Investors reacted positively to the news of global rating agency Moody’s upgradation of Adani Ports & Special Economic Zone (APSEZ), to ‘stable’ from ‘negative’. On Monday, the shares of Adani Ports & SEZ closed 3.05 per cent higher at ₹373.70, on the BSE. Intraday, the stock hit the 52-week high of ₹375.70.
APSEZ informed that Moody’s reaffirmed its investment grade rating of ‘BAA 3’ for APSEZ, thereby upgrading the outlook about the port operator to ‘stable’.
Last week, another global ratings agency Standard and Poor’s had revised the outlook on APSEZ from ‘negative’ to ‘stable’ on expectations of improved operating performance supported by healthy revenue growth. The company’s credit profile was earlier clouded by the related-party loan burden, the agencies noted.
Going forward, in the next 12-18 months, Moody’s expects APSEZ to continue focusing on re-balancing of volume mix towards higher container shipments, and maintaining a financial leverage that supports its Baa3 rating, including funds from operations (FFO)/debt staying above 15 per cent.
“The change in APSEZ’s ratings outlook to ‘stable’ reflects the stabilisation in the company’s operating performance and a decline in its financial leverage,” says Abhishek Tyagi, a Moody’s Vice President and Senior Analyst.
Fruits of initiatives“The weakened operating performance and financial metrics were key drivers behind the previous negative outlook,” Tyagi said, adding that APSEZ undertook several initiatives to address the challenges.
On the stock movement, Sacchitanand Uttekar - AVP - Technical (Equity), Tradebulls, said, “Adani Ports has finally managed to sustain above its March 2015 levels. The stock was one of the favourites during the upmove which commenced in September 2013, followed by the correction in the benchmark index. On the weekly scale, it has maintained its series of bullish structures well since the recovery period of February 2016 and is yet to enter the overbought territory.”
₹520, long-term target“We expect the stock to maintain its bullish sequence and a sustained monthly close above ₹356 would activate and validate the ‘V’ pattern breakout, which could unfold long-term targets beyond ₹520,” said Uttekar.
Adani owns and operates eight ports and terminal locations in Gujarat, Goa, Tamil Nadu, Andhra Pradesh and Odisha. Its Mundra Port in Gujarat is the largest port in India.