| Strategic importance to Government of Telangana (GOT)
TGTRANSCO is a state government entity with a 100 percent holding with Government of Telangana (GOT). Company is strategically important entity and serves as backbone of the power sector infrastructure of the state. It is a sole bulk power transmission company in state of Telangana. The company is a licensed entity for transmission and bulk supply of power in Telangana and primarily provides transmission services to the state utilities such as Telangana State Southern Power Distribution Corporation Limited (TGSPDCL) and Telangana State Northern Power Distribution Corporation Limited (TGNPDCL). Apart from this, the company also transmits power for other entities such as NTPC and other private power generators.
Acuité believes that TGTRANSCO will continue to be benefitted for being a 100 per cent owned entity of GoT and on account of its strategic importance to the GoT.
Improvement in operating revenue as compared to aggregate revenue requirement (ARR) along with strong operating profitability
TGTRANSCO’s operating performance remains a key credit strength, supported by the stable nature of its regulated transmission business. Although operating income moderated marginally to Rs.4,383.97 crore in FY2025 from Rs.4,545.78 crore in FY2024, this was driven by regulatory true-up adjustments and prudent recognition of surplus revenues as regulatory liabilities under Ind AS 114, rather than any deterioration in core earnings. The moderation follows adjustment of accumulated true-up surplus generated over FY2020–FY2024, reflecting sustained revenue generation above ARR during the control period.
Operating profitability remain robust, with EBITDA margin remaining high at 73.21% in FY2025 (FY2024: 74.62%), highlighting the cost-efficient nature of operations and largely stable operating expenses. Further, improvement in PAT margin to 5.29% from 3.18% was supported by lower depreciation and stable interest costs, despite the impact of exceptional regulatory items. Overall, the company’s ability to consistently earn revenues above ARR, coupled with strong and stable margins driven by the regulated tariff framework, continues to support TGTRANSCO’s credit profile.
Moderate financial risk profile
The financial risk profile remains moderate, supported by an improvement in net worth to Rs.2,659.28 crore in FY2025 from Rs.2,435.93 crore in FY2024, driven by accretion of profits into reserve. Leverage indicators improved with reduction in debt levels along with prepayment of debt obligation of ~Rs.307 Cr. in FY2025 and ~Rs.250-300 Cr. in FY2026, reflecting an improvement in the gearing ratio to 3.32x in FY2025 from 4.28x in FY2024. Coverage indicators remain moderate, with interest coverage at 1.95x and DSCR at 0.70x in FY2025, constrained by regulatory pass through of surplus revenue through tariff reduction and high repayment obligations. Overall, the regulated business model and government ownership provide stability, though high debt levels continue to cap financial flexibility.
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| Intensive working capital operations
TGTRANSCO’s working capital operations is intensive in nature as reflected through the gross current asset (GCA) days of 356 days in FY2025 against 314 days in FY2024. The elongation in GCA days is attributable to high debtors’ days due to relatively weak counter party risk profile of TGSPDCL and TGNPDCL. The debtor days of the company stood at 200 days in FY2025 against 210 days in FY2024. However, in FY26 the receivables outstanding has significantly reduced from Rs.2219.96 Cr. in FY25 to Rs.984.24 Cr. in 10MFY26 attributable to timely recovery of dues with debtor days reducing to ~110 days. Further, company does not have any short term limits; they manage the working capital through net cash accruals.
Acuite believes that working capital operations of the company will continue to be intensive in nature due to weak counter party risk profile.
Susceptibility of operating performance to transmission charges set by Regulatory Commission
TGTRANSCO’s revenue is influenced by regulatory framework governing the power sector. Revenues of companies such as TGTRANSCO are determined by Telangana State Electricity Regulatory Commission (TGERC). The TGERC considers key parameters like the cost structure and expected return on capital employed to arrive at transmission tariffs, wheeling and SLDC (State Load Dispatch Centre) charges. Any significant delays in tariff approvals or a reduction in return on equity or a tightening of the TGERC norms could result in lower operating cash flows.
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