Adani Ports and Special Economic Zone (APSEZ) rallied 4.21% to Rs 752 after the company said it is acquiring the 58.1% stake held by DVS Raju and family in Gangavaram Port (GPL).
The acquisition is valued at Rs 3,604 crore and subject to regulatory approvals. APSEZ had announced acquisition of Warburg Pincus's 31.5% stake in GPL on 3 March 2021 and together with this acquisition, APSEZ would have 89.6% stake in GPL. This acquisition continues the strategy of APSEZ to transform into a pan India cargo utility from a predominantly west coast port company.GPL is located in the northern part of Andhra Pradesh next to Vizag Port. It is the second largest non-major port in Andhra Pradesh with a 64 MMT 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.
Currently, GPL operates 9 berths and has free hold land of ~1,800 acres. With a master plan capacity for 250 MMTPA with 31 berths, GPL has sufficient headroom to support future growth. It 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 8 states across eastern, southern and central India.
In FY20, GPL had a cargo volume of 34.5 MMT, revenue of Rs 1,082 crore, EBITDA of Rs 634 crore (59% margin) and PAT of Rs 516 crore. GPL is debt free with a cash balance of over Rs 500 crore. The company has a paid up share capital of 51.7 crore share of which 58.1% is owned by DVS Raju and Family (promoter), 10.4% by Government of Andhra Pradesh and 31.5% by Warburg Pincus.
APSEZ announced acquisition of 31.5% stake of Warburg Pincus on 3 March 2021 for Rs 120 per share and shall acquire the DVS Raju stake of about 30 crore shares (58.1%) also at Rs 120 per share which works out to a consideration of Rs 3,604 crore. 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.
APSEZ, a part of globally diversified Adani Group, is the largest port developer and operator in India. On a consolidated basis, the company posted a 16.23% increase in net profit to Rs 1576.53 crore on 11.59% rise in total income to Rs 4274.49 crore in Q3 FY21 over Q3 FY20.
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