Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AA/Stable’ rating on the long-term bank facilities and non-convertible debentures (NCDs) of Adani Power Ltd (APL).

 

The rating reaffirmation reflects the sustenance of robust credit risk profile of APL, supported by large and geographically diversified portfolio with increasing share of tied-up capacities providing cash flow visibility for the long term. Recovery of pending regulatory dues, robust liquidity and improving receivables have resulted in stronger credit metrics and financial risk profile. Consequently, the debt service coverage ratio (DSCR) improved to more than 3 times and net debt to earnings before interest, tax, depreciation and amortisation (Ebitda) ratio improved to less than 1.5 times in fiscal 2025.

 

The company has signed power purchase agreements (PPAs) for the medium and long term, tying up 95% of its 18.1 gigawatt (GW) capacity, up from ~84% in August 2025. For the balance capacity, APL benefits from the competitive cost position of its plants located near coal sources. Around 60% of the total fuel requirement (more than 80% for domestic fuel post incorporating Mundra’s fuel supply arrangements [FSA] which is utilised in the Tiroda plant) is now backed by FSAs, thereby lending higher certainty to revenue and profitability.

 

Plant load factor (PLF) was 63% for the first nine months of fiscal 2026, compared with 71% in fiscal 2025, owing to the early arrival of monsoon and relatively cooler summer. The company’s operating Ebitda (earnings before interest, tax, depreciation and amortisation; recurring) is expected at around Rs 20,000 crore per annum in the near to medium term before the new capacities operationalise. The healthy performance in fiscal 2025 led to reduction in net leverage (ratio of net external debt to operating Ebitda) to 1.4 times as on March 31, 2025, from 3.3 times as on March 31, 2023. Leverage is expected to moderate in the medium term on account of the planned capital expenditure (capex) and normalise once the new capacities start generating cash flow.

 

Resolution of all major past regulatory matters is complete, leading to healthy cash inflow (APL has recovered majority of pending regulatory dues, including carrying cost and late payment surcharge [LPS]). This is likely to provide revenue visibility given the Change in Law tariff revision being implemented. The company follows a prudent philosophy of recognising regulatory receivables (basic claims plus carrying cost) upon favourable regulatory order and reasonable certainty of receiving the claim and LPS on receipt or acceptance by the customer. Accordingly, the company achieve income of ~Rs 2,433 crore in fiscal 2025 and Rs 1,352 crore in the first nine months of fiscal 2026. Furthermore, given the sizeable payments received from Bangladesh Power Development Board (BPDB) in June 2025, the receivables improved significantly to around 60 days as on December 31, 2025, from 85 days as on March 31, 2025.

 

APL has large capex of Rs 2 lakh crore in the pipeline. This includes organic expansion to installed capacity of 42 GW by 2032 and regular repair and maintenance. The operating cash accrual is likely to be sufficient to meet the equity requirement of capex as well as annual debt obligation while maintaining liquidity and capex reserves. Furthermore, as per the corporate debt term sheet, the company has to maintain liquidity reserve of 1.25 times of the debt servicing for the following year (pertaining to corporate loan raised from the State Bank of India (SBI) led consortium in March 2024). Timely execution of the planned capex and tie-up of capacities with long-term/medium-term PPAs, without significantly impacting the capital structure or liquidity, will be monitorable.

 

The rating continues to factor in the strong market position of APL, given the geographically diversified portfolio of coal-based power-plants and counterparties, and a healthy financial risk profile. These strengths are partially offset by large capex for increasing capacity by ~24 GW by 2032, exposure to risk related to lower merchant power demand and tariff due to untied capacity (5% of total operational capacity), and susceptibility to counterparty risk on account of weak to moderate credit profiles of some distribution companies (discoms).

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of APL (merged entity) and its subsidiaries, given their strong operational, financial and managerial linkages. UPS of around Rs 3,057 crore as on March 31, 2025 (Rs 7,315 crore as on March 31, 2024), has been treated as 100% equity as these are perpetual with no maturity or redemption. Call option for their redemption is available with the issuer (APL) and interest on these securities is cumulative. The UPS can be redeemed through distributable surplus. As on date, the UPS has been repaid in full.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Strong market position with diversified portfolio of coal-based power plants across geographies:

APL is one of India’s largest independent power producers with operational thermal power capacity of 18.1 GW, equivalent to ~7% of the thermal capacities in the country. With under-construction projects, APL is looking to scale up operations and strengthen its market position. Its units are in various territories and terrains in India, ranging from near-pitheads to coastal areas. APL has extensive experience in working with a range of power plant technologies from subcritical/supercritical technologies to ultra-supercritical technologies. Of its operational portfolio, 40% is based on imported coal.

 

Healthy business risk profile with long-term PPAs and FSAs:

APL has tied up more than 95% of its operational power generation capacity with multiple counterparties under long-term/medium-term PPAs, with scalable tariff structure for majority of these PPAs providing good revenue visibility. The company has tied up 56% of its under-construction capacity with various state discoms over the last 12 months. The untied capacity is near pitheads, which supports raw material sourcing and reduces cost of generation. The diversified counterparty mix mitigates concentration risk.

 

Also, APL has FSAs for around 60% of operational power generation capacity (more than 80% for domestic fuel, post incorporating Mundra’s FSA for the Tiroda plant). Furthermore, the ability to claim alternate fuel cost as passthrough under change in law claims for the PPAs post resolution of the regulatory matter has strengthened the business risk profile. For the imported coal-based plants, APL benefits from the Adani group’s presence across the power value chain and its sourcing ability, which mitigates raw material availability risk.

 

Healthy financial risk profile and debt protection metrics

The ratio of net external debt to operating Ebitda improved to 1.4 times as of March 2025 from around 3.3 times as of March 2023. Healthy uptick in earnings lead to improvement in the interest coverage ratio to around 7 times in the nine months of fiscal 2026 and in fiscal 2025; the interest coverage ratio is expected at 4-5 times over the medium term. While the financial risk profile is likely to be impacted over the medium term, given the sizeable capex, timely implementation of the planned capex without cost overrun will be key monitorable over the medium term.

 

Furthermore, as per the corporate debt term sheet, the company has to maintain liquidity reserve of 1.25 times of the debt obligation for the following year (pertaining to corporate loan of Rs 19,700 crore raised from SBI-led consortium in March 2024) and capex reserve equal to next six months of unfunded capex requirement (pertaining to sustenance capex only).

Key Rating Drivers - Weaknesses 

Exposure to risks associated with large capex and growth through acquisitions

APL is implementing ~24 GW of expansion projects, which are expected to be implemented in a staggered manner over the next six years. These projects are in various stages of execution; however, the execution risk is mitigated by the availability of land, PPA tie-up for 56% of the capacity and APL’s vast experience in the sector. APL executed the greenfield Godda plant on time despite the pandemic and achieved financial closure for Mahan Phase II. The PPAs tied-up for the balance under-construction capacities will remain monitorable.

 

The company continues to be on the lookout for value-accretive projects in the market. That said, APL has a consistent track record of turning around newly acquired merchant plants.

 

Susceptibility to weak credit risk profiles of counterparty

While APL has witnessed timely recovery of receivables over the past few years, some discoms have average to weak credit profiles. This may result in delay in collection leading to cash flow mismatch, which is mitigated by the presence of letter of credit mechanism and debt service reserve account (DSRA). The receivables moderated post recovery of old regulatory dues, but receivables from BPDB accumulated in fiscals 2024 and 2025. Collection from BPDB improved on a monthly basis post the political developments in Bangladesh in August 2024. BPDB has released one-time payment of $411 million in June 2025, significantly reducing the receivables. Sustenance of receivables (from other counterparties as well) will remain monitorable.

Liquidity Strong

Liquidity will be supported by strong Ebitda of over Rs 20,000 crore per annum over fiscals 2026 and 2027, which will be sufficient to meet the debt obligation over the medium term. As on December 31, 2025, the company had unencumbered cash and liquid investments of around Rs 5,164 crore, including DSRA and buffer in working capital lines. The company plans to utilise surplus funds to meet its capex and will be raising need-based debt.

Outlook Stable

The business and financial risk profiles of APL will be supported by sustenance of healthy operational performance over the medium term backed by strong power demand, remunerative tariff for most capacities tied up under long-term PPAs and assured supply of captive or linkage fuel.

Rating sensitivity factors

Upward factors

• Decline in project implementation risk through new PPAs and timely commissioning of planned capex without any significant cost overrun
• Improvement in the business risk profile with increase in coal linkage and/or tie-up of at least 90% of operational capacity under long-term PPAs, leading to improvement in leverage and DSCR
• Sustained increase in receivables from counterparties, especially from BPDB

 

Downward factors

• Weakening operating performance with plant availability factor (PAF) below normative levels for existing capacities having PPAs, leading to delay in fixed cost recovery or lower PLFs of merchant capacities/imported coal-based capacities impacting operating cash flow and liquidity
• Lower-than-expected cash flow or larger-than-expected debt-funded capex resulting in external net debt to operating Ebitda ratio above 3.0 times on a sustained basis, with DSCR below 2.0 times over the remaining debt tenure
• Adverse outcome in pending regulatory investigation constraining the financial flexibility of the Adani group

About the Company

APL, part of the Adani group, is the largest private sector thermal power producer in India with operational portfolio of 18.1 GW of assets. The power plants are located across the country, in Maharashtra, Karnataka, Rajasthan, Chhattisgarh, Gujarat, Madhya Pradesh, Tamil Nadu and Jharkhand. APL has diverse counterparties.

Any other information: Not applicable