CRISIL Ratings has reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings for Torrent Power Limited (TPL), including a ₹2,000 crore non-convertible debenture issue. The ratings reflect TPL’s strong profitability, efficient operations, and stable cash flow, which are partially offset by project risks and the absence of long-term power purchase agreements for its 1,200-MW Dahej plant. CRISIL has also withdrawn its rating on NCDs worth ₹410 crore as they have been fully redeemed.
Rating Rationale
CRISIL Ratings has assigned a ‘CRISIL AA+/Stable’ rating to the ₹2,000 crore non-convertible debentures (NCDs) of Torrent Power Ltd (TPL) and reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on other debt instruments and bank facilities. Furthermore, it has withdrawn its rating on NCDs worth ₹410 crore.
Key Rating Drivers
The ratings reflect TPL’s strong and steady profitability, supported by prudent capital expenditure (capex) plans and fundraising, resulting in healthy net leverage. The net debt to Ebitda ratio improved to 1.4 times as of March 31, 2025, driven by an increase in Ebitda to ₹5,436 crore. Fundraising through a qualified institutional placement (QIP) in Q3 2025 raised ₹3,500 crore, with 75% (₹2,625 crore) used for debt reduction.
Business Performance
The improvement in earnings was primarily due to robust power demand and sales in merchant markets. Section 11 of the Electricity Act for gas-based plants in Q1 2025 also contributed to growth. The distribution business saw improved performance, driven by lower loss, increased power demand, and contribution from renewable assets and the 1,200-megawatt (MW) combined cycle gas power plant in Dahej (DGEN), Gujarat.
Operating performance is expected to improve, focusing on the license distribution business, plant load factor (PLF) of thermal capacities, and expansion in the renewables business, leading to continued growth in Ebitda over the medium term.
Capex Plans
The company anticipates capex of more than ₹60,000 crore during fiscal years 2026-2032, funded in a debt-to-equity ratio of 70:30 or 75:25, aligned with increased accrual from commissioning of projects, particularly renewable projects.
Leverage
Net leverage is likely to increase over the medium term, expected to exceed 3.5 times in 2028 and peak beyond 4.0 times in fiscals 2029-2030. Increased cash generation from the newly commissioned capacity and T&D business should moderate net leverage.
Strengths
- Strong operating profile and regulated tariff framework.
- Robust market position in power distribution with a diverse consumer base.
- Strong financial risk profile.
Weaknesses
- Exposure to implementation risk in the under-construction portfolio.
- Susceptibility to risk related to offtake for DGEN.
Liquidity
Expected annual cash accrual of ₹3,200-3,700 crore in fiscals 2026 and 2028 will sufficiently cover yearly term debt obligations of ₹1,300-1,700 crore. The company had a cash balance of around ₹1,903 crore as of September 30, 2025.
Source: BSE
