Gopalpur Port's Rating Upgraded 6 Notches After Acquisition By Adani Ports

Care Ratings has upgraded Gopalpur Port's ratings by six notches -- from BBB (Rating Watch Positive) to AA/Stable, post its acquisition by Adani Ports and SEZ in March.

In a statement, the rating agency said besides revising the rating, Gopalpur Ports Ltd (GPL) has also been removed from 'credit watch with positive implications' following change in ownership from Shapoorji Pallonji group to Adani Ports and Special Economic Zone Ltd (APSEZ) and subsequent prepayment of 64 per cent of external debt supported by funds infusion from the new promoter.

"The rating revision factors strong parentage of APSEZ, the largest port developer and operator in India with operations across 10 ports (including GPL) and three terminals handling 27 per cent of seaborne cargo of India," Care Ratings said.

APSEZ, it said, has a track record of turning around port assets including Dhamra port post-acquisition through a combination of logistics solutions offering, partnering with prominent shipping lines, and enhancing operating efficiency.

Furthermore, a large fleet of rakes and logistical equipment of APSEZ is expected to uplift GPL's operational efficiency and address evacuation challenges. Prepayment of external debt of Rs 800 crore has also strengthened GPL's debt-coverage indicators.

On March 25, 2024, APSEZ entered a definitive agreement to acquire 95 per cent stake of Gopalpur Ports from existing shareholders -- 56 per cent stake from SP Port Maintenance Pvt Ltd and 39 per cent stake from Orissa Stevedores Ltd.

The transaction was completed on October 11, 2024, and GPL is now a subsidiary of APSEZ.

"The rating continues to be underpinned by favourable port location, tariff flexibility, favourable industry outlook of the ports and strong liquidity profile with creation of a debt service reserve account (DSRA) for one quarter of the debt servicing," it said.

However, rating strengths are tempered by cargo and client concentration risks besides evacuation challenges reflected from operational performance of the first half of the current fiscal.

However, strong parentage and APSEZ's track record of turning around an acquired asset's performance augur well for GPL in the medium-term.

The rating continues to factor in competition from nearby ports, cargo volumes susceptible to varying economic cycles and exposure to volatile weather conditions.

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