Global ratings agency Moody's Investors Service revised up its outlook on Adani Ports and SEZ (APSEZ) to stable from negative on Monday on stabilisation in operative performance and dip in leverage.
The action by Moody's comes four days after a similar call by Standard and Poor's. Moody's has affirmed the issuer and senior unsecured ratings at Baa3 for the company.
"The change in APSEZ's ratings outlook to stable reflects the stabilisation in the company's operating performance and a decline in its financial leverage," Moody's vice president Abhishek Tyagi said.
The negative outlook was driven by weakened operating performance and financial metrics, he said, adding APSEZ has taken a slew of initiatives to improve on the same.
Just like the commentary from S&P, related party loans also found a mention in the Moody's statement today with the agency saying there has been a "material reduction" in lending which was "clouding" the credit profile previously.
Fitch Ratings, which also came out with a rating on a proposed bond raising by the company with a "BBB-(EXP)" rating, said the company management recovered Rs.3,500 crore of related-party loans, advances and deposits outstanding in the financial year 2016-17.
The agency said the company is well-positioned to benefit from India's growth and related cargo opportunities, but "financial discipline" is key to the rating calls.
"The stable Outlook on the rating reflects management's commitment to contain outflows. Failure to maintain investment discipline may lead to negative rating action," it said.
However, Fitch said the terms of the proposed US dollar notes limit any related-party transactions to the company's normal course of business.
APSEZ, the flagship company of the diversified Adani group, which also has interests in realty and power, operates 10 ports across the Indian coast line and the largest of them Mundra accounts for around 58 per cent its revenue.