Adani Ports rallies 4%; market cap hits Rs 3 tn on strong cargo volumes

Shares of Adani Ports and Special Economic Zone (APSEZ) hit a new high of Rs 1,425, as they rallied 4 per cent on the BSE in Tuesday’s intra-day trade. This came after the company handled its highest ever monthly cargo volumes (inclusive international ports) of over 38 million metric tonnes (MMT) in March 2024.  

In the past two trading days, the stock of Adani Group company has surged 6 per cent. It was quoting higher for the eight straight days, soaring 15 per cent during this period. In the past five months, the stock zoomed 84 per cent.

A sharp rally in the stock price of the company has seen the market capitalisation (market cap) of APSEZ cross Rs 3.04 trillion for the first time. At 09:43 am; with a market cap of Rs 3.03 trillion, APSEZ was quoting 2.2 per cent higher at Rs 1,406.30 on the BSE. In comparison, the S&P BSE Sensex was up 0.05 per cent at 74,053.

Meanwhile, APSEZ, India’s largest ports and logistics company, handled 420 million metric tonne (MMT) cargo, an increase of 24 per cent Y-o-Y in FY24 (including international ports). With domestic ports contributing over 408 MMT cargo. The company surpassed its cargo volume guidance of 370 MMT to 390 MMT provided at the start of the financial year.

Last week, APSEZ had announced acquisition of 95 per cent stake in Gopalpur Port (GPL) at an enterprise value (EV) of Rs 3,080 crore (13xFY24 EV/EBITDA; 10xFY25 EV/EBITDA). GPL is a bulk port, located on the East coast of India with 20 million tonne per annum handling capacity, 30 year concession (extendable upto 2056) and over 500 acres of leased land parcel.

Given APSEZ’s expertise in ramping up volume and improving EBITDA margins through cost/ operational efficiencies and de-bottlenecking, analysts at JM Financial Institutional Securities believe GPL will be a value accretive acquisition for the company. GPL acquisition, though a small one (less than 3 per cent of APSEZ consolidated volumes), will be the 6th port on east coast (Dhamra, Gangavaram, Krishnapatnam, Kattupalli and Ennore) and will further deepen its reach in the long term.

Meanwhile, on March 23, Fitch Ratings affirmed APSEZ’s long-term foreign-currency Issuer Default Rating (IDR) at 'BBB-' with stable outlook.

The affirmation reflects Fitch's view that the Hindenburg report alleging governance issues at the Adani group has a limited near-term impact on APSEZ's cost of funding and access at the current rating level. The rating agency expects APSEZ's financial flexibility to remain supported by its robust portfolio of seaports, which comprises strategically located assets with best-in-class operational efficiency and an adequate liquidity position. APSEZ's internal cash surplus is sufficient to cover its near-term operations and debt obligations as well as its budgeted capex.

“We expect low contagion risk on APSEZ, if any, from the Indian securities regulator's investigation, and will treat any material adverse development with a higher-than-expected impact on APSEZ's financial flexibility as an event risk. In the longer term, maintaining strong access to financing and cost of funding will be key drivers for APSEZ's ratings,” Fitch Ratings said in rationale.