Crisil upgrades Adani Power rating over strong business parameters
Feb 07, 2025
New Delhi [India], February 7 : Crisil Ratings has upgraded its rating on Rs 38,000 crore long-term bank facilities of Adani Power Ltd (APL) to 'Crisil AA/Stable' from 'Crisil AA-/Positive'.
Crisil Rating has also assigned its 'Crisil AA/Stable' rating to Rs 11,000 crore proposed non-convertible debentures (NCDs) of the Adani Group company, the rating agency said in a statement.
The rating agency said that the upgrade in rating reflects Crisil Ratings expectation of strengthening in Adani Power's overall credit risk profile with strong improvement in the business parameters on account of increase in proportion of tied-up capacities as well as fuel linkages.
The same is expected to improve revenue and cash flow visibility over the long term, Crisil said
"Similarly, full recovery of pending regulatory dues, robust liquidity and sustaining of receivable position has also resulted in stronger credit metrics and financial risk profile resulting in DSCR (debt service coverage ratio) improving to more than 2x and net debt to Ebitda improving to <2.5 times in current fiscal," the rating agency statement read.
The resolution of all the major past regulatory matters is complete, leading to healthy cash inflow and the same provides revenue visibility for future years given "Change in Law" tariff revision being implemented, the rating agency commented.
The operating performance of APL has been strong with robust plant load factor (PLF) and healthy operating margins.
The company had better-than-expected operating earnings before interest, taxes, depreciation and amortisation (Ebitda) of Rs 18,789 crore for fiscal 2024 and Rs 16,493 crore for the first nine months of fiscal 2025.
The plant load factors for fiscal 2024 stood at 65 per cent and around 69 per cent for 9M 2024-25.
This healthy performance has led to a reduction in consolidated net leverage (ratio of net external debt to operating Ebitda) to 1.4 times as of March 2024 from 3.3 times as of March 2023 (around four times as of March 2022).
"These levels are expected to sustain in the near to medium term, backed by healthy cash accrual," Crisil statement added.
Adani Power Limited, part of Adani Group, is the largest private sector thermal power producer in India with an operational portfolio of 17.55 GW of assets. The power plants are located across the country, in Maharashtra, Karnataka, Rajasthan, Chhattisgarh, Gujarat, Madhya Pradesh, Tamil Nadu and Jharkhand.
