Torrent Power gains on upgrade in credit rating

Torrent Power informed that CRISIL has upgraded the long term credit rating of non-convertible debentures and long term bank facilities of the company to CRISIL AA/Stable from CRISIL AA-/Stable.

The scrip was currently trading 0.77% higher at Rs 300.05.

CRISIL has reaffirmed its rating on the short-term bank facilities and commercial paper at CRISIL A1+. CRISIL believes Torrent Power will maintain its strong business risk profile, driven by stable cash flows from its regulated businesses over the medium term. Also, financial risk profile expected to remain healthy.

The upgrade factors in the power purchase agreement (PPA) adoption by Gujarat Electricity Regulatory Commission (GERC) of UNOSUGEN for 278 MW with Torrent Power's licensed distribution business, which would help to cover the fixed charges such as depreciation, interest cost and O&M resulting in Profit before tax (PBT) breakeven.

The upgrade also factors in a sharp reduction in the expected leverage as the company has decided to drop the SECI III wind project (499.8 MW) due to delays in execution. This also helps substantially reduce the project risk and also improves the return profile of the company as the project had aggressively bid tariff.

Torrent Power is an integrated utility engaged in the business of power generation, transmission and distribution with operations in the states of Gujarat, Maharashtra and Uttar Pradesh. It is also engaged in the business of cables manufacturing with operations in the state of Gujarat.

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