Adani Green Energy Limited (AGEL) received an upgrade in its long-term issuer rating by India Ratings and Research (Ind-Ra) on Thursday. The rating was raised to 'IND AA-' from 'IND A+', with a stable outlook.
This upgrade is attributed to AGEL's notable position as India's largest renewable energy developer, supported by robust operational assets and healthy free cash flow to equity, along with promoter infusions covering equity commitments.
The upgrade was also influenced by AGEL's strong execution scale-up, with expected annual capacity additions of 4–5 GW, up from the previous 2.5–3.5 GW.
Ind-Ra highlighted healthy counterparty diversification and a reduction in receivables, leading to improved cash flow metrics and EBITDA compared to historical levels.
AGEL's shift in policy regarding leveraging at the holding company level, earmarking funds for the repayment of a $750 million hold-co bond, has also been noted by Ind-Ra.
The creation of a platform within AGEL with Total Energies SE and equity infusions by promoters through warrants have also been considered positive factors.
Earlier this month, AGEL reported a 30% EBITDA growth in FY24, reaching Rs 7,222 crore, as the renewable energy (RE) major revised its target for 2030 to 50 gigawatts (GW) from 45 GW.
The robust growth in revenue, EBITDA, and cash profit was driven by a capacity addition of over 2.8 GW over the last year, representing 15 percent of the country’s total renewable energy capacity addition.
Analysts expect favourable operational-to-under-construction book ratios, given AGEL's operational capacity of nearly 10.9 GW and an increase in annual capacity addition targets.
The shift to amortising structures for debt, ensuring lower refinance and tail risks, contributed to a moderation in leverage to more reasonable levels of 5.5–6.5 times, down from historically high levels of 9 times.
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