VIS removes Rating Watch on KAPCO, assigns stable outlook

November 11, 2026 (MLN): Kot Addu Power Company Limited (PSX:KAPCO) has had its entity ratings maintained at A+/A1 by VIS Credit Rating Company Limited, which has also removed the Rating Watch and assigned a stable outlook on the medium to long-term rating.

The rating agency said the long-term A+ rating signals good credit quality with adequate protection factors, though risk factors may shift with changes in the economy.

The short-term A1 rating points to a strong likelihood of timely repayment of short-term obligations, backed by excellent liquidity factors.

 VIS had last taken a rating action on the company on Mar 31, 2026.

VIS said the ratings reflect KAPCO’s strategic importance to the country’s power infrastructure, including its black-start capability and the resumption of operations under the revised three-year TPPA.

A sizeable pool of liquid assets and manageable leverage add further support, as does the company’s ongoing repositioning through its investment in Attock Cement Pakistan Limited (ACPL).

According to the agency, KAPCO is moving to broaden its earnings base beyond conventional thermal power generation, with ACPL a key step in that direction.

The new investments, along with possible future diversification, are expected to add to profitability over the medium term and gradually lessen dependence on the existing power generation arrangements.

VIS cautioned that the benefits will hinge on the operating performance and cash-generating capacity of the new investments, as well as the sustainability of the core power business.

It said successful execution of the diversification strategy, prudent capital allocation and preservation of liquidity will remain important for strengthening the company’s financial profile.

KAPCO was incorporated in 1996 as a public limited company and runs a multi-fuel power plant in Kot Addu, District Muzaffargarh, Punjab, which can operate on gas, RLNG, furnace oil and high-speed diesel.

The company signed a new Tripartite Power Purchase Agreement (TPPA) on Jun 3, 2025 with CPPA-G and National Grid Company of Pakistan Limited (NGC) for 495MW of capacity. The agreement took effect on Sep 13, 2025 and runs for three years. Its corporate office is in Lahore and its registered office is in Islamabad.

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