Adani Ports shares fall most in two weeks as firm's $2.5-bn deal for Australian terminal weighs

Adani Ports shares fall most in two weeks with Abbot Point deal weighing down on earnings per share

Adani Ports and Special Economic Zone's shares declined as much as 4 percent on April 21, during early trade, marking its lowest since April 7. This, after the firm said last week that it will buy an Australian deep-water coal export facility for an enterprise value of about A$3.98 billion ($2.54 billion), as it aims to grow its global presence. Nuvama Wealth Management noted that the company's all-share deal to buy Abbot Point Port is potentially diluting its earnings per share.

At 10:25 AM, Adani Ports shares were trading at Rs 1,225 apiece, marking a loss of 2.72 percent

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India’s largest private port operator on Thursday had announced its $2.4 billion non-cash acquisition of a coal export terminal in Australia aimed at expanding its presence in the region.

As a part of the deal, Adani Port will issue 143.8 million shares to Carmichael Rail and Port Singapore Holdings to buy Abbot Point Port Holdings, which owns and operates the North Queensland Export Terminal, the port operator said.

North Queensland Export Terminal, which is a deep-water coal export terminal with a capacity of 50 million tonnes per annum, was purchased by Adani Ports in 2011 before it was sold to the Adani family in 2013 in a $2 billion deal.

As part of the deal, Adani Ports will also assume other non-core assets and liabilities on Abbot Point Port's balance sheet, which the company will realize within a few months of the deal, it added.

The terminal, which is located on Australia's east coast, is well-positioned for strong growth, supported by rising capacity, medium-term contract renewals, and future opportunities in green hydrogen exports, Adani Ports CEO Ashwani Gupta said.

Meanwhile, Motilal Oswal has maintained its rating of 'Buy' on Adani Ports with a target price of Rs 1,560. As per the brokerage, the company is targeting higher contracted capacity and operational synergies which is very likely to boost its EBITDA. Therefore, the brokerage expects 10 percent growth in cargo volume during FY24 - 27, and this could lead 14 / 16 /21 percent CAGR in revenue / EBITDA / PAT, respectively.

Back in 2011, APSEZ acquired the North Queensland Export Terminal (NQXT) at Abbott Point for $2 billion. Two years later, in 2013, the Adani family bought the same asset from APSEZ for the initial $2 billion plus the invested capital, enabling APSEZ to concentrate on its Indian operations. However, in the past two years, APSEZ has shifted its strategy towards dominating maritime routes anticipating increased Indian trade.

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