S&P Revises Outlook For Adani Ports To 'Positive' From 'Stable'

S&P has revised the ratings of Adani Ports and Special Economic Zone Ltd., while revising its outlook to 'Positive' from 'Stable', as it expects the company's improving financials to help accommodate high capital expenditure. The rating agency affirmed a 'BBB-' long-term issuer credit rating on APSEZ and the 'BBB-' issue ratings on its senior unsecured notes.

The global rating agency said that strong asset quality and a growing strategic network of ports across the east and west coasts of India will continue to support steady cargo volume growth of 8%-12% over the next two years.

"This is due to the company's well-situated origin and destination ports, high utilisation rates of about 67% compared with peers, and increasing provision of end-to-end logistics solutions to customers. A good mix of higher-margin container volumes will also support robust Ebitda margins of 58%-60%," the agency said.

According to the agency, APSEZ's diversified portfolio reduces concentration in Mundra port, although a concession renewal before 2031 will be a key watchpoint.

S&P Ratings expects that Adani Ports' improved financials can accommodate high growth spending. Strong cargo volume and revenue growth of about 28% in fiscal 2024, as well as lower gross debt, led to deleveraging during the year.

"We expect APSEZ to maintain a steady improvement in leverage with a ratio of net debt to Ebitda of 2.7 times-2.9 times over fiscals 2025 and 2026. Robust earnings growth in the company's ports and logistics businesses, led by higher cargo volume, tariff escalations, and commissioning of new projects will support this," the agency said.

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