Adani Ports’ international expansion gets a leg up with Abbot Point deal
Adani Ports and Special Economic Zone Ltd is in better shape now than over a decade ago, when it acquired the Abbot Point Port terminal on a 99-year lease from the Queensland government in FY12. But Adani had to sell it in 2013 to the promoter group to improve its net debt-to-Equity ratio that was as high as 3.41x at the end of FY12.
Last week, Adani Ports announced the acquisition of Abbot Point Port Holdings Pte Ltd from the promoter group in a related-party transaction, aligning with its target of achieving the cargo handling capacity of 1,000 mtpa (million tonnes per annum), including 150 mtpa of international capacity by 2030.
A strong balance sheet enables the acquisition now versus the past, said Jefferies India analysts. The balance sheet is strong now (0.6x net debt-to-equity FY25 estimates), and ₹1.4 trillion cash flow from operations over FY25-30 (estimates) can fund ₹80,000 crore capex, added Jefferies in a 21 April report.
Abbot Point operates the North Queensland Export Terminal (NQXT), a dedicated export terminal connecting the resource-rich state of Queensland with the consumption centres across South Asia.
The balance-sheet boost
The acquisition would add about 7% to Adani Ports’ Ebitda at a similar 7% additional equity stake sale, according to Kotak Institutional Equities. Ebitda is short for earnings before interest, depreciation, and amortisation.
Adani Ports is targeting a 15% compound annual growth rate (CAGR) in Ebitda from the asset over the next four years, aided by higher pricing from existing contracts, up for renewals after 15 years of agreement and the addition of new customers for offtake from new mines that are opening up.
NQXT’s FY25 revenue stood at A$349 million and Ebitda margin was at 65%. Its cargo handled in FY25 was 35 million tonnes, or about 8% of Adani Ports’ throughput. Adani Ports would also acquire certain non-core assets held by Abbot Port with nearly equal liabilities, which it expects to dispose of after the acquisition is complete, without any impact on financials.
The port’s capacity is 50 mtpa, which can be increased to 120 mtpa. Of this, 80% is contracted under long-term ‘take or pay’ agreement that increases the share of assured offtake business.
“The said transaction does increase the quotient of sticky take or pay business for APSEZ in a AAA-rated economy and potentially creates better grounds for refinancing existing loans of APSEZ at better rates,” said Kotak’s analysts in a report on 20 April. Adani Port’s domestic capacity stood at 633 mtpa at FY25-end, whereas international capacity goes up to 80 mtpa after the acquisition, spread across four ports.
This is an all-equity deal at an enterprise value of A$3.98 billion (about ₹21,600 crore), including A$0.8 billion of debt and will increase the promoter’s shareholding in the company by 2.1%, from the existing 65.9%. The acquisition implies an enterprise value of 17x FY25 estimated Ebitda—the same valuation at which it was sold to the promoter group in 2013. This is also similar to Adani Ports’ shares valuations that trade at an enterprise value of 17.1x FY25 estimated Ebitda, as per a Bloomberg consensus.
Muted near-term impact
Notably, earnings gains may be lower in the initial phase because of a high asset base. “(We) expect the acquisition to be Ebitda positive, but due to high depreciation, accretion to net profit may be marginal in the near term,” said Elara Securities (India).
Also, there are risks emanating from uncertainties over the impact of US tariffs and the potential slowing down of China, which accounted for 35% of Abbot’s total tonnage in FY25. Further, the company’s ability to secure higher prices during contract renewals is crucial to improve the gains from this acquisition.
