Strategic asset for Government of India (GoI) with strong operational and financial support 
NPCIL is wholly owned by GoI. It is the public sector undertaking which is engaged in design, construction, commissioning and operation of nuclear power reactors. NPCIL currently owns 21 reactors and operates 22 reactors across India (one reactor is owned directly by GoI), has eight reactors under construction and a further 10 sanctioned projects with an aggregate committed capacity of 21,980 MW. NPCIL is a strategic entity for GoI to promote its nuclear energy initiative. Its exclusive mandate to install and operate nuclear power plants in India among the public sector companies makes it very strategically important for the government and the country. GoI provides complete operational support in terms of ensuring continuous supply of fuel and purchase of the power generated by NPCIL. Given such strategic importance and the complete ownership by the government, NPCIL is considered as a sub- sovereign entity, thereby enabling it to raise funds at competitive pricing from financial institutions and international lenders. The operational performance of the company has strengthened over the past few years on account of an improvement in plant capacity utilization levels. However, the total generation in FY23 witnessed a decline and stood at 45,855 MU as against 47,112 MU generated in FY22. This decline in power generation in FY23 was on account of shut down of some plants due to some technical problems in commissioning. The overall plant load factor (PLF) of NPCIL was ~87 percent in FY23 as against ~88 percent for FY22 and the weighted availability factor was 87 percent in FY 23 as against 88 percent in FY22. KAPP-3 was commissioned on 30 June, 2023 and the other 3 projects are expected to achieve criticality in the next 12 – 18 months, which will further increase the generation capacity. Acuité believes that NPCIL’s credit profile will continue to be strongly supported by its strategic importance to GoI. The ownership pattern of NPCIL and the support from Government will remain key rating sensitivities.

Government's focus on the use of cleaner fuel for power generation
The total installed power generation capacity in the country, as on 31st 
May 2023 stood at 4,17,688 MW. The thermal energy (Coal/Gas/Diesel) accounts for 56.8 percent of the total capacity while the rest is contributed by Clean Energy (Wind, Solar Bio, Hydro and Nuclear). The nuclear energy accounts for only around 1.6 percent of the total installed capacity of the country. The total electricity generation during 2022-23 was 1624.158 BU as compared to 1491.859 BU generated during 2021-22, representing a growth of about 8.87%. During FY2023, the nuclear power generation was 45,855 Million Units (MUs) which has contributed about 1.6 percent in the total electricity generation in the country. The energy availability during the year 2022-23 was 15,04,264 MUs against requirement of 15,11,847 MUs, a deficit of ~7,583 MUs and peak load availability was 2,07,231 MW against demand of 2,15,888 MW, a shortfall of about 8657 MW. The conventional energy sources are depleting rapidly and also leading to environmental pollution and adverse impact on climate. The Government has taken various initiatives to augment capacity addition mainly by non-fossil fuels routes like solar, wind and nuclear to limit CO2 emission in the environment while meeting the demand for power. Nuclear power is clean, safe, reliable and an economically viable source of electricity. The government has taken several initiatives to facilitate expansion of nuclear power in the country by creation of the Indian Nuclear Insurance Pool (INIP) and amendment of the Atomic Energy Act, 1962 to enable Joint Venture companies of Public Sector Enterprises to set up nuclear power plants. The Government had accorded ‘in principle’ approval of sites for setting up nuclear power projects in states of Maharashtra, Haryana, Rajasthan, Madhya Pradesh, Gujarat, West Bengal, Karnataka and Andhra Pradesh. As on date, the committed capacity, including present installed capacity, is 21,980 MW, which is planned to be progressively realized by 2031-32. Acuité believes that the government initiatives for promoting the cleaner source of fuel to bridge the demand supply gap and increase the share of nuclear power in aggregate capacity are expected to augur well for the growth of NPCIL. 

Healthy Financial risk profile
The company has healthy financial risk profile marked by healthy net worth, moderate gearing and comfortable debt protection matrices despite its continuing capital expenditure programme. The net worth of the company improved to Rs. 54,892.63 crore in FY23 as against Rs. 49,805.64 crore in FY22. The gearing of the company stood at 1.40 in FY23 as against 1.30 times in FY22. The debt profile of Rs. 76,590.40 crore in FY23 which mainly consists of long-term debt of Rs. 50,900.19 crore and unsecured loans worth Rs. 25,690.21 crore. The total outside liabilities to tangible net worth (TOL/TNW) stood at 1.52 times in FY23 as against 1.44 times in FY22. The interest coverage ratio stood at 11.58 times in FY23 as against 15.36 times in FY22. The debt service coverage ratio (DSCR) stood at 2.73 times for FY2023 as against 4.09 times for FY2022. Team believes that the financial risk profile will continue to remain healthy on account of strong cash accruals backed by a favourable tariff structure ensuring that there is no sharp rise in the debt levels.

Implementation risk associated with the ongoing projects
NPCIL is in the midst of construction and installation of 8 reactors with cumulative capacity of 6200 MW. Nuclear power projects typically have a long gestation period because the government and the project developer need to ensure very strong safety mechanisms and minimal risks to human life and the environment. Further, acquisition of land for green field projects and addressing public apprehensions about radiation risks also can take up a significant amount of time. However, KAPP-3 was already commissioned on 30^th June and the other 3 projects are expected to achieve criticality in the next 12 – 18 months. While company's extensive experience in developing nuclear power plants somewhat mitigates project implementation risks, team believes that timely completion of its various projects and commencement of operations will continue to be a risk factor.

Counter-party credit risk
The corporation is exposed to counter party credit risk as it has long term power purchase agreements with various state discoms some of which have a weak credit profile. The same as resulted in increase in the receivables position to Rs. 7319.55 Cr in FY23 out of which 90.41% of which is from State PSUs and departments. However, the payments backed by letter of credit arrangement as per Government directives mitigates the risk to an extent. The receivables of the company are expected to reduce on account of the Late Payment Surcharge Scheme introduced by the government.