Adani Ports and Special Economic Zone should have sufficient cash balance to fund the first tranche of its $650-million bond purchase programme, with the port operator expected to report an operating margin of 55-60 per cent over the next two years, S&P Global Ratings said in a bulletin.

On Monday, the Adani group flagship said as part of its exercise to pre-pay early maturing debt, it was repaying $130 million worth of 3.375 per cent senior secured notes that were maturing in 2024, in May. More repayments could take place over the next four quarters. The company said it would fund the purchase through its internal cash reserves, the final buyback amount depending on its liquidity position, and market conditions.

The global rating agency said the company, which handled about 339 million tonnes of cargo in FY23, would likely capitalise on its healthy operating cash flow and has projected cash flows of Rs 8,900 crore in the current fiscal year.

“The transaction, if accepted by investors, will facilitate Adani Ports’ strategy to reduce refinancing risks. We believe it is an opportunistic exchange, reflecting the company’s pro-active management of upcoming debt maturities in advance,” S&P said.

It forecast capital expenditure of Rs 6,000 crore in FY24.

Also read: Adani Ports exceeds EBITDA, revenue guidance in FY23

Adani Ports should have enough liquidity over the next 12 months and it was likely to be flexible in its capex programme, “adjusting it according to business performance and funding availability.”

The port operator’s management had earlier pegged capex for the current year in the range of Rs 4,000-4,500 crore, but analysts said its robust performance could have given it the confidence to spend more.

Earlier this month, Adani Ports announced the acquisition of Karaikal Port under the insolvency code route, adding about 10 million tonnes of cargo handling capacity. It plans to spend about Rs 850 crore over time to upgrade its infrastructure.

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