The rating agency cited strong regulatory support, improving financial metrics and continued deleveraging under India’s cost-plus electricity distribution structure. The upgrade comes as the Mumbai utility benefits from predictable cash flows, timely tariff orders and a declining debt burden, even as capital expenditure remains elevated.
Tariff orders issued by the Maharashtra Electricity Regulatory Commission allowed Adani Electricity Mumbai to fully recover accumulated regulatory assets in the first half of FY2026 while moving the regulatory balance into surplus, India Ratings said.
Leverage decreases as the asset base expands
After being acquired by the Adani Group from the Anil Dhirubhai Ambani Group in 2018, the utility has expanded its asset base to Rs. 10,000 crore has been extended. At the same time, leverage has steadily declined.
India Ratings expects the regulated asset base by the end of FY2026 to reach Rs. 100 billion, while gross adjusted debt is projected to fall below RAB once. The agency attributed this to strong internal cash generation and tight controls on capital expenditure.
Retail power rates have remained largely stable despite high investment, a dynamic supported by disciplined cost management and the Adani Group’s vertically integrated energy operations. Access to group-owned generation assets has helped smooth out fluctuations in power procurement costs, the agency said.
Operational metrics improve
Along with the balance sheet, the operational performance has also strengthened. Distribution losses fell to 4.3% in the first half of fiscal 2026, while storage efficiency remained close to 99%, a level that compares favorably with global peers.
Liquidity has also improved, with India Ratings noting that all long-term foreign currency debt is fully hedged, limiting exposure to currency volatility and refinancing risks.
Renewable power gets a share in the mix
The utility has also increased its reliance on renewable energy. Renewables now account for around 40% of total electricity generation, down from less than 3% in 2019, with a target of 60% by 2027. If achieved, Mumbai will rank among the cities with the highest renewable penetration in urban power supply.
Most of the renewable power is expected to come from Adani Green Energy Limited, while thermal needs are mainly met by Adani Power Limited, India’s lowest cost coal-fired generator.
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