Adani Ports Unit Receives Credit Rating Upgrade from CareEdge Following Acquisition

Adani Ports and Special Economic Zone Ltd. has announced that its subsidiary, Gopalpur Ports Ltd. (GPL), has received a significant credit rating upgrade from CareEdge. This revision shifts the rating from CARE BBB (RWP) to CARE AA, which is considered a six-notch increase. This upgrade comes in the wake of Adani Ports' acquisition of GPL in March 2024, transitioning ownership from the Shapoorji Pallonji Group.

Improved Operational Efficiency and Financial Position

CareEdge has attributed the credit rating increase to the robust support from Adani Ports, which has a strong record of improving port operations. The agency specifically noted the successful turnaround of Dhamra Port following its acquisition, showcasing Adani's capability in enhancing operational efficiencies. Under Adani's management, Gopalpur Ports has seen better cargo handling and overall operational improvements.

Debt Management Strategies

A critical aspect of the upgrade is the strategic prepayment of external debts. The Adani Group has successfully cleared around 64% of GPL’s external debts, reflecting the company's proactive capital management strategy. This move is expected to improve the port's debt coverage ratios, thereby solidifying its financial standing in the maritime sector.

Logistics and Operational Advantages

Adani Ports operates a substantial network, managing ten ports and three terminals that collectively handle nearly 27% of India’s seaborne cargo. CareEdge emphasized that the extensive fleet of rakes and logistical equipment available to Adani Ports is likely to significantly boost operational efficiency at GPL, helping to overcome prior challenges concerning cargo evacuation. Additionally, the port’s favorable location, tariff flexibility, and strong liquidity, reinforced by the establishment of a Debt Service Reserve Account, were highlighted as further contributing factors to its upgraded rating.

Market Response and Stock Performance

Following the announcement, Adani Ports’ share price saw a positive response in the market. The stock price increased by 1.82% to reach Rs 1,211.65, although it later stabilized at a 0.89% gain at Rs 1,200.65 around 1:00 p.m. on that day, aligning with an overall 0.20% rise in the NSE Nifty 50.

Over the past year, the share price has experienced a notable rise of 36.65%. Trading volume on that day was reported to be 0.54 times the 30-day average, with a relative strength index at 41.65. Of the 18 analysts monitoring the company, 16 maintain a 'buy' recommendation, while two advise to hold. No analysts have rated the stock as a 'sell.' The average price target set by analysts over the next 12 months indicates a potential upside of 43.7%.

Adani, Ports, Upgrade