Stake buy in KPCL to increase Adani Port's market share: Moody's

Acquisition of Krishnapatnam Port Company by Adani Ports and Special Economic Zone (APSEZ) will increase the latter's market share and diversity, Moody's Investors Service said on Tuesday.

The analysis comes after APSEZ's acquisition of 75 per cent stake in debt-laden Krishnapatnam Port Company Ltd (KPCL) in Andhra Pradesh for Rs 5,625 crore in an all-cash deal.

Moody's said the acquisition is in line with APSEZ's target of throughput volumes of 400 MT by fiscal 2025.

KPCL is a multi-cargo port that registered throughput volumes of 54.4 million tonne in 2018-19. KPCL is the second-largest private port in India by volume after APSEZ's Mundra port.

"The addition of KPCL to APSEZ portfolio will increase APSEZ's market share and its diversity, both geographically and in its cargo composition," Moody's said.

It pointed out that APSEZ's leverage, as measured by funds from operations/debt, should remain above 15-18 per cent after the acquisition.

"While APSEZ's outstanding consolidated debt will significantly increase by 18 -20 per cent as a result of the acquisition, the refinancing risk is manageable because of the cash flow visibility from the group's assets, staggered nature of the debt maturities and diversified funding sources," said Abhishek Tyagi, a Moody's Vice President and Senior Analyst.

"In addition, the slightly weaker metrics post acquisition will be counterbalanced by KPCL's strong positioning and market share on the east coast of India," added Tyagi.