Soaring stock of Adani Ports and SEZ (APSEZ) is set to potentially benefit the promoters, who have 77.5 per cent stake in the company now, and have to dilute their stake to at least 75 per cent by June to meet the SEBI norms.
APSEZ share price was at Rs 145.8 on Tuesday, up 6.5 per cent. On Monday, APSEZ stock had moved up by about five per cent, after the announcement that promoter family will acquire the Australian port terminal and along with it, the debt of Rs 11,000 crore.
The stock’s 52-week high and low are Rs 157.8 and Rs 105.15.
On Monday, APSEZ board approved a proposal to sell most of the stake in its Abbott Point Terminal in Australia to the Adani family. The move would reduce a debt of Rs 11,000 crore from APSEZ’s balance sheet, and improve profitability of the firm by reducing the firm’s interest costs.
By selling off almost the entire stake in the Australian asset, APSEZ will be able to reduce the debt-to-equity ratio to 1.2 from 2.3.
To fund the acquisition of Abbott Point Terminal, a port in Australia which will carry coal from Adani’s coal mines in Australia, APSEZ had a loan of Rs 11,000 crore. Out of the total loan, APSEZ had provided a corporate guarantee for Rs 4,500 crore while the remaining loan was backed by port assets.
The move will help improve the profitability of the company and also help the firm expand its footprint in India, the company stated.
According to Nomura, the sale of Abbott Point to promoter group would put to rest investor concerns relating to high gearing of Adani Ports, and the scepticism that Adani Ports was being used by the group to create port assets in Australia for potentially fuelling Promoter Group’s ambition (for coal mines, etc) and that too at potentially lower IRRs (internal rate of returns).
It maintains a buy call in APSEZ with a price target of Rs 172.