Adani Ports to acquire controlling stake in Gangavaram Port for Rs 3,604 cr

Gautam Adani-led Adani Ports and Special Economic Zone (APSEZ) Ltd on Tuesday said it is acquiring the 58.1 per cent stake held by DVS Raju and family in Gangavaram Port Limited (GPL) for Rs 3,604 crore.

The acquisition is subject to regulatory approvals.

Early this month, the company announced the acquisition of Warburg Pincus’s 31.5 per cent stake in GPL for Rs 1,954 crore.

Together with this acquisition, APSEZ would now have an 89.6 per cent stake in GPL.

Strengthening its inorganic growth route to increase capacity across the 7,500 km coastline of India, Adani Ports in FY21 has made some key acqusitions such as completion of acquisition of Dighi Port for Rs 705 crore in February and Krishnapatnam port for an enterprise value of Rs 12,000 crore in October.

“Every additional node that we are able to add to our network allows us to deliver a greater level of integrated and enhanced solutions to our customers. In this context, GPL is a tremendous addition to our portfolio. The associated hinterland we will now be able to tap into is one of the fastest growing in the eastern region and with the logistic synergies APSEZ brings to the table, GPL has a potential to become a 250 MMT port,” Karan Adani, chief executive officer and whole time director at APSEZ was quoted as saying.

Meanwhile, in its release, Adani Ports stated that GPL, located in the northern part of Andhra Pradesh next to Vizag Port, is the second largest non-major port in Andhra Pradesh with a 64 million tonne capacity established under concession from Government of Andhra Pradesh (GoAP) that extends till 2059.

It is an all-weather, deep water, multipurpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT (deadweight tonne). Currently, GPL operates nine berths and has free hold land of 1,800 acres.

With a master plan capacity for 250 million tonne with 31 berths, GPL has sufficient headroom to support future growth, it said.

GPL handles a diverse mix of dry and bulk commodities including coal, iron ore, fertilizer, limestone, bauxite, sugar, alumina, and steel. GPL is the gateway port for a hinterland spread over eight states across eastern, southern and central India.

In FY20, GPL had a cargo volume of 34.5 million tonne, revenue of Rs 1,082 crore, EBITDA of Rs 634 crore (59 percent margin) and net profit of  Rs 516 core, GPL is debt free with a cash balance of over Rs 500 crore.

APSEZ announcement of acquisition of DVS Raju stake of  Rs 30 crore shares (58.1 percent) works out at Rs 120 per share .

Putting both the stake buys together, the transaction implies EV/EBITDA multiple of 8.9x and P/E multiple of 12.0x (based on FY20 figures) and is a value accretive transaction for APSEZ shareholders, informed the company in its statement today.