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The addition of Krishnapatnam Port Company Ltd (KPCL) to Adani Ports and Special Economic Zone Ltd (APSEZ) will increase the latter’s market share and its diversity, both geographically and in its cargo composition, Moody’s Investors Service said in a report.
APSEZ’s leverage — as measured by funds from operations and debt — should remain above 15-18 per cent after the acquisition; a result which would be within the parameters of the company’s Baa3 ratings level, it said.
“While APSEZ’s outstanding consolidated debt will significantly increase by 18-20 per cent as a result of the acquisition, the refinancing risk is manageable because of the cash flow visibility from the group’s assets, staggered nature of the debt maturities and diversified funding sources,” Abhishek Tyagi, a Moody’s Vice President and Senior Analyst, said.
“In addition, the slightly weaker metrics post acquisition will be counterbalanced by KPCL's strong positioning and market share on the east coast of India,” added Tyagi.
Also Read: Adani to buy 70% stake in Krishnapatnam Port for over ₹5,500 crore
With the acquisition, APSEZ will add a new economic hinterland of Andhra Pradesh, which is currently not served by its existing ports. Moody’s explains that the acquisition is in line with APSEZ's target of throughput volumes of 400 MMT by fiscal 2025.
Also Read: APSEZ has enough financial headroom to absorb proposed buyout in Krishnapatnam Port: S&P
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