Adani buys remaining 25% in Krishnapatnam port

picture credits- daily FT

Adani Ports and Special Economic Zone Ltd on Monday informed, that it has acquired the remaining 25 per cent stake in Krishnapatnam Port Ltd from Vishwasamudra Holdings. This has made the port a wholly-owned subsidiary of the company as the nation’s largest port operator aims to increase its footprint in Andhra Pradesh.

The company had signed an agreement with the Vishwa Samudra Holdings Pvt. In order to buy the balance 25% stake in Krishnapatnam Port for a total amount of Rs 2,800 crore. It is to be noted that the Adani Ports already owned 75% in Krishnapatnam Port. Reportedly, the transaction is expected to be completed within 3 months.

picture credits- value research

However, the acquisition is subject to approvals under applicable laws, including approval by the Competition Commission of India. The filling stated that “The acquisition implies an enterprise value of Rs 13,675 crore, implying an EV/FY21 Ebitda multiple of 10.3x,”.

Last month, APSEZ had stated that it would acquire 58.1 per cent stake in the Gangavaram Port, located in the northern part of Andhra Pradesh, from DVS Raju and family for a total amount of Rs 3,604 crore, taking its total stake in the port to 89.6 per cent.

It is to be noted that the Krishnapatnam Port is located on the east coast of India in Nellore district of Andhra Pradesh, which is close to the border between Andhra Pradesh and Tamil Nadu. Reportedly, it is an all-weather, deep water port with multi cargo facility and a current capacity of 64 MMTPA. APSEZ stated that “With a waterfront of 20 km and 6,800 acres of land, Krishnapatnam Port has a master plan capacity of 300 MMTPA and a 50-year concession,”.

The port is expected to have a total volume of 38 MMT, revenue of Rs 1,840 crore and EBITDA of Rs 1,325 crore in fiscal year 2020-21. In 2019-20 its revenue stood at Rs 1,975 crore and Rs 2,394 crore in 2018-19. Since the acquisition, Krishnapatnam Port has focused on business process re-engineering, leading to Ebitda margin improving to 72% in FY21 from 57% in FY20.

Karan Adani, APSEZ CEO stated that “The consolidation of our ownership in Krishnapatnam Port reinforces APSEZ’s stride towards 500 MMT by 2025 and achieving our broader strategy of cargo parity between west and east coasts of India. Krishnapatnam Port is on track to handle double the traffic by 2025 and will deliver high growth through a multi-product and cargo enhancement strategy while enhancing return on capital employed,”.

Karan Adani, also expressed his confidence about doubling the port’s amount by tripling its EBITDA by 2025. He additionally stated that APSEZ will transform Krishnapatnam into a manufacturing and industrial hub.

Reportedly, on Monday, shares of APSEZ had closed 0.80 per cent higher at Rs 742.15 on the BSE.