| Adani Ports and Special Economic Zone Limited | ||||
| Ratings reaffirmed at 'Crisil AAA/Stable/Crisil A1+' | ||||
| Rating Action | ||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its ‘Crisil AAA/Stable/Crisil A1+’ ratings on the bank facilities and debt instruments of Adani Ports and Special Economic Zone Limited (APSEZ).
Crisil Ratings notes APSEZ’s announcement on April 17, 2025 to acquire Abbot Point Port Holdings Pte Ltd (APPH), Singapore, which owns the entities which in turn own and operate North Queensland Export Terminal (NQXT), from Carmichael Rail and Port Singapore Holdings Pte Ltd, Singapore (CRPSHPL, related party associated with Adani group). NQXT is a dedicated export terminal with a current nameplate capacity of 50 million metric tonnes (MMT) in Queensland, Australia and is under a long-term lease until 2110. NQXT handled 35 MMT cargo in fiscal 2025. Total income and earnings before interest, tax, depreciation and amortization (EBITDA) are estimated at A$349 million and A$228 million (~65% margin) respectively. Erstwhile debt at NQXT was refinanced recently with current debt of A$800 million; debt-to-EBITDA stands at 3.5 as on March 31, 2025. This current debt has a structured repayment schedule with sizeable back-ended repayments falling due in fiscals 2030 and 2031. Nevertheless, healthy profitability and strong cash flows of NQXT, along with long concession period with remaining life of 85 years and financial flexibility arising out of being part of APSEZ, will mitigate any refinancing risk and enable it to service this debt on its own.
APSEZ already has an operations and maintenance (O&M) contract for NQXT. Adjusting for this O&M outflow to APSEZ, the operating margin of NQXT is expected to be healthy over 80%. NQXT’s capacity and EBITDA account for ~8% of APSEZ’s consolidated size. APSEZ is likely to benefit from the strategic location with resource rich Queensland, Australia being a critical export gateway for producers and has around 90% of the trade with Asian countries. Further, NQXT can benefit from meeting demand of potential green hydrogen exports. Long operational track record of NQXT along with healthy profitability, long term take-or-pay contracts for contracted capacities with customers and remaining life of 85 years provide steady revenue visibility. Hence, the acquisition of NQXT fits well in APSEZ’s strategy to expand international operations. Apart from NQXT, APSEZ has its presence globally with operations at Haifa port (Israel), Dar es salaam port (Tanzania) and one under-development port at Colombo (Sri Lanka).
Even with the acquisition of NQXT, APSEZ’s net debt-to-EBITDA is expected to remain comfortable below 2.5 times. The transaction, valued at A$3975 million, is expected to be completed in fiscal 2026 subject to required regulatory approvals and will be a non-cash transaction. APSEZ will issue 14.38 crore new equity shares under the preferential allotment route to CRPSHPL, which will result in a net increase of 2.13% in promoter group holding.
APPH has ~US$2.2 billion of affiliate debt along with a corresponding amount of loan receivables, which will be assumed by APSEZ post-acquisition. This liability is expected to be settled within a few months post-closing of the acquisition as it also has corresponding loan receivables against this from related parties, subsidiaries and associates. However, realisation of the same within the expected timeline will be a key monitorable. Crisil Ratings will continue to engage with APSEZ’s management to get further details of the proposed transaction.
The ratings continue to reflect APSEZ’s strong business risk profile. The company is the largest integrated port operator providing allied services as well in India with cargo handling capacity of 633 MMT as of December 2024 spread over 15 domestic ports and terminals and a presence at 4 international ports/terminals. It has garnered 27% market share in overall cargo and 44% in container volumes handled by Indian ports. The operations are also run efficiently reflected in one of the lowest turnaround times at 0.7 days compared with ~2 days for state-owned major ports. APSEZ benefits from its integrated logistics network providing end-to-end logistics solutions to customers from the port to hinterland, which has led to stickiness; 60% of cargo is sticky in nature.
The rating also reflects healthy financial risk profile with net debt-to-EBITDA and gearing at ~2.1 times as on December 31, 2024 (2.3 times as on March 31, 2024). Net debt-to-EBITDA is expected to be capped at 2.5 times. Healthy fund flow from operations of over Rs 14,000 crore in the medium term will adequately cover debt servicing obligations and consequently debt protection metrics are expected to remain comfortable with interest cover expected to improve to above 7 times (6.28 times for fiscal 2024) over the medium term. While most of the debt is non-amortising, refinancing risk is minimal given APSEZ’s strong financial flexibility as demonstrated in strong fund-raising capabilities with relationships with multiple domestic and international banks as well as presence in domestic capital market. Additionally, long concessions for ports will support refinancing. These strengths are partially offset by susceptibility to trade related challenges and competition impacting volume growth. |
Analytical Approach Crisil Ratings has considered the consolidated business and financial risk profiles of APSEZ and its subsidiaries and joint ventures (to the extent of shareholding), as these subsidiaries and joint ventures are in similar line of business and are under the same management. Also, majority of the debt lies at the APSEZ level and expected to be serviced through consolidated cash flows, and the debt terms are also defined at consolidated level.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Leadership position in the Indian ports and allied infrastructure: APSEZ has a portfolio of 15 domestic ports/terminals and a presence at 4 international ports/terminals with total cargo handling capacity of 633 MMT as of December 2024. The company commands a market share of ~27% in terms of overall cargo and ~44% in terms of the total container volume handled by Indian ports, with cargo handled of 420 MMT in fiscal 2024. It has gradually consolidated its position with volumes growing at a compound annual growth (CAGR) of 13.4% during fiscals 2017 and 2024. This has been driven by regular capital expenditure (capex) towards capacity expansion as well as acquisitions. With addition of ports such as Kattupalli, Krishnapatnam, Gangavaram and Karaikal to the company’s portfolio, it has diversified its presence across the western and eastern coast of India. It has also expanded its operations internationally with operations at Colombo (Sri Lanka), Dar-es-Salaam (Tanzania) and Haifa (Israel).
Strong volume growth, at 24% for fiscal 2024, has supported revenue growth which increased by 28% to Rs 26,978 crore in fiscal 2024 from Rs 21,034 crore in fiscal 2023. During the first 9 months of fiscal, revenue grew by 14% to Rs 22,590 crore backed by volume growth of 7%. APSEZ also benefits from its wide logistics network throughout the country comprising of 117 marine flotillas, 132 trains, 12 multi-modal logistics parks, warehousing space of 31 lakh square feet (sq. ft) and trucking fleet of 936 units as of December 2024. This enables the company to provide end-to-end solutions to its customers leading to stickiness – 60% of the APSEZ’s cargo is sticky in nature.
Strong operating efficiency with well diversified revenue profile: The increase in scale of operations over the years has been achieved with operating margin remaining consistently over 60% backed by efficient port operations and allied logistics infrastructure. The efficiency of APSEZ’s port operations is reflected in turnaround time of 0.7 days compared to ~2 days for major ports in India. Return on capital employed has, hence, remained over 12% in the past three fiscals despite the capital-intensive nature of operations. While the operating margin has witnessed a decline to 60.1% in fiscal 2024 from 62.3% in fiscal 2023, it is due to increase in the share of non-port operations; margin for port operations remained strong at ~70%.
The cargo mix handled by APSEZ in fiscal 2025 is well-diversified with 33% coal, 42% containers, 6% crude and gas and remaining other types of cargo. The share of Mundra port in the total cargo has reduced consistently from 66% in fiscal 2019 to 44% in fiscal 2024 majorly on account of acquisitions of ports on east coast of India. Accordingly, the east coast now contributes 43% of the total cargo. Logistics and other related businesses also contribute around 10% of the total revenue.
Healthy financial risk profile: APSEZ has witnessed improvement in leverage with net debt to earnings before interest, tax, depreciation and amortization (EBITDA) at 2.25 times as on March 31, 2024, compared to over 3 times as on March 31, 2023. Net debt-to-EBITDA stood at ~2.1 times as on December 31, 2024. Debt protection metrics are also comfortable with adjusted interest coverage at 6.28 times and net cash accruals to adjusted debt at 0.24 times as of fiscal 2024. Expected fund flow from operations at over Rs 14,000 crore will be adequate against debt repayment of Rs 6,000-8,500 crore. While most of the debt is non-amortising, refinancing risk is minimal. APSEZ has demonstrated strong fund-raising capabilities in the recent fiscals with relationships with multiple domestic and international banks as well as investors. It has more than 80% of debt in foreign currency with dollar denominated bonds contributing 64% of Rs 46,279 crore as on March 31, 2024 (foreign exchange risk is minimal given natural hedge available with 25-30% of revenue also coming in foreign currency in addition to use of derivative instruments for hedging). Additionally, long concessions for ports will support refinancing.
The leverage was elevated in the past due to debt-funded acquisitions. Going forward, the company is expected to continue its growth momentum, but leverage is expected to be capped at net debt to EBITDA below 2.5 times. Any significant debt-funded acquisition or higher-than-expected capex impacting financial risk profile will be a key monitorable.
Weakness: Susceptibility to trade related challenges and competition impacting volume growth: While APSEZ benefits from healthy volume handling capacity and its leadership position, any disruptions on trade routes given geopolitical or local issues and supply chain interference can hamper volume growth on ports. Also, adverse weather conditions such as cyclones can impact port operations for several days. Nevertheless, these risks are partially mitigated by APSEZ’s operational efficiency backed by robust infrastructure and lower turnaround time and strong relationships with customers.
APSEZ’s port network is surrounded by major state-owned and private ports. Though APSEZ has efficient operations, ports face strong competition from nearby major ports which may lead to cargo diversion to competing ports or downward pressure on tariffs. |
Liquidity: Superior Liquidity is supported by strong cash accrual, moderate bank limit utilisation and cash balance of Rs 7,725 crore as on December 31, 2024. Fund flow from operations over Rs 14,000 crore will remain adequate against debt repayments of Rs 6,000-8,500 crore. The capex (including acquisitions) requirements are expected in the range of Rs 11,000-15,000 crore. While most of the debt is non-amortising, refinancing risk is minimal given healthy cash accruals and APSEZ’s fund raising ability given relationships with multiple domestic and international banks as well as bond markets. |
Outlook: Stable Crisil Ratings believes APSEZ will benefit from its leading market position, healthy operating performance and robust port infrastructure in the medium term. |
Rating sensitivity factors Downward factors
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About the Company APSEZ is the largest private port operator in India with capacity of 633 MMT and handled 450 MMT cargo in fiscal 2025. APSEZ operates a portfolio of 15 domestic ports/terminals (12 operational, 2 under-development and 1 to-be-acquired) with international presence at 4 global ports/terminals (one operational port each in Haifa, Israel and Dar es salaam port, Tanzania, 1 maintenance contract in Australia and 1 under-development port terminal in Colombo, Sri Lanka).
Along with its port operations, it has its wide logistics network and offers various port based marine services to its owned ports/terminals as well as other ports. APSEZ has its logistics presence throughout the country with 117 marine flotillas, 132 trains, 12 multi-modal logistics parks, grain silos with capacity of 1.2 MMT, warehousing space of 31 lakh sq. ft. and trucking fleet of 936 units as of December 2024.
During the first 9 months of fiscal, revenue grew by 14% to Rs 22,590 crore backed by volume growth of 7% with operating margin of 62%. |
Key Financial Indicators (Crisil Ratings adjusted)
Note: The above-mentioned financials factors in Crisil Ratings adjustments. |
List of covenants USD 10-year bond of $500 million Debt/ Tangible Net Worth (TNW) =<3.0x
For Rs 100 crore and Rs 252 crore NCDs FACR > 1.1, Debt/TNW<=3.0x, DSCR>=1.10x
For other NCDs, FACR > 1 to 1.25x
For Rs 100 crore NCD at Ocean Sparkle Ltd (OSL) DSCR > 1.2x (Subsidiary), DSCR > 1.5x (OSL Consolidated) |
Any other information Any adverse regulatory/ government action or emerging issues around corporate governance and their impact on APSEZ will be a key monitorable. |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
# Yet to be issued |
Annexure – List of entities consolidated
As of March 31, 2024 |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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