| Strategically important entity for Government of Tamil Nadu
Tamilnadu Transmission Corporation limited (TANTRANSCO) incorporated in 2010 is an electric power transmission system operator in Tamil Nadu state. TANTRANSCO serves transmission infrastructure network for power companies in Tamil Nadu. As per requirement of the Electricity Act 2003, Tamil Nadu electricity board (TNEB) was restructured into two companies namely TANGEDCO (Tamil Nadu generation and Distribution Company) and TANTRANSCO. Final transfer scheme of restructuring was completed in the year 2015 by bifurcation of assets and liabilities between both the entities. TNEB continued to be holding company of TANGEDCO and TANTRANSCO, which is ultimately held by Government of Tamil Nadu. TANTRANSCO maintains the entire substations above 66Kv capacity. TANTRANSCO is the sole power transmission company in Tamil Nadu and is a 100 percent government owned entity. The GoTN provides capital investment, grants and guarantees for loans. Acuité believes that TANTRANSCO, being a 100 per cent undertaking of GoTN, shall continue to benefit from the financial, operational and management support from time to time.
Strong revenue growth supported by tariff revision and higher energy demand:
TANTRANSCO reported revenue of Rs. 7,896.64 Cr. in FY2026 (Prov.), registering a growth of around 16 percent over Rs. 6,831.15 Cr. in FY2025. The increase in revenue was primarily driven by the upward revision in transmission tariff during the year, along with an increase in overall energy transmitted. The transmission tariff was revised upward by 4 percent in FY2026 to Rs. 5,803 per MW per month.
The company’s operating profit margin improved significantly to 74.25 percent in FY2026 (Prov.) from 61.08 percent in FY2025, supported by lower operating expenses and improved system efficiency. Similarly, the PAT margin increased sharply to 20.12 percent in FY2026 (Prov.) from 1.70 percent in FY2025, aided by higher absolute EBITDA during the year.
Acuite believes that TANTRANSCO’s operating performance will continue to improve steadily, supported by annual tariff revisions and stable energy demand.
Efficient working capital operations:
The operations of the company are working capital efficient as reflected by is Gross current account (GCA) of 68 days in FY2026(Prov.) as against 86 days in FY2025. TANTRANSCO receives bills from Tamil Nadu Generation and Distribution Company (TANGEDCO), sole customer of the company within 30-45 days, resulting debtor days of 31 days in FY2026 (Prov.) against 33 days in FY2025. The creditor days remained at 21 days in FY2026 (Prov.) as against 16 days in FY2025. The fund based working capital limits were remained unutilized over the past 12 months ending March 2026. Acuite believes that company's ability in efficiently managing its working capital operations will remain key rating sensitivity going forward.
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| Below-average financial risk profile:
The financial risk profile of the company is below average marked by negative net worth, high leverage and moderate debt protection metrics. Although the company reported profits during FY2026 (Prov.), net worth continued to remain negative at Rs.2,164.47 Cr. as on March 31, 2026(Prov.), albeit improved from negative Rs.3757.79 Cr. as on March 31, 2025, due to accumulated losses. During FY2026, the company received equity infusion of Rs.25.00 Cr. The debt position stood at Rs. 33,687.07 Cr. as on March 31, 2026 (Prov.) as against Rs. 32,260.70 Cr. as on March 31, 2025. The debt comprised secured long-term loans of Rs.26,566.06 Cr, unsecured loans from GoTN and foreign financial institutions of Rs. 2,346.39 Cr. and current maturities of debt around Rs.4774.62 Cr.
The gearing level of the company remained negative at 15.56 times as on March 31, 2026 (Prov.) as against negative 8.59 times as on March 31, 2025, due to negative net worth, and continued debt-funded capital expenditure. Further, the total outside liabilities to tangible net worth(TOL/TNW) remained negative at 26.56 times as on March 31, 2026(Prov.) as against negative 15.87 times as on March 31 2025. The debt protection metrics remained moderate, although they improved during the year. The interest coverage ratio and debt service coverage ratio stood at 2.52 times and 0.92 times, respectively, as on March 31, 2026 (Prov.), compared to 1.57 times and 0.69 times, respectively, as on March 31, 2025. Debt/EBITDA although improved but remained high at 5.11 times as on March 31, 2026 (Prov.) as against 7.64 times as on March 31, 2025. For FY2027, company has undertaken capex with an estimated capital outlay of Rs.3358.86Cr, largely funded through debt.
Acuite believes that TANTRANSCOs financial risk profile will continue to remain below average over the medium-term, given the expected debt infusion towards planned capital expenditure. Timely support from GOTN through equity infusion would be critical for sustaining the leverage indicators.
Susceptibility of operating performance to transmission charges set by Tamil Nadu Electricity Regulatory Commission (TNERC)
TANTRANSCO’s revenue is influenced by regulatory framework governing the power sector. The TNEB 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 and determines tariffs under the Multi-Year Tariff (MYT) mechanism, with the current control period ending by FY2027 and a revision expected for the subsequent control period thereafter. Any revision in the upcoming MYT cycle could have a material impact on TANTRANSCO’s revenue profile, depending on regulatory approvals for capitalisation, cost pass-through and returns. Further, the tariff framework includes true-up and true-down adjustments, wherein deviations between approved and actual performance are periodically reconciled. However, the company’s consistent achievement of system availability above normative levels and relatively stable operational metrics provide some cushion against adverse regulatory outcomes.
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