Crisil Upgrades Adani Power’s Bank Loan Facilities to AA/Stable, Strengthening Credit Profile
Crisil Ratings upgrades Adani Power’s bank loan facilities to AA/Stable, citing improved credit risk profile, strong business growth, higher revenue visibility, and robust financial performance.
New Delhi: In a major boost to Adani Power Ltd (APL), Crisil Ratings has upgraded its rating on the long-term bank facilities of the company from ‘Crisil AA-/Positive’ to ‘Crisil AA/Stable’.
Additionally, the global credit rating agency has assigned its ‘Crisil AA/Stable’ rating to Adani Power’s proposed Rs 11,000 crore non-convertible debentures (NCDs).
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Key Factors Behind the Rating Upgrade
The upgrade reflects Crisil’s assessment of Adani Power’s improving credit risk profile, citing key business growth parameters such as an increase in tied-up capacities and enhanced fuel linkages.
These factors are expected to improve revenue generation, boost cash flow stability, and strengthen the company’s long-term financial standing.
According to Crisil, the company’s robust liquidity, full recovery of pending regulatory dues, and sustained receivable position have resulted in stronger credit metrics.
The Debt-Service Coverage Ratio (DSCR) has improved to more than 2x, while the net debt to EBITDA ratio has strengthened to below 2.5x in the current fiscal year.
Financial Performance and Growth
Adani Power recorded a 7.4% growth in net profit, reaching Rs 2,940 crore in Q3 FY25, compared to Rs 2,738 crore in the same period last fiscal (FY24). The company’s overall financial stability is expected to continue improving, backed by new power purchase agreements (PPAs) and enhanced fuel security.
Over the past 12 months, Adani Power has signed new long-term and medium-term PPAs for 1,600 MW with two counterparties, increasing the proportion of tied-up capacity from 80% to 87% of its total 17.55 GW capacity.
Similarly, 60% of the total fuel requirement (91% of domestic coal needs) is now backed by fuel supply agreements (FSAs), compared to 50% (84%) a year ago. This move provides greater certainty in revenue generation and profitability.
The company’s consolidated recurring EBITDA is projected to reach Rs 20,000 crore annually in the near to medium term. Additionally, APL generated Rs 2,400 crore in income during the first nine months of FY25, with a substantial portion already received.
The company’s receivables remain stable at 87 days as of December 2024, compared to 85 days in March 2024 and 111 days in March 2023.
Expansion and Market Positioning
Adani Power continues to expand its operations with ongoing projects aimed at strengthening its position in the power sector.
The company operates thermal power plants in diverse geographical locations, ranging from near-pithead coal reserves to coastal regions, showcasing its expertise in handling various power plant technologies, including subcritical, supercritical, and ultra-supercritical technologies.
Notably, 40% of Adani Power’s operational portfolio relies on imported coal.
APL has also reduced its external debt in FY24 through partial prepayment and scheduled repayments using operating cash flow and proceeds from regulatory dues.
As a result, the net external debt to EBITDA ratio improved significantly to 1.4x as of March 2024, down from 3.3x in March 2023. Crisil expects this positive trend to continue in the near to medium term, ensuring a lower reliance on alternative coal sources due to higher materialization under FSAs.
Industry Outlook and Future Prospects
The power sector in India has witnessed significant growth in recent years, driven by increasing demand, policy support, and advancements in technology.
Adani Power’s strategic initiatives in securing long-term PPAs and enhancing fuel supply stability position it strongly for sustained profitability.
With a commitment to optimizing operations and improving financial health, Adani Power is poised to strengthen its market presence further.
As the company continues to expand its operations and improve efficiency, its upgraded Crisil rating reflects confidence in its ability to sustain financial growth while ensuring stable and secure power generation for the nation.
