Adani Ports & SEZ attains India’s first AAA ratings in private infrastructure space

Adani Ports & SEZ (APSEZ), one of the largest profit contributors for Adani Group, has been upgraded to AAA rating by Care Ratings.

This is the highest possible rating given to an issuer by credit-rating agencies in India, signifying strong credit worthiness and the capacity to repay investors.

This achievement also holds major significance for India's private infrastructure sector, marking APSEZ as the first and only private infrastructure developer of its magnitude to get this recognition.

Notably, Adani Energy Solution's two transmission assets--WTGL (West Transmission Gujarat Limited) and Alipurdwar have also been rated AAA ratings by India Ratings. However, at the company level, APSEZ is the first.

The ratings upgrade was largely driven by APSEZ's robust business model, strong growth in operations with healthy profitability, coupled with high liquidity and low leverage.

"The ratings derive strength from healthy growth in scale of operations, steady PBILDT (Profit before Interest, Lease, Depreciation and Taxation) margins, demonstrated execution capabilities of APSEZ in the port sector and robust liquidity," said the CARE report.

APSEZ's leverage marked by net external debt/PBILDT(Profit before interest, lease, depreciation and tax) steadily improved from 3.62 times as on March 31, 2021 to 3.14 times as on March 31, 2023.

Subsequently, with the progressive buy back of USD 650 million bonds (due in July 2024), APSEZ repaid nearly USD 325 million till December 2023, resulting in net external debt/PBILDT at 2.41x as on December 31, 2023.

The report also highlights the company's successful track record of turning around port assets post-acquisition and its integrated business model including ports with logistics asset base which has led to 15 per cent compounded annual growth for FY19-FY24 as compared to 4 per cent CAGR for all Indian ports.

"The large banks at Mundra, Dhamra and Krishnapatnam also enhance the prospects," said the report.

APSEZ has evolved from operating just two ports (Mundra and Dahej) in 2011 to a portfolio of 14 ports spread across the entire coastline of India.

Improved reach, strategic port locations, operational efficiencies, and a comprehensive range of integrated service offerings, including SEZ and logistics, have contributed to the company's remarkable growth. APSEZ's ports have 27 per cent volume market share.

APSEZ is India's largest port developer and operator by volume with a total capacity of 607 MMT, with the Mundra Port being the largest commercial port in India in terms of cargo handling.