VIS reaffirms entity ratings of Thal Power

December 13, 2024 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Thal Power (Private) Limited (PSX: THALL) at ‘AA/A1+’ (Double AA/A One Plus).

Medium to long term rating of ‘AA’ indicates high credit quality; protection factors are strong.

Risk is modest but may vary slightly from time to time because of economic conditions.

A short-term rating of 'A1+' suggests the strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings remains ‘Stable’.

Previous ratings action was announced on December 22, 2023.

TPL was established on July 3, 2014 in Pakistan and operates as a wholly-owned subsidiary of Thal Limited (‘THAL’ or ‘the Holding Company’).

TPL was formed to facilitate THAL's investment in ThalNova Power Thar (Private) Limited (ThalNova).

The Company primarily focuses on power generation and energy production, and managing its investment portfolio.

TPL’s operations are based at its registered office and business unit in Karachi.

The assigned ratings reflect TPL's low to medium business risk profile, underpinned by predictable cash flows from ThalNova, operational and financial risk mitigation through sponsor support from THAL, and the government-backed payment guarantees tied to the power purchase agreement.

While these factors provide stability, the ratings also account for the indirect exposure to cash flow variability stemming from timing mismatches in ThalNova’s collections from the Central Power Purchasing Agency (CPPA-G).

Assigned ratings also consider the financial risk profile of the Company backed by guaranteed income or profit from ThalNova, continuous profitability, stable capital structure, unleveraged balance sheet, and low liquidity risk.

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