New Delhi, Oct 29 Power-focused infrastructure finance companies (P-IFCs) will maintain their profitability momentum in the near term with "return on total assets (RoTA) stable in the range of 2.7 per cent to 2.9 per cent," according to a report on Wednesday.
P-IFCs are set to meet increasing debt funding opportunities in the power sector as India increases its power capacity and transmission investment, said the report from ratings agency CareEdge Ratings.
As per the National Electricity Plan (NEP), India is projected to reach a capacity of 609 gigawatts (GW) by March 31, 2027, and 900 GW by March 31, 2032.
This expansion requires a total capital expenditure of Rs 32 lakh crore for capacity addition and transmission infrastructure from FY26 to FY32, which presents a significant debt funding opportunity that P-IFCs are well-positioned to seize, the report mentioned.
Given the growing focus on power generation capacity addition to meet the energy requirements of the country, P-IFCs are expected to maintain healthy growth and earnings momentum in the near-to-medium term, it added.
Given their adequate capitalisation levels and improved gearing due to healthy accruals, P-IFCs can further leverage their balance sheets and capitalise on the growth momentum of the power sector in India.
Their improving financial risk profile and enhanced profitability due to stable margins and controlled credit costs provide a sufficient cushion to cater to incremental debt requirements of the power sector.
Despite competition from other IFCs and Infrastructure Debt Funds (IDFs) in the power financing space, CareEdge Ratings projected P-IFCs to maintain their dominant share of over 50 per cent in incremental funding for the power sector.
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