Adani Ports shares drop 5% on Israel-Gaza conflict

Shares of Adani Ports and Special Economic Zones (APSEZ) fell 4.16% on Monday as investors got jittery after Israel's Prime Minister Benjamin Netanyahu warned that the war started by Hamas will be difficult and take time. Adani Ports operates the Haifa port in Israel.

The Adani Group stock opened lower at ₹815 against its previous closing price of ₹830.75 on the National Stock Exchange (NSE). Shares of Adani Ports hit an intraday low of ₹793, taking the port operators' market cap to ₹1.71 lakh crore. The stock has declined 3% on a year-to-date basis and 1.5% over the past year.

Haifa is a strategic port in Israel as 20 million tonnes of cargo passes through the port each year – more than any other port in Israel. In 2022, Adani Ports won a tender for the privatisation of the Haifa port along with Gadot Logistics, a chemicals and logistics company, for about 32 years till 2054. The winning bid placed by Adani Ports and Gadot was $1.2 billion. Adani Group holds about 70% stake in the port, while the rest is held by the Gadot group.

The Port of Haifa is located towards the north of Israel. It is close to the city of Haifa, the third largest city in Israel. It is also one of the major industrial areas of Israel. It is only 90 kilometres away from Tel Aviv, the key commercial city of Israel. The existing infrastructure at Haifa Port includes two container terminals and two multi-cargo terminals.

The decline in the Adani Ports stock comes as Israel officially declared war for the first time in 50 years, following an unprecedented attack by Hamas that killed over 700 Israelis.

This also comes days after Adani Ports reported an operational performance update. During September, 2023,APSEZ recorded cargo volumes of 32.8 million metric tonnes (MMT) (up 26% year-on-year) with all key ports delivering double-digit growth. This growth is contributed by all three cargo types - dry bulk (up 32%), containers (up 20%) and liquids & gas (up 21%).

During the first half of FY24, APSEZ managed 202.6 MMT of total cargo, thereby crossing the 200 MMT milestone in the initial six months of the year. This growth is supported by all key ports in the APSEZ portfolio, with container cargo growth of around 18% to 74.8 MMT and dry bulk growth of around 10% to 106.3 MMT.

Commenting on the deal last year, Karan Adani, whole-time director and CEO, APSEZ, said, "This win is strategic for us from several dimensions. It gives us a much larger presence in Israel, one of India’s most strategic partners, with whom the Adani Group has been working for six long years to build a network of relationships across several industries. In the short term, we look forward to developing strategic trade lanes between our ports in India and Haifa and help facilitate trade between the two countries, diversifying the port cargo as well as leveraging our expertise to increase the operational efficiencies."

"Our portion of the investment is being funded through internal accruals and we are proud to work with Gadot as a reliable partner we have known for several years. In the long run, this is a tremendous port as we anticipate Israel becoming a connection both for Europe and the Middle East, and therefore we stand to benefit from the new possible trade lanes that will get created," Adani had said.