Adani unit, IOTL seal deal

Bengaluru: Adani Ports and Special Economic Zone Ltd. (APSEZ), the largest transport utility in India, has entered into a definitive agreement for the acquisition of Oiltanking India GmbH's 49.38 per cent equity stake in Indian Oiltanking Ltd (IOTL), which is one of India's largest developer and operator of liquid storage facilities.

This agreement also includes the acquisition of an additional 10 per cent equity stake in IOT Utkal Energy Services Ltd, a 71.57 per cent subsidiary of IOTL. Over the last 26 years, IOTL has built a network of six terminals across five states with a total capacity of 2.4 Mn KL (owned capacity of 0.5 Mn KL and BOOT capacity of 1.9 Mn KL) for storage of crude and finished petroleum products. The owned facilities include the Navghar terminal in Maharashtra, the Raipur terminal in Chhattisgarh, and the Goa terminal.

The BOOT terminal with Indian Oil Corporation Ltd. (IOCL) is at Paradip (Odisha), and O&M contracts with IOCL are at JNPT (Maharashtra) and Dumad (Gujarat). The company also has a biogas plant with a 15 TPD capacity in Namakkal (Tamil Nadu). "With this acquisition, APSEZ's oil storage capacity jumps 200 per cent to 3.6 million KL, making it India's largest third-party liquid storage company." This ties well with our ambition to become the largest transport utility globally," said Karan Adani, CEO and Whole Time Director of APSEZ.

"This stake purchase is also well aligned with our strategy of diversifying the cargo mix, focusing on products and services with higher realisation and margins. The deal will further strengthen our strategic partnership with IOCL, a key stakeholder and India's largest refiner and customer of oil storage tanks."

IOTL is on a growth spree given the country's increasing demand for oil products. The company recently signed a 25-year BOOT contract with Numaligarh Refinery Ltd for the construction, operation, and maintenance of 0.6 Mn KL crude storage tanks at the Paradip Port.

Besides, the company is negotiating/bidding on various other large projects at existing facilities and new locations. Reputed PSUs and oil majors contract the majority of IOTL's tank capacity. With around 80 per cent of IOTL's capacity under the 'Take-or-Pay' contract, there is good visibility on the future cash flows of the company. In FY22, IOTL's revenue and EBITDA were Rs 526 Cr and Rs 357 Cr respectively. The acquisition price of Rs 1,050 Cr implies an EV/EBITDA multiple of ~8x on FY22 numbers. About Adani Ports and Special Economic Zone.