Karachi: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of NASDA Green Energy Limited (NGEL) at ‘A-/A-2’, indicating a stable financial outlook and good credit quality for the Karachi-based renewable energy firm.
According to VIS Credit Rating Company Limited, the ratings reflect NGEL’s solid position in the renewable energy sector, with medium to long-term ratings at ‘A-‘ suggesting adequate protection factors and a good likelihood of meeting its financial commitments. The short-term rating of ‘A-2’ points to NGEL’s sound short-term liquidity and its capability to repay short-term obligations in a timely manner. The stable outlook is consistent with the previous ratings action announced on August 08, 2023.
NGEL, incorporated on June 11, 2015, and later converted into a public unlisted company on October 20, 2022, focuses on the generation and sale of power using wind energy, with its main operations based in Thatta, Sindh. The company’s registered office is located on Shahrah E Faisal in Karachi.
The ratings take into account the medium-to-low business risk profile of the renewable energy sector, influenced by demographic factors and industrial activity. Despite macroeconomic challenges affecting industrial activity, household demand for power is expected to remain stable due to its inelastic nature and population growth. Government support for renewable energy is evident through policies like the Alternative Renewable Energy (ARE) Policy 2019 and the Integrated Generation Capacity and Expansion Plan (IGCEP) 2022, aimed at increasing the share of renewables in Pakistan’s energy mix.
However, the sector faces hurdles due to political and macroeconomic uncertainties and a regulated operating environment. The assigned ratings also consider NGEL’s profitability, which, although experiencing revenue growth from non-project missed volume and delayed payment interest, saw a net profit decline due to increased finance costs. Improved debt servicing and strengthened capitalization metrics, reflected by lower gearing and leverage ratios following equity enhancements and debt repayment, support the ratings.
The future ratings of NGEL will depend on the company’s ability to generate internal cash flows, improve its current asset to liability mismatch, and maintain a strong capitalization and coverage profile in line with its ratings.