New Delhi, India Ratings and Research (Ind-Ra) has upgraded the long-term issuer rating of Adani Green Energy Ltd to 'IND AA-' from 'IND A+' with a stable outlook.
"Upgrade factors include continued strong operating asset performance, strong execution scale-up, with annual capacity growth expected to reach 4GW-5G annually in the medium term from 2.5-3.5GW previously; and health counterparty diversification and deleveraging in receivables, Leading." The (cash flow from operations – interest)/EBITDA conversion has increased compared to historical levels, it said in a statement.
The upgrade also reflects a change in Adani Green Energy Limited's (AGEL) policy regarding holding company leverage, as the company has no earmarked funds for repayment of US$750 million holding company bonds.
“Furthermore, the upgrade factors in the creation of a platform with Total Energy SE within AGEN, which allows partial asset monetization while maintaining consolidation benefits, equity investment by the promoters through warrants of which 25 per cent has already been received. has been completed, and the company's continued ability to tie up debt and raise equity to fully finance the under-construction portfolio,” it said.The ratings also reflect the expectation of Ind-Ra's favorable operating T under-construction book ratio, given the increase in operational capacity to approximately 10.9 GW and annual capacity addition target of 5GW.
It also takes into account the amortization structure of the loan, like the earlier bulleted structures, which ensures amortization of the loan, leading to 1 per cent tail life for the projects, thereby reducing refinancing and tail risks.
The above factors have combined to contribute to a reduction in leverage from historical highs of 9.0x to a more reasonable level of 5.5-6.5x.
"The rating reflects AGEN's strong execution track record, strong operating performance of its assets with plant load factors (PLF between P50-P90 levels of operating assets)," it said.
Additionally, Ind-Ra factors in healthy diversification among counterparties, with the majority of counterparties having the highest credit quality; Portfolio diversification was achieved geographically and across both wind and solar energy sources; And when restrictive covenants are satisfied healthy cash flows from the operating SPV, allowing debt payments at the holdin' company.AGEN's strengths include that it is the largest renewable developer in India, with good operating parameters of operating assets along with healthy free cash flow and equity.
With balance promoter warrant money infusion of Rs 7,000 crore during FY 2025-26 and equity investment from investors, this will ensure adequate availability of equity for the under-construction portfolio.
Ind-Ra expects the annual capital expenditure rate to increase to Rs 24,000-30,00 crore in FY25-FY27 from around Rs 16,000 crore in FY24. There will be an annual equity requirement of Rs 18,000 crore during FY 2025-27, of which about Rs 7,000 crore will be promoter funds, Rs 8,500-11,000 crore will be generated internally and the remaining can be generated from the equity programme.
"Upgrade factors include continued strong operating asset performance, strong execution scale-up, with annual capacity growth expected to reach 4GW-5G annually in the medium term from 2.5-3.5GW previously; and health counterparty diversification and deleveraging in receivables, Leading." The (cash flow from operations – interest)/EBITDA conversion has increased compared to historical levels, it said in a statement.
The upgrade also reflects a change in Adani Green Energy Limited's (AGEL) policy regarding holding company leverage, as the company has no earmarked funds for repayment of US$750 million holding company bonds.
“Furthermore, the upgrade factors in the creation of a platform with Total Energy SE within AGEN, which allows partial asset monetization while maintaining consolidation benefits, equity investment by the promoters through warrants of which 25 per cent has already been received. has been completed, and the company's continued ability to tie up debt and raise equity to fully finance the under-construction portfolio,” it said.The ratings also reflect the expectation of Ind-Ra's favorable operating T under-construction book ratio, given the increase in operational capacity to approximately 10.9 GW and annual capacity addition target of 5GW.
It also takes into account the amortization structure of the loan, like the earlier bulleted structures, which ensures amortization of the loan, leading to 1 per cent tail life for the projects, thereby reducing refinancing and tail risks.
The above factors have combined to contribute to a reduction in leverage from historical highs of 9.0x to a more reasonable level of 5.5-6.5x.
"The rating reflects AGEN's strong execution track record, strong operating performance of its assets with plant load factors (PLF between P50-P90 levels of operating assets)," it said.
Additionally, Ind-Ra factors in healthy diversification among counterparties, with the majority of counterparties having the highest credit quality; Portfolio diversification was achieved geographically and across both wind and solar energy sources; And when restrictive covenants are satisfied healthy cash flows from the operating SPV, allowing debt payments at the holdin' company.AGEN's strengths include that it is the largest renewable developer in India, with good operating parameters of operating assets along with healthy free cash flow and equity.
With balance promoter warrant money infusion of Rs 7,000 crore during FY 2025-26 and equity investment from investors, this will ensure adequate availability of equity for the under-construction portfolio.
Ind-Ra expects the annual capital expenditure rate to increase to Rs 24,000-30,00 crore in FY25-FY27 from around Rs 16,000 crore in FY24. There will be an annual equity requirement of Rs 18,000 crore during FY 2025-27, of which about Rs 7,000 crore will be promoter funds, Rs 8,500-11,000 crore will be generated internally and the remaining can be generated from the equity programme.