WASHINGTON: Adani Ports and SEZ shares slumped nearly 8 per cent on Thursday, following Moody’s decision to revise the company’s rating outlook to “negative” from “stable”. Billionaire Gautam Adani-controlled Adani Ports is India’s largest port developer.
“The change in APSEZ’s ratings outlook to negative reflects the company’s lower volume growth, mainly due to lower coal volumes, and an increase in capital expenditure and financial leverage, when compared to our previous expectations,” said Abhishek Tyagi of Moody’s. Traffic at Adani’s Mundra Port fell 3 per cent year-on-year in the March quarter because of sharp fall in coal volumes. It was the worst traffic performance by the company in the last 10 quarters, according to analysts.
Adani Ports’ coal cargo volumes have come down sharply due to falling domestic coal imports. Besides, some state-owned utilities have shifted their cargo to government-owned ports, leading to material impact on the growth trajectory of APSEZ, Moody’s noted. “Such a decline reduces the company’s ratings headroom,” Mr Tyagi said.
During FY16, APSEZ’s overall cargo growth grew by just 5 per cent year-on-year, mainly due to 8 per cent year-on-year decline in coal handled by ASPEZ’s ports. The tepid volume growth in FY16 was accompanied by higher debt due to increase in capex and loans and advances, Moody’s noted. Adani Ports’ net debt rose by Rs 3,500 crore to Rs 20,000 crore (1.5x equity) in FY16.
APSEZ’s credit metrics will likely remain under pressure because of the company’s capex plans and the payment due on its acquisition of Katupalli port, the rating agency noted. Adani Port shares have fallen by nearly 26 per cent this month, mainly on account of company’s weak fourth quarter earnings. Adani Ports shares closed 6.36 per cent lower at Rs 171.55. The stock was the top Nifty50 loser.
