Crisil downgrades Tata Power Ratings

Tata Power Company Ltd has announced that CRISIL has revised its rating on the Company's Non-convertible Debentures to 'AA/Stable' from 'AAA/Rating Watch with Negative Implications'. The negative watch on the short-term debt rating of 'P1+' has also been removed and the rating reaffirmed.

In CRISIL's opinion, the huge capacity expansions and the attendant project implementation risks significantly alter the Company's business risk profile, from that of the earlier licensee model. The Company plans to almost quadruple its power generation capacity, to about 8700 mega watts (MW), over the next five years. This will result in a gradual but inevitable shift in the Company's business risk profile from the existing stable licensee business, to bid-out generation projects supplying power to new areas.

The ratings in the high safety category continue to reflect CRISIL's favourable view on the risk profile of the Company's generation and distribution business, a stable licensee business that has regulated returns. The ratings are also supported by the Company's superior management capability, stable and healthy accruals from existing businesses, and financial flexibility derived from robust liquidity. CRISIL believes that the Company also enjoys financial flexibility by virtue of potential support that can be engineered, if required, through other Tata group Companies, and substantial investments in these Companies which can be liquidated to meet future requirements if needed.

The stock closed the day at Rs.667.95, up by Rs.8.45 or 1.28%. The stock hit an intraday high of Rs.673 and low of Rs.655. The total traded quantity was 37419 compared to 2 week average of 139967.

Source : Equity Bulls

Keywords