Crisil upgrades DB Power’s long-term rating as Adani Power calls off acquisition
1 min read . Updated: 22 Feb 2023, 02:54 PM IST
Premium- The rating agency also removed the firm from 'on watch status' and assigned a 'stable' outlook.
Following Adani Power Ltd’s plans to acquire DBPL were called off, rating agency CRISIL has upgraded DB Power Ltd’s (DBPL) long-term rating from “A+" to “AA-", reported Business Standard on 22 February.
The rating agency also removed the firm from “on watch status" and assigned a “stable" outlook.
Earlier on 30 August, 2022, Crisil had placed DB Power’s rating on watch following Adani Power Ltd’s announcement to acquire DBPL. However, the acquisition sate under the memorandum of understanding expired on 15 February, 2023.
Noting that the transaction has been called off, Crisil said the rating watch has been resolved.
As per details, the rating upgrade factors in the improvement in the financial risk profile of DBPL which is driven by sustenance of strong operating performance, further prepayment of debt, and enhancement of liquidity. Apart from this, it also reflects the expected sustaining of a healthy business risk profile, the business daily noted.
Supported by its established track record of generation and strong operating efficiency, DBPL has a healthy business risk profile. " These strengths are partially offset by modest, though improving, financial risk profile and exposure to weak counterparties," BS quoted CRISIL as saying.
During the 9 months through December 2022, the operating performance was strong and the high cash accrual was driven by greater-than-expected power demand and healthy sales in the short-term market, said Crisil.
In the period, the DB Power’s Ebitda was ₹1,091 crore against ₹1,504 crore during FY22. Also, its debt protection metrics improved significantly on prepayment debt of ₹310 crore in the current fiscal.
The liquidity too strengthened, with total cash and equivalents of ₹1,396 crore as on December 31, 2022, compared to ₹1,128 crore as on March 31, 2022.