Adani Power gains after CARE Ratings upgrades LT ratings to 'AA+' with 'stable' outlook
The agency has reaffirmed the company's short-term rating at 'CARE A1+'.
CARE Ratings stated that the upgrade of the long-term rating and reaffirmation of the short-term rating on bank facilities and debt instruments of Adani Power (APL) factors in the sustenance of strong operational and financial performance. APL is the largest private thermal power producer in India with operational capacity of 18.33 GW as on 30 June 2026 and under development capacity of nearly 24 GW.
The strong operational performance is demonstrated by actual plant availability factor (PAF) remaining above normative levels as reflected by PAF of 96% in Q1 FY27 and 89% in FY26 across its operational portfolio, leading to full recovery of capacity charges.
The market risk of the underlying portfolio has also decreased as power purchase agreements (PPAs) are tied for nearly 95% of installed capacity as on 30 June 2026, against 85% in August 2024. The impact of lower market risk is also reflected by declining share of merchant revenues in the overall revenues.
As articulated by the management, going forward from Q2 FY27, the share of merchant capacity in the overall capacity mix is likely to remain below 10%.
The payment from off takers has been timely as reflected by debtors of 80 days as of FY26 end, aiding the liquidity profile of the company as reflected from cash and cash equivalents of Rs 10,739 crore as of June 2026 end.
The spread between revenue per unit sold and the associated coal cost per unit has remained above Rs 2 per unit over last three years translating into stable cash flows for the company, with continuing earnings before interest, taxation, depreciation, and amortisation (EBITDA) remaining above Rs 18,000 crore on a consistent basis over FY24-FY26, whereas till FY23, continuing EBITDA was below 10,000 crore. The growth momentum has continued in FY27 with reported EBITDA for Q1 FY27 being Rs 8,369 crore against Rs 6,150 crore for Q1 FY26.
Going forward, CARE Ratings Limited (CareEdge Ratings) expects EBITDA to sustain above Rs 22,000 crore over the medium term, supported by contracted capacity, improved fuel availability and the progressive contribution from the under-development capacities, that are expected to become operational.
Despite the heightened capex, the leverage for the portfolio has remained in check. Going forward, CareEdge Ratings in its base case expects the company?s leverage to be well within the upper threshold defined by the rating agency.
CareEdge Ratings has also taken cognisance of the proposed equity raise of up to Rs 15,000 crore through a qualified institutional placement (QIP), which is expected to materialise within allowed timelines. These funds once raised, would further reduce company?s reliance on external debt for its growth capex.
Ratings continue to factor in the diversified operational portfolio of 18,330 MW spread across multiple locations and counterparties.
However, these strengths are tempered by the company's large expansion programme involving proposed capacity addition of nearly 23.72 GW for which the cumulative capex of Rs 2 lakh crore is envisaged over the medium term. The scale of the expansion exposes the company to execution, funding and commissioning risks.
CareEdge Ratings also notes that APL has certain pending regulatory matters, including the receipt of final tariff orders from the Central Electricity Regulatory Commission (CERC) and the Supreme Court of India in relation to the Mundra, Tiroda, and Korba (Lanco Amarkantak) projects. The regulatory developments in the cases continue to remain a rating monitorable.
APL is also foraying into nuclear and hydro power generation which have long gestation period. Ratings are also constrained by exposure to state distribution utilities, who are the primary off-takers and have a weak financial risk profile, resulting in a risk of payment delays.
Adani Power (APL) is the holding company of the Adani group?s coal-based thermal power generation business. APL (on a consolidated basis) has a total operational thermal power generation capacity of 18.29 GW and 40 MW solar power plant. Projects are across Gujarat, Maharashtra, Rajasthan, Karnataka, Chhattisgarh, Jharkhand, Tamil Nadu, and Madhya Pradesh. It is the largest private thermal independent power producer in the country.
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