Fitch Ratings has assigned
The proceeds will be used primarily for refinancing the debt of
The final rating follows the receipt of documents conforming to information already received and is in line with the expected rating assigned on
RATING RATIONALE
APSEZ announced its acquisition of a 75% stake in KPCL in
APSEZ's ratings are constrained by the sovereign's Country Ceiling. Should
KEY RATING DRIVERS
Risk Assessment: Fitch assesses APSEZ's revenue risk (volume) as 'Stronger', revenue risk (price) as 'Midrange', infrastructure development and renewal as 'Stronger' and debt structure as 'Midrange'. For more information, see the last full review published
PEER GROUP
PT Pelabuhan Indonesia II (
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
We do not expect positive rating action in the near term
A revision in the Indian sovereign's Outlook to Stable would indicate that the Country Ceiling is likely to remain at 'BBB-' and therefore our Outlook on APSEZ would also be revised to Stable
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Prolonged deterioration of Fitch's rating case adjusted net debt/EBITDAR to above 5.0x due to underperformance or a material reduction of average concession life
Lowering of
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
TRANSACTION SUMMARY
APSEZ accounted for approximately 17% of
FINANCIAL ANALYSIS
The Fitch base case assumes a 6% throughput decline in FY21 and an 11% rebound in FY22, in line with management's forecast. We assume throughput will rise by 6.7% per annum thereafter, in line with the CAGR of Indian GDP in the past five years. It implies a throughput CAGR of about 5% between FY20 and FY25. We have incorporated management's expectation of a delay in some capex in FY21. Our base case assumes INR123 billion in capex in FY21-FY25, of which INR23 billion will be spent in FY21. We also assume dividend payouts will be 20% of profit after tax (PAT) in FY21 and 25% thereafter. Our base case generates an average adjusted net debt/EBITDAR of 2.5x with a maximum of 3.2x.
Fitch's rating case assumes a 10% throughput decline in FY21, followed by a 10% recovery in FY22. We have applied a 10% haircut to the base case's throughput growth assumption thereafter. It implies a throughput CAGR of about 3% between FY20 and FY25. We also applied 10% stress to our base-case capex assumption. We assume dividend payouts will be 20% of PAT in FY21 and 25% afterwards. Our rating case generates an average adjusted net debt/EBITDAR of 3.2x with a maximum of 3.6x.
DATE OF RELEVANT COMMITTEE
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
APSEZ's underlying rating of 'bbb' is capped by
RATING ACTIONS
ENTITY/DEBT RATING PRIOR
LT
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LT BBB- New Rating BBB-(EXP)
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
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