NewsStocksJefferies Forecasts Ports and Logistics Sector Recovery from FY27 After Weak 2025 PerformanceJefferies Forecasts Ports and Logistics Sector Recovery from FY27 After Weak 2025 Performance
Jefferies expects India's ports and logistics sector to recover from Q1FY27 after underperforming in 2025 due to weak volumes and tariff uncertainties. Container volumes grew only 6% YoY in first eight months of FY26, below the 10-11% historical average. The Dedicated Freight Corridor's connectivity to JNPT by end-Q1FY27 is a key catalyst. Top picks include Adani Ports (8-10% organic growth expected), JSW Infrastructure (390 MT capacity target by FY30), and Container Corporation (attractive valuations post-underperformance).
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India's ports and logistics sector appears poised for a significant turnaround after a challenging 2025, with Jefferies forecasting a recovery beginning in the first quarter of FY27. The brokerage firm attributes the expected comeback to improving base conditions, strategic capacity additions, and critical infrastructure connectivity developments that should revitalize the sector's performance.
Sector Challenges in Recent Performance
The ports and logistics sector faced considerable headwinds in 2025, with stocks underperforming the Nifty 50 index as volumes consistently fell short of market expectations. The sector grappled with multiple challenges including tariff-related uncertainties and persistently weak coal demand, which significantly impacted overall port activity and throughput.
Container volumes, representing approximately 22% of total industry throughput, demonstrated the sector's struggles with growth of just 6% year-on-year during the first eight months of FY26. This performance marked a substantial deviation from the historical average growth rate of 10-11%, highlighting the depth of the sector's recent challenges.
| Volume Segment | FY26 Growth (8 months) | Historical Average |
|---|---|---|
| Container Volumes | 6% YoY | 10-11% |
| Coal Volumes | 2% YoY | Not specified |
| Container Share of Total Throughput | 22% | - |
Infrastructure Development as Growth Catalyst
Jefferies identifies the Dedicated Freight Corridor's connectivity to Jawaharlal Nehru Port as a pivotal development expected by the end of Q1FY27. This infrastructure enhancement is anticipated to deliver multiple benefits including improved rail efficiency, reduced logistics costs, and enhanced support for container traffic operations.
The brokerage firm expects both container and coal volume trends to reverse as demand conditions normalize and global trade environments stabilize. Additionally, a potential India-US trade deal could provide further momentum as an additional tailwind for sector growth.
Top Investment Picks and Growth Prospects
Jefferies has identified three companies as prime beneficiaries of the anticipated sector recovery. Adani Ports and Special Economic Zone stands out due to its significant exposure to both coal and container segments, positioning it to capitalize on volume recovery across these key areas.
| Company | Key Growth Drivers | Expected Benefits |
|---|---|---|
| Adani Ports | Coal & container exposure | 8-10% organic volume growth |
| JSW Infrastructure | Capacity expansion | 390 MT capacity by FY30 |
| Container Corporation | DFC connectivity | Attractive valuations post-underperformance |
Despite geopolitical tensions and tariff uncertainties affecting organic growth in the first half of FY26, Jefferies anticipates base normalization will support sustainable organic volume growth of 8-10% for Adani Ports. This growth is expected to be supplemented by international port additions and expansion in logistics and marine business segments.
JSW Infrastructure presents a compelling growth story centered on capacity expansion, with visibility to achieve nearly 390 million tonnes of capacity by FY30. This target aligns closely with the company's stated objectives and is supported by new port acquisitions, including operations in Oman, and government-led privatization opportunities. Jefferies projects this capacity growth will translate into over 20% EBITDA growth between FY26 and FY30.
Container Corporation of India emerges as an attractive opportunity following sharp underperformance in 2025, which has created favorable valuations. The upcoming DFC connectivity to JNPT represents the primary catalyst for the company, with Jefferies noting favorable risk-reward dynamics even under conservative market share assumptions.
Broader Sector Outlook
The recovery narrative extends beyond the top picks, with TCI Express potentially benefiting from operating leverage as volumes recover from current low levels. However, Delhivery continues to face near-term challenges from e-commerce insourcing trends, particularly pressure from Meesho's strategic decisions.
Jefferies' optimistic outlook reflects confidence that the combination of improving demand fundamentals, infrastructure connectivity enhancements, and capacity additions will drive meaningful sector recovery from FY27 onwards, marking a significant turnaround from the challenging conditions experienced in 2025.
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