| Experienced management and long operational track record
MB Power (Madhya Pradesh) Limited (MBPL), incorporated in 2008, is a Madhya Pradesh-based power generation company and a subsidiary of Hindustan Power Limited (HPL) (formally known as Hindustan ThermalProjects Limited (HTPL), which is part of the Hindustan Power Group. The company was established to develop and operate thermal power assets and currently operates a 1,250 MW coal-based thermal power plant in Anuppur, Madhya Pradesh. MBPL is overseen by an experienced management team comprising Mrs. Jasmeen Kaur, Mr. Hemant Sahai, Mrs. Seema Joshi, Mr. Rajarangamani Gopalan, Mr. Anand Deshpande, Mr. Deepak Amitabh and Mr. Edward Michael Bourgoin. Backed by the promoter group's support and its long-standing presence in the power sector, the company has developed significant operational expertise in plant management, fuel procurement, regulatory compliance, and stakeholder relations. The management's industry experience, coupled with the company's established operational track record, supports efficient plant operations, operational stability, and sustained business performance. Acuité believes that the Group’s long operating track record, industry positioning, and promoter experience are expected to support a stable flow of revenues over the medium term.
Low off take risk supported by long term PPA with 100 per cent tied up capacity
MBPL has entered into long-term PPAs with discoms of Madhya Pradesh, Uttar Pradesh, Assam and Karnataka. The company has fully (100 per cent) tied up its capacity with long-term Power Purchase Agreements (PPAs) with MP discoms for 423 MW, UP discoms for 383 MW, Assam discoms for 139 MW and Karnataka discoms for 305 MW for 25 years. All long-term PPAs have fixed and variable charges as per the bid tariff. The company has a long-term open access agreement with the Power Grid Corporation of India (PGCIL) and is well connected with dedicated transmission lines that are connected to the National Grid. Power supply to off takers (UP, MP, Assam and Karnataka) is done through the National Grid. Acuité believes that the presence of assured off-take, long-term PPAs, and low counterparty receivable risk is expected to support the business risk profile over the medium term.
Stable operating performance albeit moderation in revenues which are expected to recover in current fiscal
The company has reported revenue of Rs.4,066.35 Cr. in FY2026 as against Rs. 4,219.19 Cr. in FY2025. Furthermore, in Q1FY2027 revenue stood at Rs. 1210.00 Cr. Company has also sold the balance untied capacity in exchange market during FY 2026 at an average realization rate of Rs.5.11/Unit. The tariffs have been revised in Q1FY27, which would support the operating scale going forward. The EBTIDA margin stood at 38.14 percent in FY2026 as against 38.40 percent in FY2025. The PAT margin stood at 16.84 per cent in FY2026 as against 13.87 per cent in FY2025. The plant has consistently maintained an average annual plant availability factor of ~91 per cent in FY2026, which has ensured the recovery of capacity charges under PPAs. The PLF has remained at around 78 percent and 83 percent during FY2026 and Q1FY2027, respectively. Given the adequate fuel tie-up, the plant was able to achieve a higher-than-normative PAF and sustained PLF over the medium term. Acuité believes that due to the presence of long-term PPAs and a stable track record of PLF, operating performance will remain stable over the long term.
Low fuel supply risk owing to Fuel supply arrangements and Coal Cost Pass-through in PPA's
Company has long-term fuel supply arrangements with Southeastern Coalfields Limited for the supply of 4.99 million tonnes per annum (MTPA). Subsequently, the annual contracted quantity has been revised to 5.55MTPA, of which, around 3.89MTPA is available for MP and UP. Further, an FSA is signed under Shakti Scheme for Assam (0.63MTPA) and Karnataka (1.41MTPA) taking the total supply to 5.94MTPA. Company coal requirement is around 5.36 MTPA in FY2026. Company contracted for supply of 3.55 lakhs MTPA; total coal requirement balance coal is procured from e-auction/ open markets. Company’s plant is well connected with National railway network through dedicated railway siding in the plant. The company's long-term PPAs with the discoms of Madhya Pradesh, Assam, and Karnataka provide effective protection against fuel cost volatility, as coal costs are treated as a pass-through item. Under these agreements, the company is reimbursed for eligible expenses upon submission and verification of the requisite documents, subject to the achievement of prescribed normative parameters. Tariffs are determined by the applicable Electricity Regulatory Commissions through annual tariff orders, with fixed and variable charges payable for long-term contracted capacity in accordance with applicable tariff regulations. In the case of the UP PPA, any increase in coal procurement or transportation costs arising from shortages or price escalations is recoverable under the Change in Law provisions, over and above the stipulated variable charges. Consequently, the coal cost pass-through framework across the PPAs largely insulates the project from fuel cost escalation risks. Acuité believes that the company's exposure to fuel cost volatility remains significantly mitigated, supported by the coal cost pass-through mechanisms embedded in its long-term PPAs with the discoms of Madhya Pradesh, Assam, Karnataka, and Uttar Pradesh. Acuité believes that the company's fuel supply risk is adequately mitigated by its long-term fuel supply arrangements.
Healthy financial risk profile
The company’s financial risk profile is healthy, marked by a strong net worth, low gearing, and healthy debt protection metrics. The net worth of the company stood at Rs.3703.24 Cr. and Rs.3019.42 Cr. as on March 31, 2026, and 2025, respectively. The improvement in net worth is due to the accretion of reserves. The company’s gearing level stood low at 0.84 times on March 31, 2026, as against 1.14 times as on March 31, 2025. Debt protection metrics—interest coverage ratio (ICR) and debt service coverage ratio (DSCR)—stood healthy at 5.10 times and 2.30 times as on March 31, 2026, respectively, as against 4.02 times and 1.99 times as on March 31, 2025, respectively. TOL/TNW (Total outside liabilities/Total net worth) stood at 1.37 times and 1.72 times as on March 31, 2026, and 2025, respectively. The debt to EBITDA of the company stood at 1.82 times as on March 31, 2026, as against 1.97 times as on March 31, 2025. The improvement is on account of repayment of debt. The company is currently in the process of refinancing its existing debt to reduce its overall borrowing costs, while also raising an additional term loan of Rs.2100 Cr. for general corporate purposes. Acuité believes that, despite the proposed debt infusion, the company's financial risk profile is expected to improve over the medium term on account of healthy cash accruals and refinancing of existing debt which will reduce the debt obligations substantially.
Efficient Working capital operations
MBPL’s working capital operations remained efficient marked by gross current Asset (GCA) of 176 days in FY2026, as against 129 days in FY2025. The high GCA days in FY2026 is on account of increase in other current assets i.e. cash and bank balances. Inventory days stood at 50 days in FY2026 as against 60 days in FY2025. Company's strategy is to maintain sufficient coal reserves at the plant to ensure uninterrupted operations during the coal deficit season, particularly the rainy season. Debtor days stood at 14 days in FY2026 as against 10 days in FY2025. The healthy debtor days can be attributed to a significant increase in the financial health of discoms, this enhanced financial stability allows them to make earlier payments and take rebates. Acuité believes that the company’s operations will continue to remain efficient over the medium term. Furthermore, the company has not availed the fund-based facilities for the past several years.
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| Execution risk in ongoing solar power project
MBPL remains exposed to execution risk associated with the 300 MW solar power project in Lalitpur, Uttar Pradesh, considering the project is currently at a nascent stage of development. Total cost of the project is Rs. 1418.92 Cr, which is funded through loan of Rs. 1135.14 Cr and rest though internal accruals. Nevertheless, the risk is partially mitigated by the tie-up of the entire project capacity under a long-term Power Purchase Agreement (PPA) with Uttar Pradesh Power Corporation Limited (UPPCL) for 25 years, providing revenue visibility upon commissioning. Further, the debt required for the project has already been tied up, thereby mitigating funding risk and providing adequate financial visibility for project implementation. Timely completion and commissioning of the project within the envisaged cost and schedule will remain a key rating monitorable. However, the execution risk is partly mitigated by the group's established track record of over a decade, with successful execution of over 40 renewable projects, demonstrating its ability to undertake projects of similar scale and complexity.
Moderate counterparty credit profile
Madhya Pradesh, Uttar Pradesh discoms, Assam Power Distribution Company and Karnataka discoms are major off-takers of the company. The financial risk profile of these companies is moderate; however, the company has been receiving payments in a timely manner. Exchange sales are realized within 2 to 3 days. Going forward, any significant deterioration in the credit risk profile of the off-takers, leading to an impact on the liquidity position and financial risk profile of the company, shall remain a key monitorable.
Exposure to climatic conditions impacting PLF
The company remains exposed to climatic risks inherent in thermal power generation, as adverse weather events and variations in water availability can impact plant operations and PLF levels. Sustained deterioration in PLF may adversely affect generation, cash flows, and debt protection metrics. The risk is partly mitigated by the company's operational experience and established maintenance practices; however, its ability to maintain stable operating performance across weather cycles remains a key rating sensitivity.
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