| Strategic importance to the government of Andhra Pradesh (GoAP):
APTRANSCO is of strategic importance to the Government of Andhra Pradesh (GoAP) as it functions as the sole State Transmission Utility (STU) responsible for intra-state power transmission and maintenance of grid stability across the state. The company plays a critical role in ensuring reliable power evacuation, supporting the state's growing energy demand and facilitating renewable energy integration. APTRANSCO's operations remain integral to the functioning of the Andhra Pradesh power sector, with strong operational linkages with the state-owned generation and distribution utilities. Further, its strategic significance is evidenced by the ongoing transmission network expansion plans and continued support in mobilising long-term funding for infrastructure development. Acuité believes that APTRANSCO will continue to benefit from strong policy and institutional support from the Government of Andhra Pradesh, given its critical role in the state's power sector.
Improvement in revenue profile supported by strong operational performance
The operating income of APTRANSCO is improved to Rs. 3,258.3 Cr. in FY2026 (Est.) from Rs. 2,963.8 Cr. in FY2025, driven by higher transmission revenue recovery under the prevailing regulatory framework. The moderation in revenue to Rs. 2,963.8 Cr. in FY2025 from Rs. 3,086.1 Cr. in FY2024 was primarily on account of a true down adjustment, which resulted in lower revenue recognition during the year. The EBITDA margin moderated 53.25 percent in FY2026 (Est.) from 58.02 percent in FY2025, primarily due to higher employee and other operating expenses. However, the PAT margins improved to 16.82 percent in FY2026 (Est.) from 12.85 percent in FY2025, supported by the improvement in revenue levels and lower interest costs. Earlier, in FY2025, the EBITDA and PAT margins had declined to 58.02 percent and 12.85 percent, respectively, from 61.68 percent and 19.69 percent in FY2024, owing to the lower revenue base resulting from the truing-down adjustment and the relatively fixed nature of operating costs.
Operationally, APTRANSCO is expected to maintain a stable performance profile, with transmission system availability of 99.35 percent and transmission losses of around 2.60 percent in FY2026. The utility had reported strong operating parameters in FY2025 as well, with system availability of 99.78 percent, exceeding the approved regulatory norm of 99.70 percent, while transmission losses remained below approved levels. Acuité believes that APTRANSCO's ability to consistently maintain high system availability and controlled transmission losses will continue to support its operational profile over the medium term.
Moderate financial risk profile:
APTRANSCO’s financial risk profile remained moderate, characterised by a moderate net worth, moderate leverage levels and adequate debt protection metrics. The company’s net worth improved to Rs. 2,844.66 Cr. as on March 31, 2025 from Rs. 2,553.58 Cr. as on March 31, 2024, driven by accretion of profits to reserves. Further, net worth is estimated to improve to Rs. 3,392.55 Cr. as on March 31, 2026 (Est.), supported by the retention of profits. The capital structure remained moderate, with gearing improving to 2.25 times as on March 31, 2025 from 2.35 times as on March 31, 2024, despite the increase in total debt to Rs. 6,389.45 Cr. from Rs. 5,996.28 Cr. over the same period, on account of the improvement in net worth.
Gearing improved to 1.95 times as on March 31, 2026 (Est.), supported by the growth in net worth. The debt protection metrics remained adequate, with interest coverage ratio (ICR) and debt service coverage ratio (DSCR) stood at 3.30 times and 1.13 times, respectively, in FY2025. While the improved to 4.01 times in FY2026 (Est.), the DSCR remained at similar levels at ~1.12 times owing to the company's ongoing debt-funded capital expenditure programme. The debt-to-EBITDA level remained moderate at 3.50 times in FY2026 (Est) and 3.43 times in FY2025 . Acuité believes that APTRANSCO's financial risk profile will continue to remain moderate over the medium term, considering the sizeable capital expenditure requirements towards transmission network expansion, which are expected to be largely funded through long-term debt, albeit supported by steady profitability and improvement in net worth.
|
| Intensive working capital operations:
APTRANSCO's working capital operations remained intensive in nature, reflected by the gross current asset (GCA) of 426 days in FY2025, albeit improving from 436 days in FY2024. The elongated working capital cycle is primarily attributable to the high receivables from distribution utilities, resulting in debtor days of 343 days in FY2025. In addition, the company's current asset profile continues to comprise significant advances and other current assets, which further contribute to the elevated GCA levels. However, the working capital intensity is estimated to improve in FY2026 (Est.), with GCA days declining to 407 days and debtor days improving to 325 days, supported by better receivables realisation. The creditor period stood at 72 days in FY2025 and is estimated to moderate to 63 days in FY2026. Despite the intensive working capital operations, the fund based working capital limits were maintained with credit balance over the past 12 months ending March 2026. Acuité believes that APTRANSCO's working capital operations are likely to remain intensive over the medium term on account of the inherently high receivable cycle associated with the counterparty profile of the distribution utilities, although a gradual improvement in collection efficiency is expected to support moderation in the overall working capital cycle.
Exposure to financially weak distribution utilities:
APTRANSCO remains exposed to the credit profile of the Andhra Pradesh state distribution utilities, namely APCPDCL, APSPDCL and APEPDCL, which are the primary counterparties for transmission charges. The DISCOMs continue to report weak financial metrics characterised by modest profitability, weak debt coverage indicators and leveraged capital structures. Consequently, APTRANSCO continues to have an elongated receivables cycle, reflecting the payment profile of the distribution utilities. Nevertheless, collection efficiency improved significantly during FY2026, resulting in a reduction in outstanding receivables and an improvement in debtor days. The counterparty credit risk is further mitigated by the strategic importance of the distribution utilities in ensuring uninterrupted power supply in the state, the continued financial support extended by the Government of Andhra Pradesh to the power sector through subsidy support mechanisms, and ongoing sector reforms such as implementation of the Revamped Distribution Sector Scheme (RDSS) and payment-discipline measures under the Late Payment Surcharge (LPS) framework. These measures are aimed at improving the operational and financial sustainability of the distribution utilities.
Acuité believes that although the financial health of the state DISCOMs will continue to influence APTRANSCO's receivables profile, the demonstrated improvement in collections, coupled with the strategic importance of the state power sector entities and continued government support, provides comfort to the company's credit profile.
Susceptibility of operating performance to transmission charges set by the Regulatory Commission:
APTRANSCO operates in a regulated business environment, with its revenue and profitability largely dependent on transmission charges approved by the Andhra Pradesh Electricity Regulatory Commission (APERC). Accordingly, the company's financial performance remains susceptible to regulatory decisions relating to tariff determination, truing-up/truing-down adjustments and approval of expenditure and capitalisation of assets. Any adverse regulatory orders, delays in tariff approvals or significant true-down adjustments may impact revenue recognition and profitability. However, this risk is partially mitigated by the transparent regulatory framework and the regulated cost-recovery mechanism governing the transmission business.
|
