Adani Ports’ Refinancing Risk Eased, Says Fitch; Affirms Rating At BBB-

Fitch Ratings said Adani Ports and Special Economic Zone Ltd.’s (APSEZ) refinancing risk has eased and affirmed its long-term foreign-currency issuer default rating at BBB-, with a Stable outlook.

The affirmation reflects APSEZ's strong business and financial profile, underpinned by a robust portfolio of seaports and an adequate liquidity position, Fitch said in a statement. The Indian port operator’s refinancing risk has eased after APSEZ bought back half of its $650 million bond ahead of July 2024 maturity, it noted.

The rating agency said APSEZ's cash surplus and internal accruals are sufficient to cover near-term operations and debt obligations.

Fitch said it believes the risk of an adverse impact on APSEZ's funding access and cost amid the investigation into allegations of governance issues at Adani Group have eased after the Indian Supreme Court's judgement in January 2024.

The court said the case does not warrant a transfer of investigation from the capital markets regulator, the Securities and Exchange Board of India, and has found no regulatory failure, it noted.

Fitch said Adani Group has demonstrated sound access to the domestic and international debt market over the last six months, with APSEZ receiving a $553 million funding commitment from the US International Development Finance Corporation for the development of the Sri Lanka West Container Terminal 2, a joint venture with John Keells Holdings PLC and Sri Lanka Port Authority.

FINANCIAL PROFILE

Fitch said its base-case assumes annual cargo volume growth of about 10%-15% and 3%-6% annual tariff growth over the next few years.

The rating agency projected an EBITDA margin of about 60% over the period, annual capital expenditure of 90 billion rupees-100 billion rupees ($1 billion-$1.20 billion) and annual cash outflow from acquisitions at 25% of FY23's outflow starting in FY25.

APSEZ benefits from geographically diversified port locations, coupled with best-in-class operational efficiency, according to the statement. APSEZ is India's largest commercial port operator, handling a quarter of the country's seaborne cargo through its 12 ports, it said.

Note: $1 = 83.0062 Indian rupees

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