Fitch affirms NTPC at BBB-minus with negative outlook

The outlook is negative, it said. The agency has also affirmed NTPC's senior unsecured rating at BBB-minus and BBB-minus ratings on its USD6 billion medium-term note programme and the notes issued under the programme.

NTPC's issuer default rating reflects its standalone credit profile at bbb-minus. The rating outlook reflects the outlook on the India sovereign rating (BBB-minus/negative) as NTPC's issuer default ratings will be capped by the country's sovereign rating if it is downgraded.

NTPC's standalone credit profile is supported by its regulated business model which ensures profitability irrespective of actual off-take.

Availability of NTPC's projects has not been affected by pandemic-related lockdowns as Indian government declared electricity supply and coal mining as essential services.

Despite this, Fitch expects NTPC to generate negative free cash flows over the next two to three years due to high capex and shareholder returns.

"We expect NTPC's capex to peak in the financial year ending March 2022 (FY22) and lower capex along with higher EBITDA from additional capacities coming on line should reduce NTPC's net leverage to below 6x, our downgrade trigger for standalone credit profile by FY23."

NTPC is 51.1 per cent owned by the government and India's largest power generation utility. It has total operational capacity of around 66 GW, the majority of which are coal-based generation plants.

NTPC accounts for 17 per cent of the country's installed power-generation capacity and 23 per cent of its electricity generation.