Adani Ports and Special Economic Zone Ltd. has received an 'AAA' rating with stable outlook on long-term facilities and a 'A1+' rating for short-term facilities from CareEdge Ratings.
To arrive at the ratings, the agency has adopted a consolidated approach due to close strategic, operational and financial linkages among the port company's subsidiaries and its joint ventures, it said in a note on Tuesday.
The ratings assigned to Adani Ports instruments and bank facilities considers its market leadership position in the Indian ports sector, with operations across nine ports and three terminals handling around 27% of seaborne cargo of India, integrated business model with advanced transport infrastructure in rail logistics segment as well as connectivity to dedicated freight corridor, dominant contribution of sticky cargo in overall volumes, and diversified cargo mix, besides flexibility in determining tariff at its ports, the rating agency said.
The stable outlook reflects that the company will continue to generate healthy cash flows and maintain leverage threshold, due to its dominant position in the domestic ports and logistics infrastructure sector having a favourable demand outlook, CareEdge said.
The ratings further derive strength from healthy growth in scale of operations, steady profit before interest, lease, depreciation and taxation margin, demonstrated execution capabilities of Adani Ports in the port sector, and robust liquidity, the note said.
"It is pertinent to note that large proportion of long-term debt is denominated in foreign currency carrying fixed rate of interest, in addition to adequate forex debt coverage through natural hedge from dollar-denominated income," according to CareEdge.
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