Chennai, Jan 15 (.) Moody’s Ratings (Moody’s) has today affirmed the Adani Ports and Special Economic Zone Limited’s (APSEZ) Baa3 issuer and senior unsecured ratings.
At the same time, we have revised the outlook on APSEZ’s ratings to stable from negative., it said.
“The stable outlook reflects our expectation that APSEZ would maintain solid access to liquidity and a credit profile in line with its Baa3 rating over the next 12-18 months. APSEZ’s robust financial profile is supported by the discretionary nature of its planned capital spending for growth and funding access,” Moody’s said.
According to Moody’s the affirmation of APSEZ’s ratings further captures the company’s strong market position as India’s largest port developer and operator by cargo volume.
“We expect APSEZ’s cargo throughput to increase in fiscal 2026, on the back of contribution from recently commissioned ports. That said, throughput growth during the year will likely slow down as a result of the elevated trade tensions with the US as well as operational disruptions as a result of the India-Pakistan conflict during the June quarter,” Moody’s said.
The credit rating agency expects the port’s funds from operations (FFO) to debt to moderate to the low to mid-20% range over the next 2-3 years as a result of debt-funded capital expenditure, versus the minimum tolerance level of 14%.
Over the medium term, Moody’s expect APSEZ’s credit profile to be driven by its growth initiatives as well as it funding approach for the related capital spending requirements.
“We assume that any strategic acquisitions will be funded in a manner consistent with the debt incurrence covenant, which requires debt/net worth to remain below 3 times. Our base case scenario does not include additional capital spending potentially required to develop new ports in Maharashtra, per two non-binding memorandum of understandings APSEZ has entered into with the State authorities,” Moody’s said.
In November 2024, the chairman of Adani Green Energy Limited (AGEL), along with two other senior executives, were indicted by the US Attorney’s Office in a criminal case, while the US Securities and Exchange Commission initiated civil proceedings against them. The charges and allegations include: (1) conspiracy to commit securities and wire fraud; (2) securities fraud involving misleading statements; and (3) omission to disclose material facts in certain statements.
“Although the allegations and the charges pertain to AGEL’s senior executives, one of the individuals has a prominent role as chairman as well as the controlling shareholder of APSEZ. Based on our understanding of the key project documents, we expect the contagion risk from the ongoing proceedings to the operation of APSEZ to be manageable within the rating,” the Moody’s said.
Since the initial filing, various Adani Group entities have continued to demonstrate access to liquidity – for refinancing, hedge rollovers and growth funding. At the same time, management confirmed that there were no material disruption to Group entities’ operations – including at APSEZ – as a result of the indictment. That said, negative outcome from the indictment proceedings or further evidence of material corporate governance weaknesses – if materialized – could still have an adverse impact on the group’s ability to execute its growth initiatives or its funding access in the future.
. VJ SAS