Support from the government of Punjab
PSPCL is a wholly owned undertaking of the Punjab government. It is a strategically important entity which forms the backbone of the power sector for Punjab. The status of the corporation as a 100 per cent government of Punjab owned entity provides financial flexibility. Government of Punjab provides support to PSPCL by way of providing security for its loans in the form of irrevocable and unconditional guarantee for the entire bank facilities of the company. This enables PSPCL to procure loans from Banks/ Financial Institutions at a competitive rate of interest. The government also provides support to the company in the form of subsidy payments. However, the company has started receiving subsidy payments on time. As per the management, the total subsidy received in FY2026  is of Rs. 19372 Cr.

Improvement in operating risk profile
PSPCL has recorded growth in the operating income at Rs. 48,152.95 Cr. in FY25 as against Rs. 42,752.02 Cr. in FY24. In 9MFY26, the corporation recorded operating income of Rs. 39,199.87 Cr., the improvement is on the back of steady improvement in PLF. Further, the margins of the company witnessed an improvement as reflected in the EBITDA of FY25 which stood at 10.42 per cent in FY25 as against 7.45 per cent in FY24. The PAT margins of the company also improved to 12.91 per cent in FY25 as against 1.87 per cent in FY24. The PAT of Rs. 6,215.58 Cr. in FY25 majorly supported by loss funding by GoP. The primary reason for this drastic improvement is on account of lower purchase cost and lower generation cost. PSPCL for its fuel requirements remained dependent upon domestic coal in FY 2024-25 as its mines generated sufficient coal to meet its requirements. In the future, the demand for coal will largely be met from PSPCL mine and Local suppliers sustaining profitability. Also, PSPCL started receiving subsidy payments on time. Acuite believes that the operating profile of the corporation would remain stable on the back increased capacities and steady PLF.

Improvement in financial risk profile
The financial risk profile of the corporation has improved marked by improving net worth, gearing, and debt protection metrics. The tangible net worth of the corporation increased and stood at Rs. 32,761.31 Cr. in FY25 as against Rs. 26,316.89 Cr. in FY24. The total debt of the corporation decreased and stood at Rs.17,416.33 Cr. as on March 31, 2025 as against Rs. 20,170.45 Cr. as on  March 31, 2024. The debt outstanding of the corporation in FY25 comprises of long-term debt of Rs. 12,039.54 Cr. , Rs. 3,481.34 Cr. of short-term debt and Rs. 1,895.45 Cr. of CPLTD. The gearing of the corporation stood comfortable at 0.53 times for FY25 as against 0.77 times for FY24. The TOL/TNW also stood at 1.02 times as on March 31, 2025 as against 1.31 times as on March 31, 2024. The debt service coverage ratio improved to 2.63 times in FY25 as against 1.12 times in FY24 and interest coverage ratio stood at 5.70 times in FY25 as against 2.63 times in FY24. Acuité believes that the financial risk profile of PSPCL will continue to remain stable over the medium term.

Moderately intensive working capital operations
The working capital operations of the corporation remained moderately intensive in nature marked by gross current assets (GCA) of 162 days in FY25 as against 146 days in FY24. The receivable days of the corporation stood moderate at 54 days in FY25 as against 61 days in FY24. The inventory levels of the company stood low at 7 days during FY25 against 8 days for FY24. The creditor days of the company stood at 45 days for FY25 compared against 40 days for FY24. The bank limit utilisation for fund-based facilities and non-fund based facilities stood moderate at ~63.25 per cent and ~82 per cent for six months ending February 2026. The company has cash and bank balance of Rs. 35.62 crore in FY25. Acuité believes that the working capital operations of the company will continue to moderate.

Aggregate technical and commercial loss (AT&C)
The Aggregate and Technical Commercial Loss (AT&C losses) remained range bound at ~11-13 %, however as of March 31, 2025 it stood at ~19.33 per cent, this was on account of substantial subsidy receivable as on March 2025 (In FY26 as on date, subsidy received is of Rs. 19372 Cr. As such, the revised AT&C Losses after considering the above will be at ~12.31%). Overall, AT&C losses, post adjustment for subsidy receivables, remained rangebound depicting the operational efficiency of the utility; however, sustained reduction in losses and timely receipt of subsidies will remain a key rating monitorable.

Regulated nature of operations
The revenues are influenced by the regulatory framework governing the power sector. Revenues of players such as PSPCL are determined by state electricity regulatory commissions. The Punjab State Electricity Regulatory Commission (PSERC) takes into account key parameters such as the cost structure and expected return on capital employed to arrive at distribution tariffs. Acuité believes that significant changes in the regulatory environment will impinge on the credit profile of the company.

• Sustained growth in scale of operations with stable profitability.

• Sustained improvement in operating margins above10.50 per cent.

• ­Deterioration in financial risk profile on the back of higher-than-expected debt-funded capex.

• Significant increase in Debt/EBITDA above 3 times or weakening of coverage indicators.

• Reduced support from Government of Punjab.