CRISIL Reaffirms Ratings for Torrent Power Amid Major Capacity Expansion and Acquisition

CRISIL Reaffirms Ratings for Torrent Power Amid Major Capacity Expansion and Acquisition​

Torrent Power Ltd (TPL) has received updated credit ratings from CRISIL Ratings, reflecting the company's strong operational performance and significant expansion plans. The ratings action addresses proposed non-convertible debentures (NCDs) and reaffirms ratings on existing bank facilities and commercial paper.

Concurrently, TPL is executing a major expansion through the acquisition of Nabha Power Ltd (NPL). This strategic move, involving the purchase of a thermal generation subsidiary operating a 1,400 MW power plant in Punjab from L&T Power Development Ltd (LPDL), is expected to expand TPL's operational capacity from approximately 5 GW to 6.4 GW.

Rating Action Details​

CRISIL Ratings assigned the long term credit rating for the proposed non-convertible debentures of ₹ 4000 Crore to 'CRISIL AA+/Stable' and re-affirmed its rating on non-convertible debentures amounting to ₹ 4735 Crore to 'CRISIL AA+/Stable'. The ratings agency also reaffirmed short-term Bank Loan facilities and commercial paper at 'CRISIL A1+'.

The key rating actions and facilities rated are summarized below:

Strategic Acquisition and Financial Metrics​

The acquisition of NPL, which occurred after executing a Securities Purchase Agreement (SPA) on February 16, 2026, for an enterprise value of approximately Rs. 6,889 crore, is anticipated to be concluded by June 2026, subject to remaining approvals. The deal structure includes upfront cash consideration of Rs 3,661 crores for equity and convertible instruments, repayment of promoter loan of Rs 495 crores, and net debt of ~Rs 2,733 crs as on March 31, 2025.

On the financial front, the company's robust performance was highlighted by the improvement in its debt structure. The net debt to EBITDA ratio improved to 1.4 times as on March 31, 2025, from 2.2 times in fiscal 2024.

The overall profitability metrics show significant growth:

• EBITDA improved to Rs 5,436 crore in fiscal 2025 from Rs 4,632 crore in fiscal 2024.
• The company also raised Rs 3,500 crore through a Qualified Institutional Placement (QIP) in the third quarter of fiscal 2025, of which 75% (Rs 2,625 crore) was used for debt reduction.

Operational Strengths and Risks​

TPL maintains a strong operational profile, bolstered by a regulated tariff structure and high operating efficiency. The distribution business has remained a key pillar, with the T&D losses continuing to be among the lowest nationally. In fiscal 2025, TPL's market position was affirmed, as it is the sole power distribution licensee for Ahmedabad, Surat, Gandhinagar, and DNHDD, selling power to over 4.2 million consumers.

The company's management has articulated a focus on maintaining net leverage and the capital structure within rating thresholds, despite significant planned capital expenditure (capex).

However, the company faces implementation risk due to a sizeable capex pipeline exceeding Rs 65,000 crore over the medium term. The generation portfolio includes a 1,200-MW combined cycle gas power plant in Dahej (DGEN). The profitability from DGEN was noted to be sensitive to gas prices and the availability of power purchase agreements (PPAs), although the overall cash generation from the regulated and renewables businesses is expected to drive stable cash flow.

The company's governance structure is noted for having approximately 56% of its board comprised of independent directors and 22% women board directors.

TORNTPOWER Stock Price Movement​

Today, Torrent Power Limited shares rallied, gaining 4.68% to close at ₹1737. The stock surged to hit its 52-week high of ₹1741, supported by a volume of 1.22 million shares traded today.