Press Release

June 16, 2026

PRAYAGRAJ NAGAR NIGAM
Rating Reaffirmed

Product	Quantum (Rs. Cr) (SEBI)	Long Term Rating	Short Term Rating	Regulated By
BOND	50.00	ACUITE AA \| Stable \| Reaffirmed	-	SEBI
Total Outstanding	50.00	-	-	-
Total Withdrawn	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

Acuité has reaffirmed the long term rating of ''ACUITE AA'' (read as ACUITE double A) on the Rs. 50.00 Cr. bonds of Prayagraj Nagar Nigam (PNN). The outlook is ‘Stable’.

Rationale for Rating

The rating takes into consideration the consistent support from both the state and central government towards the development of the city, the healthy revenue income and the healthy cash surplus. Uttar Pradesh continues to strengthen its position on the global tourism map, with the number of tourists visiting UP. Prayagraj is considered one of the most popular tourist places in India for domestic, national, and international tourists. The rating further factors Prayagraj’s status as the Judicial capital of Uttar Pradesh. The rating also derives comfort from the structured payment mechanism, including DSRA, Interest Payment Account, and Sinking Fund Account. However, the rating remains constrained by the elevated level of receivables of PNN.

About the Company

Prayagraj Nagar Nigam was established in 1994 and is responsible for the civic infrastructure and administration of the Prayagraj city. The Municipal Corporation is managed by Shri Gaurav Kumar, Shri Prem Kumar Gautam, Shri Tarun Gauba, Shri Vijay Vishwas Pant, and Shri Ravindra Kumar Mandar. Its registered office is at Prayagraj, Uttar Pradesh.

Unsupported Rating

ACUITE A/Stable

Analytical Approach

Acuite has standalone business and financial risk profiles of Prayagraj Nagar Nigam (PNN) to arrive at the rating.

Key Rating Drivers

Strengths

Benefits from Prayagraj’s status as the Judicial Capital of Uttar Pradesh
PNN is a governing civic body and provides civic services to Prayagraj city, it is responsible for the civic infrastructure and administration of the city. As of 2011, Prayagraj is the seventh most populous city in the state, thirteenth in Northern India and thirty-sixth in India, with an estimated population of 1.2 million in the city. In 2011, it was ranked the world's 40th fastest-growing city. The city, in 2016, was also ranked the third most liveable urban agglomeration in the state (after Noida and Lucknow) and sixteenth in the country. The administrative section of PNN is headed by the municipal commissioner, under whom currently three additional municipal commissioners are deputed. The political section of the PNN is constituted of an elected mayor and 100 ward members for a term of five years. The city is divided into wards according to its population, and representatives are elected from each ward. The significant employment opportunities, generated as a result of the economic activities in and around Prayagraj, have led to higher per capita income. Besides being one of the largest cities in Uttar Pradesh, Prayagraj has been identified as one of the cities under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) mission. The purpose of AMRUT is to ensure every household has access to tap water and sewerage connections, increase the amenity value of cities, and reduce pollution in the city. Acuité believes that adequate financial and non-financial support from State and Central Government will be made available to PNN for maintaining civic infrastructure at healthy levels under AMRUT mission. PNN has access to revenue grants and capital grants from the State Government and Central Government.

Healthy Scale of Operations
The revenue profile of the PNN includes various tax revenues, fees and user charges, rental income from municipal properties, sales and hire charges, grants and contributions of revenue nature, and non-tax income. The corporation achieved a turnover of Rs.922.87 Crore in FY2026. On the profitability level, the EBITDA margin of the ULB stood at 15.24% in FY2026 against 12.61% in FY2025, and the PAT margin stood at 6.39% in FY2026 against 4.84% in FY2025. Acuite expects that the revenue of the corporation will improve over the medium term on the back of healthy revenue collection and improvements in economic activities.

Healthy Financial Risk Profile
The financial risk profile of the corporation is marked by strong net worth, low gearing, and healthy debt protection metrics. The net-worth of Rs.2931.60 Crore as on 31st March 2026 against Rs.2682.21 Crore as on 31st March 2025. The increase in net worth is on an account of the accumulations in reserves and includes grants and contributions for specific purposes. The total debt stood at Rs.54.01 as on 31st March 2026 against Rs.6.01 Crore as on 31st March 2025. The reflected debt as on 31st March 2026 includes the issued bonds along with unsecured loans from the State Government. Further, the gearing stood at 0.02 times as on 31st March 2026. The interest coverage ratio and debt service coverage ratio stood at 81.25 times each as on 31st March, 2026. Acuité expects the financial profile of PNN to remain healthy, backed by adequate support from the Government in the form of grants and timely receipt of tax collection and growth potential of Prayagraj city.

Structured Payment Mechanism
PNN books revenue to various income sources, out of which property tax shall be deposited every month in a separate no-lien escrow account for debt servicing of the bonds. The funds should be first utilized to meet the Minimum Balance in the escrow account, which entails maintenance of a Debt Service Reserve Account (DSRA), Sinking Fund Account (SFA), and Interest Payment Account (IPA) The minimum balance shall not be used for any purpose other than transfer to the DSRA, IPA and SFA.

Terms of the Bonds

The DSRA shall be created in any event prior to seven days with an amount equivalent to the four coupon payments (2 years’ interest) need to be maintained.
The funds (owned revenue) received in the escrow account will be transferred to IPA and SFA on a monthly basis as per the terms of the bond.
As regards the interest payments (expected to be half-yearly), the IPA will be funded on a monthly basis.
SFA, which shall be funded monthly, equivalent to the amount as per the terms of bond issuances.

IPA (Interest Payment Account)
An amount, as specified in the terms of bonds/loans agreements, will be transferred to IPA from the escrow account on a monthly basis. The debenture trustee shall check the amount in IPA at least 25 (T-25) days prior to the interest payment date. In case of any shortfall in the amount, the trustee shall intimate the PNN of the shortfall, and PNN shall cover the shortfall prior to 10 days (T-10 days) of the interest payment day. If the corporation fails to cover the shortfall at 09 days (T-09 days) prior to the interest servicing day, then the trustee will instruct the bank to transfer the deficit from the DSRA to the IPA at 08 days (T-08 days) prior to the interest servicing day. In case the DSRA Amount (or part thereof) is utilized to fund the shortfall in the amount required to make payment of the Coupon in respect of any Coupon Payment Date, immediately after the Debenture Trustee has instructed the Bank to utilise the DSRA Amount as above and in any event prior to 7 (Seven) days prior to the relevant Coupon Payment Date (T-7). The Debenture Trustee would issue a notice in writing to the Issuer (and the GoUP shall be informed of the same, by the Debenture Trustee marking a copy of such notice to the GoUP).

SFA (Sinking Fund Account)
The debenture trustee shall check the amount in SFA at least 25 (T-25) days prior to end of each 12-month block. In case of any shortfall in the amount the trustee shall intimate the PNN of the shortfall and PNN shall cover the shortfall prior to 15 days (T-15 days) prior to end of each 12 months’ block. If the corporation fails to cover the shortfall at 14 days (T-14 days) prior to end of each 12 months’ block, then the trustee shall trigger the payment mechanism and issue a notice to the Issuer (and the GoUP shall be informed by marking a copy to the GoUP). On the issuance of such notice, the GoUP shall remit funds to fund the shortfall into the Sinking Fund Account prior to the end of each 12 Month Block (T). The redemption shall be made by the Issuer on the relevant Redemption Dates.

Weaknesses

Significant buildup of receivables
The receivables position of the corporation improved yet remained high, wherein the debtor days stood at 250 days as on 31^st March 2026 as against 333 days as on 31^st March 2025. The trade receivables include property tax, water and sewerage tax, receivables from Government grants, etc., which are unpaid by the consumers. Acuité believes that any significant build-up in receivables beyond existing levels will be a key rating sensitivity factor.

Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix)

GoUP has created a policy for utilisation of the funds in the Infrastructure Development Fund (IDF) for credit enhancement and other needs of local bodies to promote/ incentivise issuance of municipal bonds. Pursuant to the Governmental Order, the Issuer has approached the GoUP for entering into the Tripartite Agreement with the Debenture Trustee and the Issuer in respect of the Debentures, for agreeing and covenanting to make payment of funds from the Infrastructure Development Fund in terms of such agreement:

a) into the Interest Payment Account on the occurrence of a DSRA Amount Shortfall,
b) into the Sinking Fund Account on the occurrence of a Sinking Fund Mismatch.

The GoUP shall make payment of such amounts as may be required to make good any DSRA Amount Shortfall. In case the DSRA Amount lying in the Interest Payment Account is utilized to fund the shortfall in Interest Payment Account at the time of the Coupon payment, the GoUP shall remit the funds (to the extent that the DSRA Amount utilized to fund the shortfall in the Interest Payment Account for meeting the Coupon payment on such Coupon Payment Date) to replenish the Required DSRA Amount, in terms of the Tripartite Agreement.

Further, the GoUP shall make payment of such amounts as may be required to make good any Sinking Fund Mismatch. In case of Sinking Fund Mismatch, the GoUP shall remit the funds to fund the shortfall in the Sinking Fund Account.

Stress Case Scenario
Acuite believes that if the property tax, which is expected to be collected, were adjusted by 50%, still the corporation would be having sufficient cash flow over and above to make the coupon payments and DSRA. Further, the corporation is required to maintain DSRA for four coupon payments.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Growth in the size of corporation with revenue surplus

Potential triggers (individual or collective) for a downward rating action:

Non-adherence to the Structured Payment Mechanism (SPM).
Significant reduction in property tax collections resulting in the escrow account balance falling below the stipulated levels.

All Covenants

1. The Issuer shall, at all times till the Debentures are outstanding, ensure that the total amounts collected in the Escrow Account in any financial year shall be at least 2 (Two) times of the Annual Payments Amount. For the purpose of this term sheet, the term ‘Annual Payments’ shall, in respect of any financial year, mean the aggregate of:

a) the Coupon payable in such year (in relation to the present bond issue and any further borrowings)
b) the portion of principal amount of the Debentures which are required to be deposited by the Issuer into the Sinking Fund Account in such financial year (in relation to the present bond issue and any further borrowings), in terms hereof.

2. Debt Service Coverage Ratio (DSCR) shall mean the ratio of operating surplus to total debt servicing, which shall not be less than 1.50 times of operating surplus calculated as on 31st March for each year financial year (starting from 31st March 2026 till the time bonds are outstanding) as below:
DSCR = operating surplus / total debt service

i. Operating surplus calculated as the below:
Operating Surplus = Total Income - Adjusted Expenditure
a. Total income = Total income of the corporation as per the audited income and expenditure statement.
b. Adjusted Expenditure = Total expenditure as per the audited Income and Expenditure statement - Depreciation - Finance charges - Provisions and Write offs - other non-cash expenditures

ii. Total debt service = interest payment of loans and bonds + transfers made to the sinking fund account towards principal repayment / redemption + principal repayment / redemption (Excluding those made out of the sinking fund account).

So long as the eligibility conditions are met, the issuer shall be entitled to raise further financial indebtedness based on its cash flows including the cash flows through the escrow account, provided that nothing in this provision should be construed to permit the creation of any encumbrance over the hypothecated property without the express prior written consent of the debenture trustee.

For the purpose of this term sheet, the term ‘Eligibility Conditions’ shall mean the following conditions:
(a) the Annual Payments Ratio is maintained by the Issuer;
(b) the Minimum DSCR of 1.50 times is maintained by the Issuer
(c) there is no shortfall in the contribution to the Escrow Account, the Interest Payment Account (including towards maintenance of the Required DSRA Amount) and/or the Sinking Fund Account which has not been made good by the Issuer in terms of the Transaction Documents;
(d) no Event of Default has occurred.

3. Other financial covenants as defined in the Transaction Documents
The documents executed in relation to or which are relevant to the issue includes:
a) Preliminary Placement Memorandum/ this Placement Memorandum along with all annexures,
b) The Tripartite Agreement with the Debenture Trustee and the Government of Uttar Pradesh,
c) The Issue Agreement, T
d) The Issue Proceeds Agreement,
e) The Debenture Trustee Agreement,
f) The Registrar Agreement,
g) The Debenture Trust Deed,
h) The Deed of Hypothecation,
i) Memorandum of Deposit of Title Deeds,
j) The Escrow Agreement,
k) The Tripartite Agreements with NSDL and CDSL
l) Any other agreement or document designated as such by the Debenture Trustee (acting on the instructions of the Majority Debenture Holders).

4. Additional Covenants Default in Payment: In case of default in payment of interest and/or principal redemption on the due dates, the Issuer shall pay an additional interest at the rate of 2% p.a. over the respective Coupon Rates of the Bonds for the defaulting period.

5. Negative Covenants
At all times until the Final Settlement Date, the Issuer shall not, without the prior written consent of the Debenture Trustee (acting upon the instructions of the Majority Debenture Holders):
a) Create any encumbrance over the Mortgaged Property and Hypothecated Property
b) Enter into any agreement or commitment of any sort, the terms of which conflicts with the pro visions of the Transaction Documents
c) Close the Collection Accounts and/or collect property tax (or any other tax levied in place of property tax as per Section 173 of the Act) in any other account
d) Abolish , alter or reduce the property tax levied by the Issuer.
e) Undertake or enter into any transaction of merger, de-merger, consolidation, re-organisation, or compromise with its creditors.

Liquidity Position

Adequate

PNN has adequate liquidity marked by healthy net cash accruals of Rs.166.82 crore for FY2026 as against Rs.145.69 crore for FY2025. Additionally, the cash and bank balances stood at Rs. 925.10 Cr. as on 31^st March 2026 as against Rs. 686.70 Cr as on 31^st March 2025. The investments in the form of fixed deposits stood at Rs. 199.57 Cr as on 31^st March 2026 as against Rs. 118.71 Cr as on 31^st March 2025. The city requires huge investments to improve the quality of its civic services, which is supported by the Government in the form of grants and PNN's cash buffer. Acuité expects the liquidity to remain adequate, considering PNN has not availed any external debt.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 26 (Actual)	FY 25 (Actual)
Operating Income	Rs. Cr.	922.87	969.67
PAT	Rs. Cr.	58.97	46.89
PAT Margin	(%)	6.39	4.84
Total Debt/Tangible Net Worth	Times	0.02	0.00
PBDIT/Interest	Times	81.25	937.58

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Explicit Credit Enhancements: https://www.acuite.in/view-rating-criteria-49.htm
• Urban Local Bodies : https://www.acuite.in/view-rating-criteria-57.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
16 Jun 2025	Bond	Long Term	12.50	ACUITE AA \| Stable (Assigned)
	Bond	Long Term	12.50	ACUITE AA \| Stable (Assigned)
	Bond	Long Term	12.50	ACUITE AA \| Stable (Assigned)
	Bond	Long Term	12.50	ACUITE AA \| Stable (Assigned)
18 Feb 2025	Proposed Bond	Long Term	50.00	ACUITE Provisional AA \| Stable (Reaffirmed)
20 Feb 2024	Proposed Bond	Long Term	50.00	ACUITE Provisional AA \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Listing Status	Regulated By	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Not Applicable	INE1QL524024	Bond	Listed	SEBI	02 May 2025	8.07	02 May 2032	12.50	Simple	ACUITE AA \| Stable \| Reaffirmed
Not Applicable	INE1QL524032	Bond	Listed	SEBI	02 May 2025	8.07	02 May 2031	12.50	Simple	ACUITE AA \| Stable \| Reaffirmed
Not Applicable	INE1QL524040	Bond	Listed	SEBI	02 May 2025	8.07	02 May 2030	12.50	Simple	ACUITE AA \| Stable \| Reaffirmed
Not Applicable	INE1QL524016	Bond	Listed	SEBI	02 May 2025	8.07	02 May 2029	12.50	Simple	ACUITE AA \| Stable \| Reaffirmed

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Archita Sharma
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

List of instruments and names of regulators of the instruments

As required by SEBI Circular (SEBI/HO/DDHS/DDHS-PoD-2/I/4685/2026) dated February 10, 2026, a list of activities or instruments falling under the purview of various Financial Sector Regulators (FSRs), along with the names of respective FSRs, is being disclosed below:

A. Rating Activity:

Sr. No.	Instrument / activity Name	Regulator of the instrument
1	Listed/Proposed to be listed Bonds/Debentures/Preference Shares (all securities)	SEBI
2	Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities)	MCA
3	Listed PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	SEBI
4	Listed PTCs / Securitisation Notes (originated by entities not regulated by RBI)¹	SEBI
5	Unlisted PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	RBI
6	Listed Commercial Paper and NCDs with original maturity less than 1 year	RBI
7	Unlisted Commercial Paper and NCDs with original maturity less than 1 year	RBI
8	Loan Facilities (Fund/Non-Fund Based) from Bank / NBFCs/ NHB/ FIs ²	RBI
9	External Commercial Borrowings and other similar borrowings	RBI
10	Certificates of Deposit	RBI
11	Fixed Deposits raised by NBFCs, Banks, HFCs, FIs	RBI
12	Fixed Deposits raised by corporates other than NBFCs, Banks, HFCs, FIs	MCA
13	Inter Corporate Deposits/Loans extended by Corporates	MCA
14	Borrowing programme ³	-
15	Issuer Ratings ⁴	-
16	Credit Ratings for Capital Protection Oriented Schemes (by Mutal Funds and AIFs)	SEBI
17	Credit quality ratings (CQRs) for Mutual Fund Schemes and Schemes of AIFs	SEBI
18	Listed Security Receipts	SEBI
19	Unlisted Security Receipts	RBI
20	Independent Credit Evaluation (ICE)	RBI
21	Expected Loss Ratings (For Loan Facilities [Fund/Non-Fund based] from Banks/NBFCs/NHB/FIs)	RBI
22	Expected Loss Ratings (Listed / Proposed to be listed Bonds / Debentures / Preference Shares (all securities))	SEBI
23	Expected Loss Ratings (Unlisted / Proposed to be unlisted Bonds/ Debentures / Preference Shares (all securities))	MCA
24	Unlisted PTCs / Securitisation Notes (originated by entities not regulated by RBI) ¹	Investor-side Regulator such as IRDAI, PFRDA ⁵

¹Includes securitisation transactions involving assignee payout, acquirer's payout.

² Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions.
³The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In Press Release(s) subsequent to issuance(s), Acuite shall separately capture the rated quantum details along with names of respective regulators.
⁴ There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs.
⁵ These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026 and accordingly, investor side regulators have been included.

B. Other activities:

Sr. No.	Activity Name	Regulator of the activity
1	Monitoring Agency	SEBI
2	Research activities, incidental to rating, such as research for Economy, Industries and Companies ⁶	Not applicable

⁶ permitted by SEBI vide SEBI Master Circular for CRAs.

Disclosure on instruments / activities and names of regulators:

A list of products/activities or ratings of instruments falling under the purview of various financial sector regulators (FSRs) along with the names of respective FSRs has also been duly disclosed by Acuite on its website. A link to the same has been provided below for ready reference:

https://acuite.in/Activities-and-Regulators.html

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer:

An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.

Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.