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Standard & Poor's Ratings Services revised its outlook on the corporate credit ratings on Tata Power to positive from stable. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating and long-term senior unsecured debt rating on the company.
Rationale:
S&P rationale for the revision of outlook for Tata Power primarily reflects the significant progress made by Tata Power on its two key projects, 4,000 MW Mundra project and 1,050 MW Maithon project. Both are currently running ahead of schedule and within estimated costs. This reflects Tata Power's good project management skills, which benefit from the company's long track record of operating in India.
Tata Power continues to generate stable cash flows led by efficient operations and supportive regulations that allow pass-through of fuel costs to customers under its licensee business. It is also making progress on smaller projects with about 575 MW capacity commissioned in the past 18 months. In fiscal 2009, Tata Power benefited from its 30% stake in the Indonesian coal operating companies, which recorded good price realization. S&P expects this to continue in fiscal 2010 with the lower coal prices being offset by increased coal production.
Tata Power continues to pursue an ambitious growth strategy and has a project pipeline aggregating about 6,000 MW of capacity. However, these projects in pipeline are in a nascent phase and have not been factored into the rating. |
