India's largest private port player Adani Ports and Special Economic Zone Ltd has received a rating upgrade from S&P Global Ratings. The long-term issuer credit rating has been upgraded to 'BBB' from 'BBB-'. The global ratings agency cited the company's robust operating performance, disciplined leverage policy and ability to fund an ambitious expansion programme without significantly weakening its balance sheet.

According to the assessment, Adani Ports' strong operating performance over the next 12-24 months will support a steady ratio of net debt to EBITDA of about 2.6 times, even with high spending on growth.

The company will continue to benefit from strong earnings growth due to higher capacity at Vizhinjam port and Colombo port, as well as a full year of earnings contribution by NQXT in Australia. This will support cargo volume growth of about 18% in fiscal 2027 and 7%-8% over the subsequent two years.

"The stable rating outlook reflects our view that Adani Ports' diversified portfolio of assets and strong operating performance will drive robust cash flows over the next 12-24 months," said the global agency. 

S&P expects that Adani Ports will not undertake significant related-party transactions outside the normal course of business.

S&P expects capital expenditure (capex) of the firm to increase to Rs 18,000 crore annually over fiscals 2027-2028 (ended March 31) and Rs 20,000 crore in fiscal 2029, from past levels of Rs 13,000 crore. 

"About 65% of forecast spending relates to the expansion of domestic ports, particularly on ramping up container terminals. The remainder will be spent on logistics, marine services, and potential growth opportunities in international markets. We view the latter largely as discretionary spending," said S&P.