India Ratings gives `stable’ outlook to IndiGrid’s market-linked debentures

Our Bureau Mumbai | Updated on April 06, 2020

Explaining the rating rationale, India Ratings said: “The affirmation reflects the stable operations of IndiGrid’s asset portfolio till March 2020 and adequate liquidity to tide over the disruptions caused by the nation-wide lockdown imposed to tackle the COVID-19 spread. IndiGrid is continuing the operations of its assets as transmission assets are declared as essential services.”

The major shareholders in IndiGrid are investment firm KKR, GIC, and Sterlite Power Grid Ventures Limited, who is also the sponsor of IndiGrid, owns 15 per cent.

Some of the key factors in the ratings was concerning IndiGrid’s performance. In fiscal 20, IndiGrid’s average availability was above the target availability, and it recorded stable receivable period of around 60 days. In the nine months of fiscal 2019-20, IndiGrid reported revenue and EBITDA of ₹943 crore, a 40 per cent growth when compared to ₹673 crore in 2018-19. Similarly, EBITDA grew by 43 per cent to ₹875 crore in comparison to ₹610 crore.

Apart from financials, IndiGrid recently acquired East North Interconnection Company Limited (ENICL) for ₹1,020 crore. This acquisition would increase the Assets Under Management (AUM) of IndiGrid by 10 per cent to ₹12,100 crore.

Also, the historical track record of the assets indicates robust asset availability of over 99 per cent since project commissioning. “The comfortable asset availability and stable revenue stream, bolstered by timely payments through the regulator-driven revenue pooling mechanism for interstate assets, have generated sufficient liquidity since the start of commercial operations,” noted India Ratings.

Also, IndiGrid’s net debt to asset value is about 44 per cent, according to a valuation report for the first half of fiscal 2019-20. Total debt to total assets is a leverage ratio which defines the total debt relative to the assets held. The higher the ratio, higher the degree of leverage, which, in effect, results in higher financial risk.

After the acquisition of ENICL, it will be at 49 per cent, according to IndiGrid. Also, SEBI has recently increased the limit for the net debt to asset value for InvITs to 70 per cent from 49 per cent, subject to a few conditions including the credit rating of ‘AAA’.

Published on April 06, 2020

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