Adani Ports and Special Economic Zone Ltd. (APSEZ), India's largest private port operator, has received a significant long-term issuer credit rating upgrade from S&P Global Ratings. The global ratings agency elevated APSEZ's rating to 'BBB' from 'BBB-', signaling confidence in the company's financial health and operational strategy.
S&P cited several key factors for the upgrade, including the company's consistently strong operating performance, its disciplined approach to managing leverage, and its demonstrated capability to finance an ambitious expansion program without unduly weakening its balance sheet.
Strong Performance Fuels Upgrade
The assessment highlighted that Adani Ports' robust operating performance is expected to continue over the next 12-24 months. This strong performance is projected to support a steady net debt to EBITDA ratio of approximately 2.6 times, even amidst substantial growth-related capital expenditure.
The company is anticipated to benefit from significant earnings growth, driven by increased capacity at key facilities like Vizhinjam port and Colombo port, alongside a full year of earnings contribution from NQXT in Australia. These factors are expected to bolster cargo volume growth by about 18% in fiscal 2027, followed by a steady 7%-8% over the subsequent two years.
Strategic Expansion and Stable Outlook
S&P projects Adani Ports' capital expenditure (capex) to increase to Rs 18,000 crore annually for fiscals 2027-2028, further rising to Rs 20,000 crore in fiscal 2029, up from previous levels of Rs 13,000 crore. Approximately 65% of this forecast spending is earmarked for expanding domestic ports, particularly to ramp up container terminals. The remaining funds will be allocated to logistics, marine services, and exploring potential international growth opportunities.
The rating agency also expressed its expectation that Adani Ports will maintain its policy of not undertaking significant related-party transactions outside its normal course of business. The outlook on the rating remains stable, reflecting S&P's view that APSEZ's diversified asset portfolio and strong operational execution will generate robust cash flows over the coming 12-24 months.