Acuite has consolidated the financial and business risk profile of Odisha Power Generation Corporation Limited (OPGCL) and Odisha Coal and Power Limited (OCPL). The consolidation is on account of Odisha Coal and Power Limited being a 51% subsidiary of Odisha Power Generation Corporation and Odisha Coal and Power Limited being incorporated to cater to the coal needs of Odisha Power Generation Corporation Limited for Unit 1, 2, 3 & 4 and for its upcoming Unit 5 & 6  through the coal mines of Manoharpur and Dip-side of Manoharpur block. OPGCL has given corporate guarantee to OCPL in terms of financial assistance.
 

Strategically important entity to Government of Odisha (GoO)

The group is strategically important for the power sector infrastructure in the state of Odisha. OPGCL is also one of the key entities for undertaking power generation activity in the state of Odisha other than Odisha Hydro Power Corporation Limited (OHPCL). The status of being a government-owned entity provides adequate financial flexibility. OPGCL's credit profile is also supported by its access to funds at low cost and its ability to mobilize financial resources from several financial institutions and multilateral development institutions. The rating also factors regular equity infusion by GoO in OPGCL. Odisha has been one of the fastest growing states in India with a low debt to gross state domestic product. The GoO has significantly increased its focus on increasing industrial development in the state. It is also focusing on asset creation towards infrastructure and social sectors. Acuite believes that OPGCL shall continue to benefit from the financial, operational, and managerial assistance received from GoO from time.

Low Offtake Risk owing to PPAs and FSA

Of the total capacity of 1,740 MW, 100% is tied up through long-term PPAs with GRIDCO Limited. The PPAs are structured on a two-part tariff mechanism, ensuring recovery of both fixed and variable costs for the entire power generated. This helps to mitigate any volatility associated with their customer. The company has consistently demonstrated strong operational performance, supported by regular maintenance of its power plants, enabling it to maintain a plant availability factor (PAF) above the normative levels of 68.49% and 85% (as specified in the PPAs) for Units 1 & 2 and Units 3 & 4, respectively, thereby ensuring full recovery of fixed costs.
OPGCL has a fuel supply agreements (FSA) with OCPL (Unit 1&2 -75% and Unit 3&4- 100%) and Mahanadi Coalfields Limited (Unit1&2- 25%) lowers fuel availability risk for power generation under the PPAs and fulfils 100% of their requirement. Furthermore, purchase of coal is done through the bank guarantee mechanism. Acuite believes that the presence of long-term offtake arrangements coupled with assured fuel linkages provides strong revenue visibility and operational stability over the medium term.

Healthy scale of operations
The revenues of the group stood at Rs.4371.39 Cr. in FY25 as against Rs.4105.39 Cr. in FY24. Further, the group achieved ~Rs.4564 Cr. in FY26 (Prov.). This increase was based on sales of coal i.e. 25% of the production to e-auction with better coal realizations and revised tariff rates. The EBITDA Margins stood at 48.92% in FY25 as against 47.21% in FY24 due to marginal decline in raw material costs, employee costs and administrative expenses. Further, EBITDA margin of OCPL and OPGCL stood at 32.30% till Q3FY26 and 35.44% till FY26 respectively. The PAT margin stood at 18.61% in FY25 as against 16.30% in FY24. Further, PAT margin of OCPL and OPGCL stood at 18.82% till Q3FY26 and 12.33% till FY26 respectively. Acuite believes that the scale of operations will improve over the medium term.

Healthy Financial Risk Profile
The financial risk profile of the group remained healthy marked by improved networth, comfortable gearing and moderate debt protection metrics. The networth of the group stood at Rs.6233.35 Cr. in FY25 as against Rs.5316.96 Cr. in FY24 due to accretion of reserves and infusion of equity by the Government of Odisha in OPGCL. There was an equity infusion of Rs.203.00 Cr. in FY25 for the R&M Project Phase I related to Units 1 & 2. The gearing improved to 1.06 times in FY25 from 1.36 times in FY24. The debt protection metrices of the group stood moderate marked by Interest coverage ratio (ICR) of 3.50 times and debt service coverage ratio (DSCR) of 1.51 times for FY2025. Acuite believes that the financial risk profile will remain healthy over the medium term, supported by steady accruals, government support and moderate capital structure.

Intensive working capital cycle

The working capital cycle has improved but remains intensive as reflected from Gross Current Asset (GCA) days of 154 days in FY25 as against 172 days in FY24. The inventory days stood at 60 days in FY25 as against 50 days in FY25. OPGCL stores coal and oil for 45 days and 2 months respectively. The debtor days stood at 77 days in FY25 as against 104 days in FY24. The credit terms for OPGCL from OCPL is a credit period of 1 month and another 15 days available. The credit terms with GRIDCO is of 30 days and if the payment received beyond 30 days, then a late payment surcharge is charged. The creditor days stood at 79 days in FY25 as against 71 days in FY24. The credit terms for OPGCL are on advance basis and varies based on the contract. Acuite believes working capital cycle will remain intensive over the medium term on the back of its nature of business.

Exposure to Regulatory Risks

GRIDCO is the sole counterparty for OPGC's power output and is directly exposed to the health of the Odisha discoms. Thus, OPGC's collection efficiency largely depends on state of the power sector in Odisha. However, these risks are mitigated by presence of a robust two-tier payment security mechanism comprising a letter of credit and an escrow mechanism, which has led to timely realization from discoms.

• Continued improvement in the operational performance with better PLF generations
• EBITDA margins increase above 60% on a sustained basis
• No further elongation of receivables and timely recovery of delayed payment surcharge

• Elongation in working capital cycle with GCAs above 190 days on a sustained basis
• Significant increase in debt fund capex thereby affecting the financial risk profile