fertilizer. We do it. So as Adani Ports and Logistics, these four key pillars of India growth story are 100% linked to us, which -- because of which we are confident that with our 15 strategic assets in India and four strategic assets overseas, we are going to capitalize this opportunity. So what I would say, quarter-to-quarter, first half to second half, in short term, definitely, we see the growth. But more than that, in mid- to long term, we are gearing up to capitalize all these opportunities.

And on the margins, Muthu, you would like to say?

[D. Muthukumaran, executive]

I think you asked, I guess, two-part questions. The first one is around Gangavaram and the second part is around the company as a whole. You would have seen that company as a whole this year port margin is 72.5%, which actually is upper end of what we have been achieving and more than what we have done in quarter 1 as well. So as far as the Gangavaram is concerned, Gangavaram is also fast recovery. In terms of volume, as you quoted the numbers correctly, we are only sort of 22% down compared to the previous year in quarter 2. And in quarter 3 and quarter 4, we will make up facility in Gangavaram. And company as a whole, we've been trying to highlight, we are running ahead of the estimates.

[Achalkumar Lohade, analyst]

Got it. And I think here the quarter numbers, in terms of realization, particularly for the Kandla ports, Dahej and Hazira. We've seen that their realizations are actually down almost in teens on a Y-o-Y basis. Is there any particular reason in terms of cargo or anything we could highlight?

[D. Muthukumaran, executive]

So considering the number that you are quoting, I may have to check and come back to you separately because I don't see that actually in my sheet and in whatever we have disclosed. Do you have a page number reference that you could give as to where you are reading this?

[Achalkumar Lohade, analyst]

So basically, revenue, I'm dividing by the volume to arrive at the realization. And if I could quote the realization, the realization for Hazira is about 699, Dahej is 620.

[D. Muthukumaran, executive]

So maybe we can...

[Achalkumar Lohade, analyst]

We will take it offline. No problem.

[D. Muthukumaran, executive]

Yes, we can do it offline, but it's actually gone up, right?

[Achalkumar Lohade, analyst]

I'll come back to you. Let me take it offline. And just last question, if I...

[D. Muthukumaran, executive]

Just a pro note on that, based on publicly published numbers that we have given out to you also, if you do the division, it should show that actually in both places we have gone up by at least -- I mean, in double digits. It's not gone down, but we can take it offline.

[Achalkumar Lohade, analyst]

Sure. Sure. My bad. Actually, it is pertaining to Gangavaram where the realization is lower, but I'll take it offline. The rail volume is up about 4% for the quarter. How do you see -- you have said the overall logistics has done extremely well for the quarter as well, but particularly on the rail volume, container rail volumes, if you could throw some light as to how we have versus the peers and the outlook?

[Divij Taneja, executive]

Yes, this is Divij. So what we have started doing new is we have aggressively started moving from road to rail, and this is reflected in the numbers that we're seeing. This is specifically coming in from the Mundra belt. We have taken a lot of cargo that was traditionally moving by road, and we have put them on to our domestic boxes and pushed them across.

[Ashwani Gupta, executive]

Yes. And I'm very glad that you have recognized it because in every quarterly call, people have many questions on logistics. And in every quarterly call, we have been saying that our next focus is logistics. To start with, group logistics because we have so many group transportation from cement to energy, to everything. So just to give you figures because you talked about the competition. In the first half, the number one logistics player who is our main competitor, grew 6%, whereas our rail volumes increased 11%. And as Mr. Divij has explained, with our new strategy, our competitor domestic volume increased by 15% year-on-year, whereas ALL, Adani Logistics volume increased by 47% year-on-year. So -- which means the strategy which we explained about last mile connectivity, which is connecting rail, road, [ ITDs ] with the ports have started working, and we will see the traction in the coming months because of evolution and execution of our strategy. Thank you.

And [ Gaurav ], just to close out on your previous query, your the -- in this particular quarter, our revenue per MMT was 535 and corresponding quarter last year, it was 550. So we've seen an increase in our overall realization on a Y-o-Y basis.

[Operator]

Next question comes from Priyankar Biswas from BNP Paribas Exane.

[Priyankar Biswas, analyst]

Sir, my first question is since Tanzania has been integrated it seems, can you give us an idea of, let's say, the quarterly volume revenue and profitability of this asset? That's the first one.

[D. Muthukumaran, executive]

Please carry on with your questions.

[Priyankar Biswas, analyst]

So for Tanzania, I am asking for -- what was the volumes, the revenues and the profitability for this quarter?

[D. Muthukumaran, executive]

We actually give only the volume. And the volume for this quarter is actually 3 million tons roughly -- I mean, approximately.

[Priyankar Biswas, analyst]

Okay. So if you do not provide the revenues and profitability for this asset, if I understand it, right?

[Divij Taneja, executive]

Not right now, Priyankar.

[Priyankar Biswas, analyst]

The other question is since this just came up in the previous question. You highlighted that the Dhamra Port has some impact of let's say Cyclone Dana because of the landfall that it may close to Dhamra. So what can be the kind of impact or how much time would it take for us to come back to a relatively normal level of operations, if I can ask?

[Ashwani Gupta, executive]

So the impact was for 4.5 hours. And there was no physical damage, and there was no human impact. So 4.5 hours already we have recovered. So absolutely, the port is running in a great condition now.

[Priyankar Biswas, analyst]

And one more question that I have, this pertains to Gangavaram. What we understand is that RINL steel plant that supports some of our volumes over there, that is facing a significant working capital crisis because of which it's almost kind of nonfunctional. So any idea when these volumes can come back or what is the stage of negotiation at least there -- so that our volumes can ramp up?

[D. Muthukumaran, executive]

See, as you know, this has been a historical situation as far as the particular plant is concerned, this is not the first time they're actually facing the working capital crunch, but they actually come out pretty quickly as well, usually in a matter of a month or 2. So we expect that actually we will -- I mean, they will -- and oftentimes, they also get the support from the government and other people concerned backing it, et cetera. So they come back pretty quickly. So we expect that this time also they are nearly there and they should come back from that.

[Divij Taneja, executive]

And Priyankar, just to put things into context, the proportion of cargo from RINL related to the overall cargo in Gangavaram is just about 10%. So it's not a very material quantity.

[Priyankar Biswas, analyst]

Can you repeat that, you said 10% of...

[Divij Taneja, executive]

Of the Gangavaram volume.

[Priyankar Biswas, analyst]

Okay. Okay. Okay. If I can just squeeze one more in. So I understand that we have been developing LNG-related assets as well. So how are we, in terms of utilization of these assets, let's say, comparison with the prime competitor in the country?

[D. Muthukumaran, executive]

Sorry, in comparison to -- what is the last part of the question?

[Priyankar Biswas, analyst]

The main competitor in the country.

[D. Muthukumaran, executive]

The LNG terminal you're asking?

[Priyankar Biswas, analyst]

LNG, yes, yes.

[D. Muthukumaran, executive]

See, LNG, the production ramp-up is happening or rather the utilization ramp-up is happening at plant. You're talking about Dhamra. And in any case, what we have there is actually a take-or-pay contract.

[Operator]

The next question comes from Alok Deora from Motilal Oswal.

[Alok Deora, analyst]

Congratulations on a very good set of numbers. Sir, just wanted to understand this volume guidance we have maintained for the full year. So based on the kind of a subdued volumes in some of the months in the first half. So it's a pretty small ask for the second half. So how confident we are on this volume guidance? Just some color on that.

[Ashwani Gupta, executive]

Yes. I think as I said before, containers, we are very much confident. The agro and fertilizers are coming back with the opening up of things. So we are very confident. In addition to that, we have Gopalpur and Tanzania and so on, which are in addition. So that's why we reemphasized today our guidance where the volume between 460 to 480, we are very much confident of achieving that.

[Alok Deora, analyst]

Sure. And sir, this logistics business, we have done pretty well on the growth side, but the margins have kind of still been lower than what we were doing last year. So just wanted some understanding on that because -- I mean, as we scale up margins, we would expect it to slightly be better or equal to what we were doing previously. So how are we seeing the margins here? Or it's more of a support play to the ports business and so margins really don't really matter much in that sense.

[D. Muthukumaran, executive]

So we explained in the previous quarters as to why the margins have been going down. And we had also mentioned at that point in time, we could see that in quarter 2, the margins should actually show you the increasing trend. So this quarter, we are talking about a margin of 27% as opposed to 25%. I think you're comparing with the Q2 of the previous year. And this particular hit on margin on a couple of items to name out one busy season surcharge started in Q3 and Q4 of the last year. So therefore, actually, in short, the margins are coming back, and we expect the margin to stabilize to the levels that we actually have seen in the past in the coming quarters. We've been able to pass on -- in short, we've been able to pass on the cost increases to the customer. We have done it over a period of time. We haven't done it on day 1. But as of today, all the cost increases have actually been passed on. So you will see that the margins come back to the same level as previous year.

[Operator]

Next question comes from Ketan Jain from Avendus Spark.

[Ketan Jain, analyst]

So my first question is on the growth in volumes. What were the key drivers for volumes for this quarter, especially containers and at Mundra and Dhamra?

[Ashwani Gupta, executive]

Yes. So the main growth pillar in this quarter was container. The ports in first half, Mundra grew by 17.6%, Karaikal grew by 6.5%, Ennore grew by 36.3%, Kattupalli grew. So you can see the container handling ports grew much. And then most important, Dhamra because of the natural minerals and the coal, grew by 18.6%. So it's a very well balanced between West Coast, South Coast and the East Coast, driven by containers and the dry cargo. And we do believe that this is going to continue because Gopalpur has already started contributing significantly from

October.

[Ketan Jain, analyst]

Also for the coal volumes, is it because more of an inland shipment, is it because of that?

[Ashwani Gupta, executive]

I think most important is, if you look at all-India growth, coking volume has been flat in the first half, whereas the imported thermal coal has grown by 4.8%, but coastal coal has only grown by 2%, which is very marginal. So it looks to be this kind of story. But at the end, this is what is the all-India cargo. In this all this cargo, we have captured the market share. So we have grown our market share in this, and that's where we are pitching. The only commodity which has degrown at all India level is the iron ore, which has gone down by 10.2%, all-India level and the fertilizer, which has gone down by 24.1%. So that is something which is all-India cargo, which has gone down. Iron ore, because of the international pricing, as we all know, and fertilizer, which are very much linked to the government opening of the tenders. For the fertilizers, now we see the opening of the tenders. So the cargo has already started coming in, in the month of October. In iron ore, Krishnapatnam has got a challenge because of the logistics cost. But now Dhamra and Gopalpur is capturing the iron ore because of the competitive logistic cost. So that's why even if all-India volume is down on iron ore and the fertilizer, we are going to pick up in the second half of this year.

[Ketan Jain, analyst]

Understood. So my last question is on capacity expansion. What can we expect in the next 3 to 5 years expansion in the current domestic ports? Like where are you looking to expand? Where is higher demand relatively?

[Ashwani Gupta, executive]

So as you can see in our presentation, so we have a very good balance between business commodity mix and the business asset mix, which means across the 7,500 kilometer of coastline, we have the ports, as you know. But because we handle container, dry and liquid, all the commodities, so we can easily absorb the risk and we can maximize the opportunity. This is what we have been doing. Now moving forward, as I said before, India...

[Technical Difficulty]

[Operator]

Ladies and gentlemen, the line for the management has been disconnected.

[Ashwani Gupta, executive]

Yes. I was in between of the answer. So having said that, we are increasing our capacity almost everywhere. So Mundra, Hazira, then Kattupalli, then Dhamra. Now Gopalpur, we have just acquired, so we are not. We're just refurnishing some of the equipments. Krishnapatnam, Gangavaram, I think everywhere, somewhere, we are doing something because we know that we have to prepare ourselves with the growth, which will be 2x than the India growth. So as we speak, we are investing in the capacity. And as we have explained in our financial discipline that we have enough cash being generated from the operations to fund our mid- to long-term capacity. And this capacity, number one, is to sustain the current assets. Number two, to invest in the technology, which is the digital platform we have developed end-to-end. And number three, in the greenfield projects in the future. So to answer to your question, we keep on investing in increasing our capacity. Hope it answers your question. Thank you.

[Ketan Jain, analyst]

Yes. Sir, is it possible to quantify any expansions, like any plans you have, any quantification in terms of capacity in million tons?

[D. Muthukumaran, executive]

See, I think there are multiple ways in which we can answer this question. First is one, detail that we give every year at the beginning of the year is broadly the CapEx plan that we have by port, which is there in the investor deck, where we are talking about -- in this particular year, we are talking about in Mundra, equipment for T3 to expand the capacity, the South Port Rail Head, which is a SPRH, material handling system for a new customer. In Gangavaram, we are doing yard mechanization and we are actually importing new GSUs, the crane. In Dhamra, we are doing railway doubling and berth construction. So we're giving details of specific CapEx plan by port in the investor presentation. In terms of the berth capacity itself, we see -- I can tell you now instead of year-by-year, a block of, let's say, 5 years, where we see actually berth will sort of expand in capacity across almost all our ports. So it's only a question of which one comes when. But on an overall basis, we'll be investing across all our major ports. And if you want to give an order in the next sort of round of expansion, we are talking about potentially a container terminal in Mundra. We're talking about a multipurpose terminal in Dhamra. And as you know, our VLCC terminal in Mundra is sort of getting commissioned soon. Our Vizhinjam Port is getting commissioned soon. Sri Lanka will be getting commissioned this year. So yes, these are the upcoming commissionings and ongoing expansions.

[Operator]

The next question comes from Aditya Mongia from Kotak Securities.

[Aditya Mongia, analyst]

The first question that I had was more on the logistics part, specifically rail logistics. I wanted to get a sense of across our MMLPs, where are we getting a lot more market share or gaining market share in this business? And what is driving that market share kind of improvement? Is it pricing? Is it service levels? What is it?

[Divij Taneja, executive]

Aditya, so the market share that we are getting into is not from any other MMLP. This is primarily a conversion from road into rail. As you're aware, the DFC coming in, the ability to double stack is increasing. So comparable to the road, as the distance gets larger, we are able to double stack and eat into those markets.

[D. Muthukumaran, executive]

Aditya, if you're going to have a follow-on question, could you be slightly away from the mic? You are a little too close.

[Aditya Mongia, analyst]

Sure. So the second question that I had was this observation that there is this line item in the cash flow statement talking about payments made for acquisition of subsidiaries. This is about INR 850 crores this first half, was I think at INR 2,000 crore number last year. At least last year, it was suggested that this is more linked to acquisition of land parcels. I wanted to get a sense of is there a similar kind of thought process this year or where is the money being invested in?

[D. Muthukumaran, executive]

See, I think you're talking about the number, which is INR 835 crores in the cash flow statement?

[Aditya Mongia, analyst]

Roughly, yes.

[D. Muthukumaran, executive]

So as we have mentioned there, it is for two purposes. One is acquisition of Tanzania, and the other is acquisition of various land parcels. I may have to zoom out a little bit to explain this context. You may recall when we actually talked about the logistics strategy, we said that actually -- ahead of the market in anticipation of our new facilities coming in, we are acquiring land across length and breadth of the country, where we have mapped out MMLP and ICDs are coming up and warehouses are coming up. This follows the detailed study in our strategy as to where there is a market. And clearly, the existing industrial clusters is what we have assumed. We have not assumed any new industrial clusters in the geography coming up. So our expansion plans in MMLPs and warehouses and ICDs are in and around the existing industrial clusters. You might remember that actually, we have been commissioning MMLPs in the recent past, Nagpur, Virochannagar, we're working on various other across the country. So we are buying land across. And this land will get bought usually anywhere between 2 to 3 quarters of giving land advance.

[Aditya Mongia, analyst]

And I would assume that the several new subsidiaries that have been added in this quarter are also linked to this kind of endeavor. Is that a fair assessment of things?

[D. Muthukumaran, executive]

Sorry, we could not hear the question. Could you repeat, please?

[Aditya Mongia, analyst]

No. I think let's move on to the next question. I hope I'm audible to you. This Tanzania 3 million tons, is this part of the volume numbers for this quarter for you? And b, what will be the Gopalpur contribution as well as the Vizhinjam and the Colombo contribution for second half as well?

[D. Muthukumaran, executive]

So yes -- so yes, 3 million is part of the 220 that you actually see for the half year. And as far as the Gopalpur is concerned, at the time of acquisition, we have actually told you what the sort of broad numbers of the past is. We will actually see that the numbers of Gopalpur will be along the lines that we presented during the acquisition, so which is anywhere between 800,000 to 1 million tons per annum.

[Rahul Agarwal, executive]

And the Vizhinjam run rate should be around 50,000 to 60,000 TEUs a month.

[Operator]

The line for the current participant has dropped from the queue. So we'll move on to the next question. The next question comes from [ Nidhi Shah ] from ICICI Securities.

As there is no response from the line of the current participant, we'll move on to the next question. The next question comes from Bharani Vijayakumar from Avendus Spark.

[Bharanidhar Vijayakumar, analyst]

Yes. So you mentioned about higher rail volumes for logistics business this quarter. So can you highlight the rail provisions in major container ports like Mundra and say Hazira and others in this particular first half compared to the same period first half last year?

[Divij Taneja, executive]

So roughly at Mundra, 32% as of this year. This includes both the import and the export volumes. Import is slightly higher at about 46%, but it averages out to 32%.

[Bharanidhar Vijayakumar, analyst]

Yes. So how much would it have been last year, sir, you can say?

[Divij Taneja, executive]

It would be roughly around 31% last year.

[Bharanidhar Vijayakumar, analyst]

Okay. So like that, can you say in which other ports that rail provisions has increased?

[D. Muthukumaran, executive]

We expect rail provision in Dhamra, where we are actually sort of putting a double line. And the rest of the ports, actually, as you know, our rail evacuation at this point in time is not directly owned by us. So these are the two which is important.

[Bharanidhar Vijayakumar, analyst]

Okay. My second question is on this particular quarter's performance on volumes. So we had seen strong volume growth in coal and in ports like Mundra, Krishnapatnam, Dhamra. Can you -- and this is in light of the overall economy seeing some slowdown, like even power generation was lower, there has been some slowdown in other parts of the economy. So in that light, it is definitely a very good performance. I heard you mention that we have done well because we have also taken market share or market share has increased. But can you spend some more time on specifically what is driving this good volume growth in Mundra in coal, in Dhamra, in Krishnapatnam?

[Ashwani Gupta, executive]

Okay. No, I think I tried to answer your question that the India growth is being driven by infrastructure, energy, industrialization. And industrialization that to medium to high-end capital-intensive industrialization, and the food and fertilizers. There could be a shift in the trend of each of the commodity. But at the end, because we are into all these four pillars, we are capitalizing all the four pillars. So even if the iron ore volume, all-India level went down, fertilizer didn't come up. But on the other side, the agri volumes, especially pulses and sugar, they grow by 32%, all India volume, right?

When we look at iron and steel, all India, grew by 6%. When we look at cement, it grew by 3.9%. When we look at POL products, they have grown by 3.9%. LPG, LNG grew by 15.5%. So what I'm trying -- and the container volumes grown by 12.3%, out of which we grew much more, and that's where it is. So transshipment volume in India grew by 63.4%. And now with Vizhinjam, we will get there also. So what I'm trying to tell you here is that we are getting more market share because of our asset and because of our competitiveness from each of the commodity, which is growing either marginal or exponential. And that is a result of that we grew our market share from 26.4% to 27.3% in the H1 FY '25, which is comprising of all the commodities, but also which is comprising of all the ports -- all the major ports in West, East and South coastal.

[Bharanidhar Vijayakumar, analyst]

So I got it. So if I may squeeze in one last question. So our ports EBITDA margins have grown from 71.5% to 72.3%, I think some 80 bps increase. Like anything specific driving this, because is this driven by realization increase?

[Ashwani Gupta, executive]

So basically, in our ports, what is most important is operational efficiency. But also what is also important is the commodity mix. So more and more, we are growing in containers, definitely, we have an overall EBITDA margin, which is better because containers gives us a good return. So that's a combination of operational efficiency, but also that we are doing more container mix in our portfolio.

[Operator]

The next question comes from Sumit Kishore from Axis Capital.

[Sumit Kishore, analyst]

My first question is that if I look at the domestic port EBITDA per ton versus international port EBITDA per ton, domestic port EBITDA per ton is significantly higher. So could you just explain what is the dynamics here? I understand it's not like-for-like, but given the EBITDA margins for even Tanzania included now have not materially changed the profile. What are your thoughts going forward? Would this be the new normal?

[D. Muthukumaran, executive]

Sure. Actually, it's a very good question because India is a homogeneous market and all the investment that we make outside India, the market is a bit heterogeneous. It's not exactly sort of comparable. And what is important -- instead of just giving the metric of EBITDA per ton, what is important is actually what is our value-creation journey and are we tracking the value-creation journey. So we would urge that actually you look at that and EBITDA per ton is not comparable.

[Sumit Kishore, analyst]

So could you give us a metric on ROCE if you compare...

[D. Muthukumaran, executive]

ROCE, we have 15% return on equity in Indian rupee term as the threshold.

[Sumit Kishore, analyst]

Okay. So international, although it's early days yet for Hazira and Tanzania, but they are above this threshold.

[D. Muthukumaran, executive]

Yes, yes. Tanzania is above the threshold. It's a mature market and mature port. And in times to come, we may embark on an expansion journey. So at that time, we need to actually wait for fruition of the CapEx. But as far as -- Sri Lanka also, you will be able to see it in the next couple of years, we are on that journey. So yes, I mean, you have to actually see it at the right point in time as we ramp up and complete the ramping up, you will be able to see the returns.

[Sumit Kishore, analyst]

Sure. My second question is on the SEZ and port development business. We have seen revenue of only INR 170 million-odd for the quarter. I mean my question is with so much SEZ development over the years, why isn't a recurring income from lease rentals above a certain threshold on a quarterly basis? So just for my understanding, why isn't there a recurring lease income?

[D. Muthukumaran, executive]

We have actually spoken about this in the past. What we want to highlight here is that actually it is not quarter-by-quarter comparable number. What is important is the fact that we have a land bank in the ports that we have actually talked about in the presentation. We have it in multiple ports. And we will, over a long period of time, unlock value from here. And it will not be uniform quarter-on-quarter. You will see that in some quarters, it spikes up, and in other quarters, it remains subdued.

[Sumit Kishore, analyst]

No, sir, I completely appreciate that. But -- so are the contracts not structured with some periodic payment on a rental basis as well? Or is that -- because that used to happen in the past. So is there some change in how contracts are structured?

[D. Muthukumaran, executive]

It's a good question. Actually, I could have answered it earlier itself. Point taken. Actually, what you see in this quarter, there is no one-off income. So all these in this quarter is coming from the fixed contract. So if there are no new contracts, this money will keep flowing for the next many years to come.

[Operator]

The next question comes from Jinesh Kothari from Elara Capital.

[Jinesh Kothari, analyst]

Congratulations for a good set of numbers. I had one question regarding our logistic rail volumes. So you mentioned in your commentary that there is a shift happening from road to rail. But if I see it for the particular quarter, the volume numbers are a mere growth of 4%. So was there any particular commodity that affected this growth in our rail TEU volumes? Or was it something cyclical in nature? So just wanted some insight on that part.

[Divij Taneja, executive]

Yes. So the main commodity that we have gone after is agri-based commodity. So this is primarily a domestic play. So while you look at the number as, say, 4%, the circuits are being established as we speak, and the number is bound to increase after that. But to answer your question specifically, it's conversion of road cargo specifically on agri and both on inbound and outbound.

[Jinesh Kothari, analyst]

All right. And just wanted to get a sense on the CapEx part. So out of the total guidance that we have highlighted for the year, so how much CapEx that we incurred in the first half and the balance that we are aiming in the second half?

[D. Muthukumaran, executive]

Yes. So the amount of CapEx that we have spent in the first half is close to INR 4,400 crores, and the guidance stands. So we will -- we are anticipating that we will spend the rest of it in the next 2 quarters.

[Jinesh Kothari, analyst]

Got it. And just to squeeze in last one question. The volume -- you highlighted some of the revenues that you are aiming that will compensate the volume growth and reach our guidance. So just a ballpark number, if you can provide like Vizhinjam, Gopalpur and Tanzania in the second half, how likely or how is the quantum of volume that we are aiming from those 3, 4 ports that we are looking to add in the second half?

[D. Muthukumaran, executive]

See, we told you actually the sources of volume increase in the second half will happen from both the buckets. Number one, the new ports that we have added in the portfolio, either M&A or CapEx, I mean, greenfield. And the second bucket being ramp-up of volume in existing ports. As to your question on the first bucket, Gopalpur, we told you 800,000 to 1 lakh is what -- sorry, 800,000 to 1 million is what we anticipate in monthly volume. And Vizhinjam, actually, Rahul mentioned sort of, let's say, 50,000 TEUs, which is approximately 750,000 tons per month of volume. And Tanzania, we told you 3 million for this quarter. So it's a reasonably representative number. So that is actually the volume increase sort of from the 3 new additions that we see. And Colombo will most likely be commissioned towards the end of the year. So we will probably not have much to be contributed from Colombo in this. And the balance that sort of we expect volume ramp-up is across ports, but fundamentally led by Mundra, Gangavaram and Dhamra maintaining its course. And a little bit pickup in Krishnapatnam. So these are the four ports that we expect volume drivers to come from.

[Operator]

The next follow-up question comes from [ Nidhi Shah ] from ICICI Securities.

[Unknown Analyst]

So firstly, I wanted to ask on the ABPO. So this quarter, we are seeing that the revenues are much, much lower. Is this primarily because this was planned by the company? Or is this something that has happened this quarter?

[D. Muthukumaran, executive]

Sorry, which one? Which business?

[Unknown Analyst]

The ABPO. ABPO business. We are seeing that the revenues are much lower compared to last quarter. What is the reason for that? Is that a planned move?

[D. Muthukumaran, executive]

Sorry, that particular word is not clear. What exactly are you referring, ma'am?

[Unknown Analyst]

I am referring to the ABPO business. Basically, it's called out in your slide separately.

[Rahul Agarwal, executive]

Could you give us a slide reference number, ma'am?

[Unknown Analyst]

In the meantime, if I could just ask you another question while I look for it. So as we know that the Vadhavan port is coming up in Maharashtra as well as the Morbi port, do we see that these ports will bring some competition in terms of containers for Hazira and Dighi port? And also, I understand that Mundra is much further away, but they all share the same hinterland. So do we expect some kind of competition once these ports come up?

[Ashwani Gupta, executive]

So competition is always good, but you know that. All India capacity has been increasing. So by 2047, India is looking for 10 billion tons of capacity. So anyhow, when Vadhavan will come in, it will give us more opportunity to capture more market share. That's what we are looking in Vadhavan. And Vadhavan is also an opportunity for us, not a risk for us.

[Unknown Analyst]

All right. And to come back to the first question -- just to come back to the first question in the -- apologies instead of ABPO, I meant to say SEZ and port development.

[D. Muthukumaran, executive]

Port development. That's the same thing that we spoke about, which is SEZ income, which actually we spoke in the last question. So we have two types.

[Unknown Analyst]

Okay. This is just part of that. All right.

[D. Muthukumaran, executive]

Yes, yes. So we have two types of income coming from there. One is annuity type of income, which is lease rental. We told you that this year or this quarter, we only have annuity. So therefore, this is a minimum income that we will get. And every time we complete a development of a port and do a transaction, you will have one-off port development income. Actually, we just wanted to bring this...

Okay. So can we take one more question?

[Operator]

The next question comes from Luke Chua from Pictet Asset Management.

[Luke Chua, analyst]

First of all, congratulations on your good performance. Just one thing I wanted to check. In the presentation and the release, there was something that I wanted to look at was your net debt to EBITDA. It was number two in one of the presentations. But in the release statement, it was -- on the [ TTM ], it was 2, right? And you guided 2.2 to 2.5x forward looking. And if I take your excellent EBITDA at, call it, INR 18,000 crores and above and your CapEx as you earlier on call it INR 11,000 crores and above, you would draw a lot of free cash. So if that is correct, then are you not going to use the money to delever further, or the cash will become just dividends going up further?

[D. Muthukumaran, executive]

Sure. Yes, actually, the September debt -- net debt leverage number is 2. And we anticipate at the end of the year, this number will be in the broader region that we have guided, which is 2.2 to 2.5. Fundamentally because two events that have already happened as we report, but post-September, in the month of October is the acquisition completion of Gopalpur and acquisition completion of Astro. And as you might have observed in this conversation a few moments ago, our CapEx for the next half is going to be more in the region of INR 6,500 crores. So given a higher utilization in H2, we estimate the EBITDA range to be in 2.2 to 2.5.

[Luke Chua, analyst]

I mean understood. But it seems then that if your cash flow conversion is as high as, I think, the most previous year, you should throw up a lot of cash. But did I miss something here? Because your CapEx is going to be INR 11,000 crores to INR 12,000 crores, correct?

[D. Muthukumaran, executive]

Yes, yes. No. So in case if our cash conversion is more, we have just said that actually our long-term target for debt is 2.5 leverage. So we will take appropriate action. It's not based on one quarter, but it has to be probably seen consistently over a few quarters before we can take action in terms of equity adjustment, dividend or buyback, et cetera.

[Luke Chua, analyst]

Okay. Understood. So you're saying it's more of a medium-term target there.

[D. Muthukumaran, executive]

That's correct. It cannot be based on one single quarter's number. It will have to be sustained over a period of time, and then we would actually watch it and then obviously calibrate to 2.5 long-term target based on the expansion plans and acquisition plans that we come up with.

Thank you very much. Thanks for the participation. It is particularly appreciated in light of the fact that the festival season has already started. Happy Dhanteras to all of you. Happy Diwali to all of you. We hope actually you have good festival. Please do reach out to us, particularly Rahul Agarwal. He's the contact point. He'll be very happy to answer any questions that we have not answered now. And we have seen that there are some questions coming up on the board. So please do feel free. He will be happy to answer them. Thank you very much.

[Operator]

As there are no further questions from the participants, I now hand the conference over to Mr. Achal Lohade for closing comments.

[Achalkumar Lohade, analyst]

Yes. We thank the management of Adani Ports and SEZ for giving us the opportunity to host the call. Thank you all for being on the call. Thank you so much. Have a good evening.

[Operator]

Thank you. On behalf of Nuvama Institutional Equities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.