January, 27, 2026
Fitch Ratings has affirmed Sri Lanka-based power generator WindForce PLC's National Long-Term Rating at 'A+'(lka). The Outlook is Stable.
WindForce's rating reflects its growing scale as a prominent renewable power generator in Sri Lanka and several regional markets, its resource diversity and contractual cashflows via long-term power purchase agreements (PPAs). WindForce's rating is constrained by the credit profile of Ceylon Electricity Board (CEB, A(lka)/Stable), which is a key off-taker accounting for over 80% of WindForce's EBIT.
Fitch forecasts WindForce's EBITDA net leverage to rise in the financial year ending March 2027 (FY27) on high debt-funded capex for new generation plants and reduce thereafter as the new plants are commissioned, driving the Stable Outlook. However, inability to deleverage in FY28 in line with our expectations could pressure WindForce's rating.
Temporarily High Leverage on Capex: WindForce expects capex of over LKR40 billion for solar and wind power plants in the next two years with most outflows in FY27. This includes a 100MW solar plant with integrated battery storage, which is Sri Lanka's largest renewable energy project, under a joint venture with Lakdhanavi Ltd (AA-(lka)/Stable). Fitch estimates WindForce's generation capacity to rise to over 200MW by FY28 as a result.
EBITDA net leverage will rise to around 6.8x in FY27, before moderating to around 4.6x by FY28 as the plants are commissioned. Execution risks for these projects are low, supported by the company's record in similar projects, the limited construction complexity of solar and wind projects, the requisite regulatory approvals and offtake agreements in place, with transmission lines constructed or right-of-way established. Additionally, the plants' long-term PPAs with CEB are in place at preset tariffs, mitigating demand risk.
Counterparty Constrains Rating: WindForce's rating is constrained by the credit profile of CEB, the sole electricity transmitter and distributor in Sri Lanka, despite CEB's improved financial performance. CEB's rating depends on support from the Sri Lankan sovereign (Long-Term Local-Currency Issuer Default Rating (IDR): CCC+; Long-Term Foreign-Currency IDR: CCC+).. WindForce derived around 70% of its EBIT from CEB in FY23-FY25, with the share rising to around 80% in FY25 after the commissioning of the Kebitigollewa solar project. We expect WindForce's cash flow exposure to CEB to increase in FY26-FY29 once new projects are commissioned.
Risks to Cost-Reflective Tariffs: Fitch sees risks to CEB's implementation of cost-reflective tariffs, which could weigh on its balance sheet and pressure settlements to domestic power producers. This is due to the government's competing priorities of managing inflation, CEB's financial health, and the state's own finances. CEB's EBIT turned negative in 1Q25 due to costs rising faster than approved tariff increases. However, tariff revisions since have improved CEB's EBIT to breakeven levels in 9M25. WindForce's average receivable days are steady at around 40 as of 30 September 2025, compared to the peak of around 350 days in FY23.
Steady EBITDA Margin: We expect EBITDA margins to improve from around 65% in FY25 to around 70% in FY26-FY28. This reflects operating expenses normalising following increased repairs and maintenance at wind plants, which were deferred from previous years. WindForce's PPAs offer long-term cash flow visibility, with a weighted-average remaining contract life of over 10 years, but generation volume can be affected by seasonal and climatic patterns. This is mitigated by its diversified portfolio, comprising wind (74MW), solar (55MW) and hydro (15MW) , totaling 145MW, on an alternating current equivalent basis (AC), across 23 power plants excluding associates and joint ventures.
WindForce is rated one notch below domestic power producer and engineering, procurement and construction contractor Lakdhanavi. The difference is on account of Lakdhanavi's larger operating scale as a critical base-load power generator in Sri Lanka as well as its higher geographic and business diversification.
Both Lakdhanavi and WindForce have significant exposure to CEB. However, Lakdhanavi also has operations and maintenance (O&M) services, manufactures transformers and switchgears, and offers galvanising services, which provides a degree of diversification. We also believe CEB is likely to prioritise payments to Lakdhanavi even in situations where its own financial profile is stretched, given Lakdhanavi provides O&M services to one of Sri Lanka's largest power plants, and is investing in a large liquefied natural gas power plant, all of which are critical to Sri Lanka's power generation and to CEB's future strategy.
Resus Energy PLC (A-(lka)/Stable), a domestic power producer, is rated two notches below WindForce. Resus also benefits from contractual revenue visibility via its PPAs with CEB. However, Resus' lower rating reflects its tighter liquidity than WindForce and smaller operating scale with narrower access to domestic banks.
Vidullanka PLC (A+(lka)/Stable) is rated at the same level as WindForce. WindForce has larger operating capacity than Vidullanka and more diversified power generation resources. This is counterbalanced by Vidullanka's exposure to the state-owned utility of Uganda (B/Stable) and concentration in hydropower generation. Most of Vidullanka's cash flow stems from overseas, while most of its debt is onshore with Sri Lankan banks, exposing the company to potential repatriation risks. However, Vidullanka's track record of overseas receipts has been steady.
Revenue to remain flat in FY26 then increase by over 30% annually in FY27 and FY28 from new projects
EBITDA margin of around 70% in FY26 and FY27;
Receivable days steady at around 40
Capex of around LKR15 billion in FY26 and around LKR30 billion in FY27
Dividend payout of 80% of prior year profit.
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
EBITDA net leverage above 5.0x for a sustained period;
EBITDA interest coverage below 1.5x for a sustained period.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
A sustained and substantial reduction in counterparty risk, as reflected in a continued improvement in CEB's credit profile.
WindForce's liquidity is subject to timely collection of dues from CEB. The company reported over LKR1.3 billion of readily available cash as of 30 September 2025 and had access to around LKR7 billion in unutilised, albeit uncommitted, credit lines from local banks against LKR1.4 billion of debt maturing in the next 12 months. Maturing debt mainly comprises the current portion of long-term debt obtained to fund the investments in its power plants.
We expect the company to generate negative FCF in the near-to-medium term due to high capex. However, WindForce has adequate access to domestic banks, as most banks are willing to provide longer-tenured facilities for the company's operating power plants that have more than 10 years remaining under their PPAs.
WindForce is a leading renewable power producer in Sri Lanka with a total installed power generation capacity of around 145MW (excluding associates and joint ventures) as of 31 March 2025. Most of the installed capacity is in Sri Lanka (132MW), with the rest in Uganda (13MW). The company is listed on the Colombo Stock Exchange.
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