India Ratings upgrades Adani Green Energy to ‘IND AA-’ from ‘IND A+’with stable outlook

India Ratings and Research (Ind-Ra) has elevated the Long-Term Issuer Rating of Adani Green Energy Limited (AGEL) from ‘IND A+’ to ‘IND AA-‘, with a Stable outlook. This significant upgrade underscores AGEL’s robust operational performance, enhanced execution capabilities, and improved financial health, on May 30.

The upgrade reflects AGEL’s strong operational asset performance, increased annual capacity additions, and healthy counterparty diversification. Ind-Ra noted the company’s strategic move to earmark funds for the repayment of a USD750 million bond and its collaboration with Total Energies SE, which facilitates asset monetization while retaining consolidation benefits, as per an official release.

• Financial Performance and Leverage Improvement

AGEL’s financial performance has seen considerable improvement, with revenue rising to ₹92.2 billion in FY24 from ₹77.9 billion in FY23. The EBITDA also saw a substantial increase, reaching ₹72.9 billion in FY24 from ₹49.3 billion the previous year. The EBITDA margin improved to 79 per cent from 63 per cent, and the net adjusted debt to EBITDA ratio moderated to 6.5x from 8.0x in FY23.

• Capacity Expansion

AGEL has expanded its operational capacity, which has grown to 10.9 GW at the end of FY24 from 8.1 GW in FY23 and 5.4 GW in FY22. This growth is underpinned by AGEL’s strong execution capabilities and a diversified portfolio that includes solar (68 per cent), wind, and hybrid sources (32 per cent). The company’s operational assets are performing at high levels, with plant load factors (PLFs) between P50-P75 levels, ensuring steady and reliable energy generation.

The portfolio’s diversification also extended to its counterparties, with major entities like the Solar Energy Corporation of India Limited and NTPC Limited forming 72 per cent of the portfolio, both rated ‘AA+’ and above. This strategic counterparty diversification reduces risk and enhances the reliability of cash flows.

• Strategic Equity Infusion and Debt Management

A key factor in AGEL’s improved financial standing is the strategic equity infusion from promoters and Total Energies SE. The promoters have committed ₹70 billion over FY25-FY26, ensuring adequate funding for AGEL’s ambitious expansion plans. Additionally, AGEL successfully defeated USD 750 million Holdco bonds due in September 2024 through asset monetisation (USD 300 million), promoter preferential allotment (USD 281 million), and reserve accounts (USD 169 million). This strategic debt management underscores AGEL’s capability to manage large-scale financial obligations effectively.