Adani Ports has acquired a 75% stake in Krishnapatnam Port at an enterprise value of Rs.136mn. Port is large, established asset with 64mn t of capacity and 54mn t of FY19
volume. Port is well connected by rail/road, has ample land and expands ADSEZ’s reach to east coast and scales up its all-India port volume share to 27% from 22% currently. Adani Ports has a good track record of scaling up acquisitions.
Dependence on coal is the key risk as coal forms large part of the cargo (~55% in FY19) and isexpected to grow by another 20mn t in next 5 years. Lower plant load can reduce demand for coal which would affect ports margins.
Acquisition opens up the 300-mn-ton Tamil Nadu & Andhra Pradesh market for ADSE. KPCL’s projected FCFF over five years will more than cover the deal equity.
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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