VIS Maintains Stable Ratings for Artistic Wind Power Amid Operational Challenges

Lahore, VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings for Artistic Wind Power (Pvt.) Limited (AWPPL) at ‘A’ for medium to long-term and ‘A-2’ for short-term, signaling good credit quality and a stable financial outlook. The ratings reflect the company’s sound liquidity, access to capital markets, and strong backing from its parent company, Artistic Milliners (Pvt.) Limited.

According to VIS Credit Rating Company Limited, the reaffirmed ratings are supported by AWPPL’s solid financial foundation and strategic operational agreements, including a long-term O and M contract and an Energy Purchase Agreement with the CPPA, which help mitigate some of the off-take risks associated with the wind power sector. The company’s performance in the fiscal year 2023 faced hurdles due to government-led power curtailments and seasonal variations in wind speeds, impacting profitability. However, improvements have been noted in the current year.

AWPPL’s ongoing tariff petition with NEPRA, seeking to reflect true-up costs in its tariff, is a critical factor for future ratings. Approval of this petition is expected to bolster the company’s profitability margins, which have remained robust despite operational challenges. The company has maintained a satisfactory liquidity profile with effective management of cash flows and receivables, mainly cleared by CPPA on time.

The firm’s capital structure showed signs of improvement through profit retention and is expected to strengthen further with ongoing debt repayments and internal capital generation. VIS has indicated that the continuity of these positive trends, along with the maintenance of strong profitability and liquidity metrics, will be crucial for maintaining the current ratings.