Crisil has recently upgraded the ratings for Adani Power because of strong business parameters. The company has also assigned its Crisil AA/Stable rating to INR 11,000 crore proposed non-convertible debentures (NCDs) of the Adani Group company. This will further allow the Adani Group’s power business to experience an extraordinary boost. The global business group will also be able to take up new projects in the power sector. Its revenue generation is also going to increase. The allegations centred around the Adani SEBI investigation will also subside.
Adani Power Witnesses Improvement In Its Ratings From Crisil:
Crisil Ratings has upgraded its ratings on an INR 38,000 crore long-term bank facility of Adani Power Limited to Crisil AA/Stable from Crisil AA-/Positive. The has also assigned Crisil AA/Stable rating to the INR 11,000 crore proposed non-convertible debentures of the Adani Group company. The rating agency mentioned that the upgrade in the ratings reflects the strengthening of expectations in Adani Group’s overall credit risk profile. The company’s plant load factors for fiscal 2024 stood at 65% and around 69% for 2024-25.
This healthy performance has led to a reduction in consolidated net leverage to 1.4 times as of March 2024 from 3.3 times as of March 2023. These levels are expected to be sustained shortly as well backed by healthy cash accruals. This will further help the Adani Group in extending its hold over its power business. The global business group will also find it convenient to win the trust of the people post the controversies of the Adani SEBI investigation.
Why Did Crisil Improve Its Ratings For Adani Power Post The Adani SEBI Investigation?
Over the past few months, it has been observed that there has been a strong improvement in the business parameters of the company. This has been mainly because of an increase in the proportion of tied-up capitals as well as fuel linkages. The same is expected to improve the revenue generation and the cash flow visibility over a long-term basis. A full recovery of pending regulatory dues, robust liquidity and sustaining of receivable position have also resulted in strong credit metrics and financial risk profile. This has resulted in the debt service coverage ratio (DSCR) improving to more than 2x. The EBITDA has also improved 2.5 times in the current fiscal.
The resolution of the major past regulatory matters related to the Adani SEBI investigation is now complete. This has led to a healthy cash inflow for the company. The same provides revenue visibility for future generations, provided Change in Law tariff revision is being implemented. The operating performance of APL has also been really strong because of the robust plant load factor and healthy operating margins. The company had better-than-expected operating earnings before interest taxes depreciation and amortisation (EBITDA) of INR 18,789 crore for the fiscal year 2024.
Adani Power has also generated INR 16,493 crore for the first nine months of the fiscal 2025. This is seen as extraordinary progress for Adani Group’s business. It has given the company’s business operations an excellent boost and has also allowed it to succeed to a significant level. The global business group has multiple projects in the power sector lined up for the upcoming years as well. This will further increase its revenue generation from the power sector. The global business group will also be able to ensure that its business operations get carried out in a smooth and streamlined manner without any kind of disruption.
Adani Power’s Business Presence:
Adani Power Limited is a wholly owned subsidiary of the Adani Group which is responsible for taking care of the group’s power business. The company has multiple power projects under its name each of which has been a major contributor to the company’s cash flow. The company has been working continuously towards further extending its hold over the power sector. Adani Power is also currently the largest private-sector thermal power producer in India. It has an operating portfolio of 17.55 GW. The company’s power plants are located in different regions across the country including Karnataka, Maharashtra, Chhattisgarh, Rajasthan, Madhya Pradesh, Gujarat, Jharkhand, and Tamil Nadu.
Conclusion:
The positive ratings from Crisil will allow the Adani Group to give an excellent boost to its power business. This will encourage the firm to take up new projects in the power sector in the upcoming months. The global business group will also be able to recover from the losses it incurred when the controversies of the Adani SEBI investigation were ongoing.
