Image Source: Business Standard
CESC Limited (CESC.NS), one of India’s leading integrated power companies, has announced that its Board of Directors will consider a proposal for the issuance of Non-Convertible Debentures (NCDs) in an upcoming meeting. The move is aimed at strengthening the company’s capital structure to support ongoing expansion projects and operational improvements.
What Are Non-Convertible Debentures?
Non-Convertible Debentures (NCDs) are fixed income instruments that companies issue to raise long-term funds. Unlike convertible debentures, NCDs cannot be converted into equity shares. They typically offer higher interest rates than traditional fixed deposits, making them attractive to investors seeking steady returns with moderate risk.
CESC’s potential issuance of rated, secured, redeemable NCDs will provide it with greater financial flexibility without diluting equity, supporting its growth plans and capital expenditure requirements.
CESC’s Growth and Capital Needs
CESC’s latest fundraising initiative comes amid significant investments in renewable energy projects and infrastructure upgrades. The company is advancing solar manufacturing capacity expansions, smart grid technologies, and distribution network enhancements.
Notably, CESC recently announced ambitious plans to create a 1-GW renewable energy portfolio through its subsidiary Purvah Green Power and has invested approximately ₹5,000 crore in solar assets. The potential NCD proceeds will play a critical role in funding these initiatives.
Financial Strength and Credit Ratings
CESC carries robust credit ratings in the medium to long term, having had multiple NCD issuances with CARE AA and ICRA AA ratings, reflecting strong operational cash flows and regulatory support in its power distribution business in Kolkata.
Despite some challenges such as tariff order delays and fuel cost adjustments, the company maintains stable revenue visibility and prudent financial management. The planned NCD issuance will help optimise the debt mix and reduce refinancing risks while maintaining liquidity.
Market Outlook and Investor Appeal
For investors, CESC’s NCDs represent an opportunity to invest in a company with a regulated business model, consistent dividend payout, and growth potential in renewable energy. The company’s strong market presence and strategic positioning make it a preferred choice among fixed income investors.
The NCDs are expected to be listed and secured, further enhancing their marketability and investor confidence.
Next Steps
CESC Limited will provide updates post the Board meeting, detailing the size, coupon rates, tenure, and terms of the NCD issuance. Investors and market watchers anticipate clarity in the coming weeks as the company harnesses its funding strategy to keep pace with evolving energy demands and sustainability goals.
Sources: CESC Limited Filing, CARE Ratings, Findoc News, ScanX Trade
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