ECONOMYNEXT – Fitch Rankings has affirmed Sri Lanka-based energy generator WindForce’s Nationwide Lengthy-Time period Ranking at ‘A+'(lka), with a steady outlook, based mostly on its rising scale as a outstanding renewable energy generator within the island and a number of other regional markets.
“WindForce’s score displays its rising scale as a outstanding renewable energy generator in Sri Lanka and a number of other regional markets, its useful resource variety and contractual cashflows by way of long-term energy buy agreements (PPAs),” Fitch Rankings stated.
Nonetheless, the score company identified that WindForce’s score is constrained by the credit score profile of CEB, the only real electrical energy transmitter and distributor in Sri Lanka.
The Fitch assertion is reproduced beneath:
Fitch Affirms Sri Lanka’s WindForce at ‘A+(lka)’; Outlook Steady
Fitch Rankings has affirmed Sri Lanka-based energy generator WindForce PLC’s Nationwide Lengthy-Time period Ranking at ‘A+'(lka). The Outlook is Steady.
WindForce’s score displays its rising scale as a outstanding renewable energy generator in Sri Lanka and a number of other regional markets, its useful resource variety and contractual cashflows by way of long-term energy buy agreements (PPAs). WindForce’s score is constrained by the credit score profile of Ceylon Electrical energy Board (CEB, A(lka)/Steady), which is a key off-taker accounting for over 80% of WindForce’s EBIT.
Fitch forecasts WindForce’s EBITDA web leverage to rise within the monetary 12 months ending March 2027 (FY27) on excessive debt-funded capex for brand new era vegetation and cut back thereafter as the brand new vegetation are commissioned, driving the Steady Outlook. Nonetheless, incapacity to deleverage in FY28 in step with our expectations might strain WindForce’s score.
Key Ranking Drivers
Briefly Excessive Leverage on Capex: WindForce expects capex of over LKR40 billion for photo voltaic and wind energy vegetation within the subsequent two years with most outflows in FY27. This features a 100MW photo voltaic plant with built-in battery storage, which is Sri Lanka’s largest renewable power venture, beneath a three way partnership with Lakdhanavi Ltd (AA-(lka)/Steady). Fitch estimates WindForce’s era capability to rise to over 200MW by FY28 because of this.
EBITDA web leverage will rise to round 6.8x in FY27, earlier than moderating to round 4.6x by FY28 because the vegetation are commissioned. Execution dangers for these tasks are low, supported by the corporate’s document in comparable tasks, the restricted development complexity of photo voltaic and wind tasks, the requisite regulatory approvals and offtake agreements in place, with transmission strains constructed or right-of-way established. Moreover, the vegetation’ long-term PPAs with CEB are in place at preset tariffs, mitigating demand danger.
Counterparty Constrains Ranking: WindForce’s score is constrained by the credit score profile of CEB, the only real electrical energy transmitter and distributor in Sri Lanka, regardless of CEB’s improved monetary efficiency. CEB’s score will depend on help from the Sri Lankan sovereign (Lengthy-Time period Native-Forex Issuer Default Ranking (IDR): CCC+; Lengthy-Time period International-Forex IDR: CCC+).. WindForce derived round 70% of its EBIT from CEB in FY23-FY25, with the share rising to round 80% in FY25 after the commissioning of the Kebitigollewa photo voltaic venture. We anticipate WindForce’s money movement publicity to CEB to extend in FY26-FY29 as soon as new tasks are commissioned.
Dangers to Price-Reflective Tariffs: Fitch sees dangers to CEB’s implementation of cost-reflective tariffs, which might weigh on its steadiness sheet and strain settlements to home energy producers. That is as a result of authorities’s competing priorities of managing inflation, CEB’s monetary well being, and the state’s personal funds. CEB’s EBIT turned adverse in 1Q25 because of prices rising quicker than permitted tariff will increase. Nonetheless, tariff revisions since have improved CEB’s EBIT to breakeven ranges in 9M25. WindForce’s common receivable days are regular at round 40 as of 30 September 2025, in comparison with the height of round 350 days in FY23.
Regular EBITDA Margin: We anticipate EBITDA margins to enhance from round 65% in FY25 to round 70% in FY26-FY28. This displays working bills normalising following elevated repairs and upkeep at wind vegetation, which had been deferred from earlier years. WindForce’s PPAs supply long-term money movement visibility, with a weighted-average remaining contract lifetime of over 10 years, however era quantity might be affected by seasonal and climatic patterns. That is mitigated by its diversified portfolio, comprising wind (74MW), photo voltaic (55MW) and hydro (15MW) , totaling 145MW, on an alternating present equal foundation (AC), throughout 23 energy vegetation excluding associates and joint ventures.
Peer Evaluation
WindForce is rated one notch beneath home energy producer and engineering, procurement and development contractor Lakdhanavi. The distinction is on account of Lakdhanavi’s bigger working scale as a essential base-load energy generator in Sri Lanka in addition to its larger geographic and enterprise diversification.
Each Lakdhanavi and WindForce have important publicity to CEB. Nonetheless, Lakdhanavi additionally has operations and upkeep (O&M) providers, manufactures transformers and switchgears, and affords galvanising providers, which supplies a level of diversification. We additionally consider CEB is prone to prioritise funds to Lakdhanavi even in conditions the place its personal monetary profile is stretched, given Lakdhanavi supplies O&M providers to certainly one of Sri Lanka’s largest energy vegetation, and is investing in a big liquefied pure gasoline energy plant, all of that are essential to Sri Lanka’s energy era and to CEB’s future technique.
Resus Vitality PLC (A-(lka)/Steady), a home energy producer, is rated two notches beneath WindForce. Resus additionally advantages from contractual income visibility by way of its PPAs with CEB. Nonetheless, Resus’ decrease score displays its tighter liquidity than WindForce and smaller working scale with narrower entry to home banks.
Vidullanka PLC (A+(lka)/Steady) is rated on the identical stage as WindForce. WindForce has bigger working capability than Vidullanka and extra diversified energy era assets. That is counterbalanced by Vidullanka’s publicity to the state-owned utility of Uganda (B/Steady) and focus in hydropower era. Most of Vidullanka’s money movement stems from abroad, whereas most of its debt is onshore with Sri Lankan banks, exposing the corporate to potential repatriation dangers. Nonetheless, Vidullanka’s monitor document of abroad receipts has been regular.
Fitch’s Key Ranking-Case Assumptions
Income to stay flat in FY26 then improve by over 30% yearly in FY27 and FY28 from new tasks
EBITDA margin of round 70% in FY26 and FY27;
Receivable days regular at round 40
Capex of round LKR15 billion in FY26 and round LKR30 billion in FY27
Dividend payout of 80% of prior 12 months revenue.
RATING SENSITIVITIES
Components that May, Individually or Collectively, Result in Destructive Ranking Motion/Downgrade
EBITDA web leverage above 5.0x for a sustained interval;
EBITDA curiosity protection beneath 1.5x for a sustained interval.
Components that May, Individually or Collectively, Result in Constructive Ranking Motion/Improve
A sustained and substantial discount in counterparty danger, as mirrored in a continued enchancment in CEB’s credit score profile.
Liquidity and Debt Construction
WindForce’s liquidity is topic to well timed assortment of dues from CEB. The corporate reported over LKR1.3 billion of available money as of 30 September 2025 and had entry to round LKR7 billion in unutilised, albeit uncommitted, credit score strains from native banks in opposition to LKR1.4 billion of debt maturing within the subsequent 12 months. Maturing debt primarily includes the present portion of long-term debt obtained to fund the investments in its energy vegetation.
We anticipate the corporate to generate adverse FCF within the near-to-medium time period because of excessive capex. Nonetheless, WindForce has sufficient entry to home banks, as most banks are prepared to supply longer-tenured amenities for the corporate’s working energy vegetation which have greater than 10 years remaining beneath their PPAs.
Issuer Profile
WindForce is a number one renewable energy producer in Sri Lanka with a complete put in energy era capability of round 145MW (excluding associates and joint ventures) as of 31 March 2025. A lot of the put in capability is in Sri Lanka (132MW), with the remainder in Uganda (13MW). The corporate is listed on the Colombo Inventory Trade.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of data used within the evaluation are described within the Relevant Standards.
Proceed Studying
