For Rs 1,050 crore, Adani Ports buys a 49.38% interest in Indian Oil tanking.

As part of the agreement, Adani Ports would also purchase an additional 10% ownership stake in IOT Utkal Energy Services Ltd, an entity that is a 71.57 percent subsidiary of IOTL.

Adani Ports and Special Economic Zone Ltd (APSEZ), one of India’s leading developers and operators of liquid storage facilities, has signed a legally binding agreement to acquire Oil tanking India GmbH’s 49.38 percent equity holding in Indian Oil tanking Ltd. (IOTL).

This makes Adani Ports and Special Economic Zone (APSEZ) the biggest third-party liquid tank storage provider in India, according to a press release.

With this acquisition, APSEZ increased its oil storage capacity by 200 percent to 3.6 million KL, making it the largest third-party liquid storage company in India. According to Mr. Karan Adani, CEO and Whole-Time Director of APSEZ, this fits in well with our objective of being the largest transport utility in the world.

This stake purchase is also in line with our aim to diversify the cargo mix while putting an emphasis on goods and services with better realization and profits. The agreement would enhance our strategic alliance with IOCL, a significant stakeholder and the biggest refiner and purchaser of oil storage tanks in India.

IOTL is expanding quickly as a result of the country’s increasing demand for oil products. A BOOT agreement for 25 years was just inked between the corporation and Numaligarh Refinery Ltd., under which the latter will construct, operate, and maintain 0.6 million KL of crude storage tanks at the Paradip Port. In addition, the company is negotiating with and/or submitting bids for a wide range of important projects, both at its current locations and new ones.

The majority of IOTL’s tank capacity has been contracted by reputable PSUs and oil companies. The “Take-or-Pay” contract covers more than 80% of IOTL’s capacity, hence the company’s upcoming cash flows are well known. For IOTL in FY22, revenue and EBITDA were Rs 526 crore and Rs 357 crore, respectively. The acquisition price of Rs 1,050 Cr implies an EV/EBITDA multiple of 8x on FY22 data.

With a capacity of 2.4 million KL, IOTL has constructed a network of six terminals distributed across five states for the storage of crude and finished petroleum products (owned capacity of 0.5 million KL and BOOT capacity of 1.9 million KL). The Goa port, the Raipur terminal in Chhattisgarh, and the Navghar terminal in Maharashtra are the owned facilities.

Indian Oil Corporation Ltd.’s (IOCL) BOOT terminal and O&M contracts are located in Paradip, Odisha, and Dumad, Maharashtra, respectively (Gujarat). The business also operates a 15 TPD biogas plant in Namakkal (Tamil Nadu).