After Adani Total Gas, ICRA revises outlook on another Adani firm to negative

Adani GroupFinancial flexibility worsened after the Hindenburg Report on 24 January. Significant reports of short sellers led to a sharp fall in share prices and a rise in yields on international bonds raised by group entities.

ICRA noted that APSEZL’s track record of refinancing a substantial portion of its debt with long-term borrowings (mostly from overseas debt capital markets) at low interest rates and strong financial resilience of the group were key credit strengths on which has had an adverse effect.

Moody’s backed rating agency expects increased risk of regulatory/legal scrutiny on group entities and will monitor its impact on the credit quality of APSEZL.

being told, ICRA Monitor the Group’s ability to raise funds from the domestic/global market in the form of equity/debt at competitive rates.

However, ICRA also takes into account Adani PortsLiquidity profile remains strong and a major repayment of international bonds of $650 million is due only in FY2025.

With regard to rating reaffirmation, ICRA’s action continues to factor in APSEZL’s strong business profile, marked by its favorable operating characteristics, geographically spread footprint, diverse cargo mix and long-term customer tie-ups.

ICRA said, “The company has been acquiring key port assets as well as strategic assets across the logistics volume chain over the past few years. It has also strengthened its business footprint by improving asset and cargo diversification, expanding presence in key hinterland in domestic profile. Market, and integrating port assets with other logistics segments.”

Adani Ports is expected to account for ~24% of the total cargo handled at Indian ports in FY2022, with ~43% share in the container segment and ~35% share in coal.

ICRA’s rating action has also taken note of the decline in the share of coal in the overall cargo mix over the years, and is expected to moderate further going forward.

It said, “Increased asset and cargo diversification mitigates risks associated with demand cyclicality in specific cargo segments, structural risks arising from expected moderation in coal imports over the medium to long term, and any asset specific/restricted assets at specific locations.” Reduces incident risk.”

Further, in its note, ICRA highlighted that the company is working on several projects including a greenfield project at Vizhinjam in Kerala, which have been delayed due to various issues including protests.

While the company is exposed to project execution risks, ICRA said, it “notes that the impact on the overall credit profile of the company is mitigated by the relatively small size of such projects as compared to the overall asset base and net worth”. takes into account the in-principle approval obtained for Viability Gap Funding (VGF) for the project from ICRA.”

Though Adani Ports has maintained an aggressive acquisition policy and capex plans in recent years, including capex for joint venture projects, however, in view of recent developments, the company has revised its capex plans — – reducing it 4,000-4,500 cr for FY24 6,000-8,000 crores. Also, the management has directed that the company will partially prepay its debt in FY2024 to achieve a net debt/OPBDITA of 2.5x.

“Any potential acquisition will take into account the leverage guidance,” ICRA said. It added, “Any significant debt-financed acquisition that would impact the deleveraging plans would have rating sensitivity.”