Credit rating agency Fitch Ratings has affirmed the Long-Term Foreign-Currency Issuer Default Rating (IDR) of Adani Ports and Special Economic Zone (APSEZ) at ‘BBB-‘ with a Negative outlook.
APSEZ’s underlying credit profile is assessed at ‘BBB while its rating is capped by India’s Country Ceiling of ‘BBB-‘, Fitch Ratings said in a report.
“APSEZ's underlying credit profile reflects its status as the largest commercial port operator in India, with best-in-class operational efficiency. Historically, the issuer has experienced throughput resilience in economic cycles, including the current Covid-19-related downturn,” the rating agency noted.
The company’s cargo throughput rose by nearly 2 percent in FY21 as compared with the nearly 5 perent decrease for cargo throughput at all Indian ports.
About 56 percent of APSEZ's cargo is sticky, which includes contractual take-or-pay cargo, cargo that is unlikely to be diverted to other ports due to infrastructure restrictions, such as the lack of facilities to handle crude oil, and cargo from joint-venture (JV) partners.
Also, APSEZ has timing flexibility in its expansion projects. The management has budgeted about Rs 30 billion-40 billion for capex in FY22, but this could be cut down to Rs 8 billion for maintenance only, said the report.
“We believe APSEZ has adequate liquidity to weather near-term challenges. The company had a readily available cash balance of about Rs 53 billion at FYE21, against operating expenses of Rs 33 billion and interest cost of about Rs21 billion. APSEZ has Rs 14 billion due in FY22 to be repaid or refinanced,” Fitch noted.
The company, as a member of one of the largest conglomerates in India spanning different sectors, has strong banking relationships and established access to the capital markets.
Fitch’s rating case projects adjusted net debt/EBITDAR will average 3.6x in FY22-FY26. The ratio can also drop below 3.0x if management is able to maintain consolidated EBITDA margins of 65 percent.
At 2:05 pm, the shares of APSEZ were trading 3.94 percent lower at Rs 731.45 apiece on the BSE.
The shares of Adani Group companies are under immense selling pressure for since last two days after a media report said that the accounts of three foreign investor funds that own stocks had been frozen.
However, the Adani group rejected the report calling it “blatantly erroneous.”
The stock prices of other companies, Adani Enterprises, Adani Green Energy and fell over 3 percent each on Wednesday, while shares of Adani Total Gas, Adani Transmission and Adani Power hit their lower circuit limits.
(Edited by : Abhishek Jha)