The rating agency cited strong regulatory support, improving financial metrics and sustained deleveraging under India’s cost-plus electricity distribution framework. The upgrade comes as the Mumbai utility benefits from predictable cash flows, timely tariff orders and a shrinking debt burden, even as capital expenditure remains elevated.
India Ratings said tariff orders issued by the Maharashtra Electricity Regulatory Commission allowed Adani Electricity Mumbai to fully recover accumulated regulatory assets along with carrying costs, shifting regulatory balances into a surplus position by the first half of fiscal 2026. That regulatory certainty has been a central factor in the company’s improving credit profile.
Leverage falls as asset base expands
Since being acquired by the Adani Group in 2018 from the Anil Dhirubhai Ambani Group, the utility has expanded its asset base to more than Rs 10,000 crore, supported by sustained investment to meet growing electricity demand in Mumbai. At the same time, leverage has steadily declined.
India Ratings expects the regulated asset base to cross Rs 100 billion by the end of fiscal 2026, while gross adjusted debt is projected to fall below one time the RAB. The agency attributed this to strong internal cash generation and tighter control over capital spending.
Retail electricity tariffs have remained largely stable despite higher investment, a dynamic supported by disciplined cost management and the Adani Group’s vertically integrated energy operations. Access to group-owned generation assets has helped cushion fluctuations in power procurement costs, the agency said.
Operational metrics improve
Operational performance has strengthened alongside the balance sheet. Distribution losses fell to 4.3% in the first half of fiscal 2026, while collection efficiency remained close to 99%, levels that compare favourably with global peers.
Liquidity has also improved, with India Ratings noting that all long-term foreign currency borrowings are fully hedged, limiting exposure to currency volatility and refinancing risks.
Renewables gain share in power mix
The utility has also increased its reliance on renewable energy. Renewables now account for about 40% of total power procurement, up from less than 3% in 2019, with a target of 60% by 2027. If achieved, Mumbai would rank among cities with the highest renewable penetration in urban power supply.
Most renewable power is expected to be sourced from Adani Green Energy Ltd., while thermal requirements are met primarily through Adani Power Ltd., one of India’s lowest-cost coal-based generators.
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