Rating agency CRISIL has advanced DB Power Limited’s (DBPL) long-term grade from “A+” to “AA-” after Adani Power Limited’s tactics to obtain DBPL were called off. It also detached the firm from “on watch status” and allotted a “stable” outlook.

On August 30, 2022, the rating work placed DB Power’s rating on watch, succeeding Adani Power Limited’s declaration to obtain DBPL. The extended stop date of the deal (the acquisition) under the memorandum of acceptance finished on February 15, 2023.

CRISIL Ratings said it knows the deal has been called off; hence, the rating watch has been fixed. The rating upgrade factors in the improvement in the financial risk profile of DBPL, obsessed with the strong operating performance, prepayment of debt, and improvement of liquidity.

The operating presentation was robust during the nine months through December 2022, and greater-than-expected power requests and healthy sales in the short-term market drove the high cash buildup.

DB Power’s Ebitda was Rs 1,091 crore against Rs 1,504 crore during FY22. Operating presentation is predictable to sustain over the medium term due to steady and healthy power demand and low generation cost.

Its debt protection metrics enhanced knowingly on prepayment debt of Rs 310 crore in the existing fiscal (Rs 415 crore in FY22). The liquidity strengthened, with total cash equaling Rs 1,396 crore on December 31, 2022 (Rs 1,128 crore on March 31, 2022).

With substantial upgrading in receivables (77 days as on December 2022, against 119 days as on March 2022), the unutilised bank limit was also amended to Rs 715 crore.