Torrent Power Limited has received a credit rating reaffirmation from CRISIL Ratings, maintaining its strong financial standing in the power sector. The rating agency confirmed the company's long-term rating at 'CRISIL AA+/Stable' and short-term rating at 'CRISIL A1+' across various debt instruments and banking facilities.

Rating Reaffirmation Details

CRISIL Ratings reaffirmed the ratings on February 24, 2026, covering a comprehensive range of financial instruments:

Strategic Acquisition and Expansion

The rating agency highlighted Torrent Power's execution of a Securities Purchase Agreement on February 16, 2026, to acquire Nabha Power Ltd from L&T Power Development Ltd. This strategic acquisition involves:

This acquisition will expand Torrent Power's operational capacity from approximately 5 GW to 6.4 GW and mark its entry into the northern Indian power market.

Financial Performance Highlights

The company demonstrated strong financial performance with significant improvements in key metrics:

The improvement in earnings was primarily driven by robust power demand, resulting in high sales in merchant markets and the invocation of Section 11 of the Electricity Act for gas-based plants.

Capital Expenditure and Growth Plans

CRISIL noted the company's ambitious capital expenditure plans exceeding ₹60,000 crore during fiscal 2026-2032. The capex will be funded through a debt-to-equity ratio of 70:30 or 75:25, with majority of the expenditure staggered and aligned with project commissioning timelines.

Key Projects in Pipeline:

• Renewable projects of approximately 3.8 GWp under implementation (₹24,000-25,000 crore)
• Two new transmission projects (₹1,270 crore)
• Pumped storage projects of 3 GW (₹14,000 crore)
• Greenfield thermal project of 1.6 GW in Madhya Pradesh (₹22,000 crore)

Operational Excellence

The company maintains strong operational efficiency with transmission and distribution losses among the lowest in the country:

Torrent Power serves more than 4.2 million consumers across domestic, industrial, and commercial divisions, maintaining 100% collection efficiency in key distribution areas including Ahmedabad, Gandhinagar, Surat, and Dahej SEZ.

Rating Outlook and Risk Factors

CRISIL maintains a stable outlook, citing the company's diversified business risk profile and strong liquidity position. However, the rating agency noted potential challenges including exposure to project implementation risk and the absence of long-term power purchase agreements for the 1,200-MW Dahej gas power plant.

The net leverage is expected to increase over the medium term, potentially exceeding 3.50 times in 2028 and peaking above 4.00 times in fiscals 2029-2030, before moderating as new capacity becomes operational and generates cash flows.

Torrent Power has announced a major acquisition that will significantly expand its thermal generation footprint through the purchase of Nabha Power Limited from Larsen & Toubro's subsidiary. The transaction, valued at ₹6,889 crores, represents a strategic move to strengthen the company's position in India's power sector while entering the northern regional market.

Acquisition Details

The Securities Purchase Agreement involves acquiring 100% equity stake and convertible instruments in Nabha Power Limited from L&T Power Development Limited, a wholly owned subsidiary of Larsen & Toubro. The transaction is subject to requisite regulatory approvals and customary closing conditions.

Nabha Power Limited Performance

Nabha Power Limited operates a high-performing thermal power asset with strong financial metrics and operational excellence. The supercritical plant, built on advanced Japanese technology, demonstrates exceptional reliability and efficiency standards.

The 1,400 MW facility, comprising 2 x 700 MW units, ranks 2nd among all thermal power plants above 500 MW in India. Located at Rajpura in Patiala district, Punjab, the plant maintains sustained availability levels above 90% and operates under a 25-year Power Purchase Agreement established through Case II Competitive Bidding Guidelines.

Strategic Impact and Capacity Expansion

Upon completion of the acquisition, Torrent Power's operational capacity will increase from approximately 5 GW to 6.4 GW. The transaction provides immediate access to institutional expertise and decade-long technical capabilities developed through exceptional implementation and operational excellence.

Key Strategic Benefits:

• Entry into high-growth northern India power market
• Addition of best-in-class operating asset with fully contracted cash flows
• Value accretive transaction from day one
• Enhanced portfolio diversification without development risk
• Platform for potential capacity expansion using existing infrastructure

Fuel Supply and Operational Framework

The power plant operates with comprehensive fuel supply arrangements ensuring operational stability. Long-term Fuel Supply Agreements are established with SECL for 2.775 million MT and NCL for 2.464 million MT, along with mechanisms for alternate coal procurement to address supply shortfalls. The plant's equipment design enables blending of domestic and imported coal, providing operational and fuel flexibility.

Commissioned in 2014, the facility was developed under Government of India's competitive bidding framework and operates under a 25-year Power Purchase Agreement. The strategic location in a power-deficit region supports potential ancillary revenue streams while existing infrastructure allows seamless capacity expansion for future growth opportunities.

Management Commentary

Samir Mehta, Chairman of Torrent Power, emphasized the acquisition's strategic value: "The acquisition marks Torrent's entry into the high-growth power market of northern India. Upon completion, NPL will add a high-quality, best-in-class and well-established operating asset to our portfolio supported by fully contracted cash flows and a strong operational track record."

S N Subrahmanyam, Chairman & Managing Director of L&T, stated: "The divestment of NPL aligns with L&T's strategic objective of unlocking value to strengthen our robust core businesses. This move positions us to create long term value for all our stakeholders — business partners, shareholders and employees."