New Delhi, Feb 7
Crisil Ratings has upgraded its rating on the long-term bank facilities of Adani Power Ltd (APL) to 'Crisil AA/Stable' from 'Crisil AA-/Positive'.

The global credit rating agency has also assigned its 'Crisil AA/Stable' rating to Rs 11,000 crore proposed non-convertible debentures (NCDs) of Adani Power.

The upgrade in rating reflects "Crisil Ratings' expectation of strengthening in APL’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", it said in a 'Rating Rationale' note.

The same will improve revenue and cash flow visibility over the long term.

"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 Debt-Service Coverage Ratio (DSCR) improving to more than 2x and net debt to Ebitda improving to <2.5 times in current fiscal," the global financial services institution said in its note.

Adani Power reported a 7.4 per cent growth in net profit at Rs 2,940 crore in Q3 FY25, compared to Rs 2,738 crore in the same period last fiscal (FY24).

According to the Crisil Ratings note, Adani Power has signed up new long-term and medium-term power purchase agreements or PPAs (total 1,600 MW with 2 counterparties) over the past 12 months, resulting in tying up of 87 per cent of its total 17.55 GW capacity compared with 80 per cent earlier.

Similarly, 60 per cent of the total fuel requirement (91 per cent of domestic coal requirement) is now backed by fuel supply arrangements (FSAs) versus 50 per cent (84 per cent) a year ago, thereby lending higher certainty to the revenue and profitability of the company.

As a result, APL’s consolidated operating Ebitda (recurring) is expected to be around Rs 20,000 crore per annum in the near to medium term.

The company recorded Rs 2,400 crore of income in 9 months of FY25, a large part of which has already been received. This led to receivables position remaining comfortable around 87 days as of December 2024 vs 85 days as of March 2024 and 111 days as of March 2023, according to the note.

With under-construction projects, APL is looking to further scale up operations and strengthen its market position. Its plants are in various territories and terrains in India, ranging from near-pitheads to coastal areas.

“APL has extensive experience in working with a range of power plant technologies from subcritical/supercritical technologies to ultra-supercritical technologies. Of its operational portfolio, 40 per cent is based on imported coal,” according to the note.

External debt reduced in fiscal 2024 due to partial prepayment and scheduled repayment through operating cash flow, including proceeds of old regulatory dues. The ratio of net external debt to operating Ebitda improved to 1.4 times as of March 2024 (around 3.3 times as of March 2023) and is expected to sustain at similar levels over the near to medium term.

Also, APL has FSAs for around 60 per cent of its coal-based thermal power generation capacity (91 per cent for domestic coal-based capacity). Crisil Ratings expects higher materialisation under these FSAs to continue, resulting in relatively lower reliance on alternative coal sources, the note said.

Crisil upgrades Adani Power's bank loan facilities to AA/Stable