CRISIL assigns "AA/Stable/P1+" Rating to Tata Power

CRISIL has assigned Tata Power Company Ltd 'AA/Stable/P1+' bank loan ratings to the Company's bank facilities and has reaffirmed its outstanding ratings on the Company's non-convertible debenture and short-term debt programmes.

The ratings reflect the Company's strong position in its generation and distribution businesses. Its distribution licensee business has regulated returns, thereby ensuring stability of cashflows. The ratings are underpinned by the Company's capable management, stable and healthy accruals, and robust liquidity. CRISIL believes that the potential support from other Tata group Companies, and the Company's substantial liquid investments in these Companies, enhance the Company's financial flexibility.

Over the next five years, however, large capacity expansions and attendant project implementation risks may significantly alter the Company's business risk profile. The Company proposes to nearly quadruple its generation capacity to about 8700 mega watts (MW). This will result in a gradual, but inevitable, shift in the Company's business risk profile from the current stable licensee model to bid-out generation projects supplying power in areas where it currently does not have a presence.

Source : Equity Bulls

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