Fitch expects Indian power gencos' credit ratings to remain stable

Fitch Ratings says Indian power gencos are insulated from volume risk due to regulated assets and fixed-tariff contracts, despite a slowdown in electricity demand growth

Fitch Ratings does not expect the credit profiles of most of its rated power companies in India to be directly affected, even if power demand growth is lower than anticipated in the next few years.

 

The rating agency expects India’s power demand to grow by 4–5 per cent over the medium term, similar to the 4 per cent growth recorded in the financial year ended March 2025 (FY25), but slower than the roughly 8 per cent growth seen over FY22–FY24.

 

“Fitch-rated Indian power generation companies’ (gencos) credit profiles should be resilient to moderately weaker demand, as they generally benefit from the high availability of their regulated assets and/or long-term fixed-tariff contracts,” the agency said in its latest report.

 

The slowdown in power demand growth in FY25 was sharper than expected, partly reflecting slower GDP growth, Fitch said.

 

“We would not expect NTPC Limited (BBB-/Stable), Power Grid Corporation of India Ltd (BBB-/Stable) and Adani Energy Solutions Limited (BBB-/Negative) to be affected by volume risks, as a large part of their cash flow is linked to the high availability of their generation or transmission assets,” it said.

 

The agency noted that other operators benefit from predictable revenue flows due to long-term fixed-tariff contracts and ‘must-run’ provisions for renewable generation. “Nonetheless, some power gencos’ credit profiles could be indirectly hurt if a prolonged sector downturn were to weaken the financial profile of state-owned distribution companies (discoms). These are the key off-takers of electricity and have historically had a mixed record on payment punctuality,” the rating agency said.