Adani Ports Receives AA+ Rating For Planned Bond Issue; Adani Shares Mostly Trade Lower Today

Today, the share price of Adani Enterprises shares was down 0.40% at Rs 2831 per share at 12:24 pm IST, Adani Green Energy shares were down 0.79% at Rs 1586.65, and Adani Total Gas shares fell 0.81% at Rs 991.25 per share.

The share price of Adani group firm Adani Ports and Special Economic Zone (APSEZ) remained in focus on Thursday after Rating agency ICRA assigned an AA+ rating for the company's Rs 100 billion bonds. With this rating, Adani Ports has moved one step closer to returning to the corporate bond market. Today, Adani Ports shares traded a tad lower at Rs 1021.10 per share at 11:55 am IST.

ICRA's ratings of Adani Ports and Special Economic Zone Limited have factored in the company's strong business profile marked by its favorable operating characteristics, geographical footprint, diversified cargo mix and long-term customer tie-ups.

According to the ICRA report, APSEZL has undertaken various acquisitions in the last few years and has incurred capex to add assets across the logistics value chain, including railway infrastructure, warehouses and MMLPs. The recent acquisitions have strengthened its position as an integrated logistics player with a presence across key segments in the value chain. Going forward, the company will be incurring capex in the medium term to expand its asset base in the logistics/warehouse segment. The revenue from the non-port segments(including logistics) grew ~8% in FY2023 (~61% in H1FY2024driven by various acquisitions).

The report said that APSEZL has a strong business profile and established market position in the port sector due to the location of its assets, favorable operating characteristics, tariff flexibility at non-major ports and long-term customer tie-ups. At present, it has a presence across 14 operational ports with a combined capacity of ~602 MMT.

The company's share in the overall volumes handled at Indian ports has increased to ~24% in FY2023 from ~15% in FY2018 and is the dominant player in the sector. The consolidated cargo handled by APSEZL increased at a CAGR of ~12% during FY2018 to FY2022 and witnessed a healthy growth of ~9% to ~339 million metric tonnes (MMT) in FY2023 (~203 MMT in H1FY2024). Due to the strategic acquisition of port assets and focus on cargo diversification, the share of the flagship Mundra Port stood at 46% in FY2023(~44% in H1FY2024) which has moderated compared to recent years.

Further, the increased asset and cargo diversification mitigates the risks associated with demand cyclicality in specific cargo segments, structural risks arising from the expected moderation in coal imports in the medium to long term, and any asset-specific/event risk at specific locations. Around 54% of the cargo handled by the company is sticky in nature, further mitigating any concentration risk. The company's foray into projects in Sri Lanka and Haifa in Israel will provide geographic diversification.

The key rating drivers of the firm include the company's strong competitive profile and established market position; increasing asset/cargo diversification.

Earlier this month, Reuters reported citing sources that Adani Ports is considering a fundraising of up to Rs 10 billion from the domestic bond market in the last quarter of the financial year. This would be the company's first bond issue since October 2021.

Recently, the company said it would raise up to Rs 50 billion by issuing bonds via private placements in one or more tranches. The company's board will meet on Jan. 3 to approve the bond issue.

APSEZ has said that a meeting of the Board of Directors of the Company will be held on Wednesday, 3rd January 2024, inter alia, to consider and approve a proposal to issue Non-Convertible Debentures by way of public offering, preferential allotment and/or combination thereof as may be considered appropriate, or any other eligible securities, subject to all such regulatory/statutory approvals as may be required.

Today, the share price of Adani Enterprises shares were down 0.40% at Rs 2831 per share at 12:24 pm IST, Adani Green Energy shares were down 0.79% at Rs 1586.65, and Adani Total Gas shares fell 0.81% at Rs 991.25 per share.