The outlook is negative, it said. APSEZ’s underlying credit profile is assessed at bbb while its rating is capped by India’s country ceiling of BBB-minus.
Fitch said APSEZ’s underlying credit profile reflects its status as the largest commercial port operator in India with best-in-class operational efficiency.
Historically, the issuer has experienced throughput resilience in economic cycles including the current Covid-19-related downturn.
Cargo throughput for APSEZ rose by nearly 2 per cent (11 per cent if including its Krishnapatnam Port Company Ltd acquisition) in the financial year ended March 2021 (FY21) compared with nearly 5 per cent decrease for cargo throughput at all Indian ports.
About 56 per cent of APSEZ’s cargo is sticky, which includes contractual take-or-pay cargo, cargo that is unlikely to be diverted to other ports due to infrastructure restrictions like lack of facilities to handle crude oil and cargo from joint venture partners.
Fitch said APSEZ has timing flexibility in its expansion projects. Management has budgeted Rs 3,000 crore to 4,000 crore for capex in FY22 but this could be cut down to Rs 800 crore for maintenance only.
APSEZ has adequate liquidity to weather near-term challenges. The company had a readily available cash balance of Rs 5,300 crore at FYE21 against operating expenses of Rs 3,300 crore and interest cost of about Rs 2,100 crore.
The company has Rs 1,400 crore due in FY22 to be repaid or refinanced. As a member of one of the largest conglomerates in India spanning different sectors, it has strong banking relationships and established access to capital markets.
Fitch’s rating case projects adjusted net debt/EBITDAR will average 3.6x in FY22 to FY26. The ratio can also drop below 3x if management is able to maintain consolidated EBITDA margins of 65 per cent.
APSEZ is the largest commercial port operator in India. It handled about 25 per cent of the country’s seaborne cargo in FY21 through the 12 ports.
