| NTPC Green Energy Limited | ||||||
| Ratings reaffirmed at 'CRISIL AAA/Stable/CRISIL A1+' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA/Stable/CRISIL A1+’ ratings on the bank facilities of NTPC Green Energy Ltd (NGEL).
The ratings continue to factor in the commissioning of 314-megawatt (MW) capacity (consolidated) during fiscal 2024 supporting the overall credit profile of NGEL. While the pace of capacity addition has remained below expectations during the last fiscal, it is expected to ramp up from the current fiscal as articulated by the management. That said, any significant delay in commissioning of capacities, leading to material cost overruns impacting the viability and debt protection metrics of NGEL, will remain a key rating sensitivity factor.
During the first nine months fiscal 2024, plant load factor (PLF) of the operational assets were at par with respective P90 levels. Also, NGEL has reported revenue from operations of Rs 1,450 crore and earnings before interest, tax, depreciation and amortisation (EBITDA) of Rs 1,320 crore during the same period. Receivables continue to remain healthy at ~93 days as of December 2023.
Liquidity is supported by annual cash accrual of Rs 2,500-3,000 crore over the medium term. Furthermore, as on March 31, 2024, the company had a cash balance of Rs 470 crore.
The ratings continue to reflect the high strategic importance of NGEL to NTPC and strong financial and managerial linkages with it, diversified portfolio and low offtake risk due to long-term power purchase agreements (PPAs), resulting in healthy debt service coverage ratio (DSCR). These strengths are partially offset by the weak credit risk profiles of some of the counterparties and susceptibility to implementation risk owing to large capital expenditure (capex). |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of NGEL, NTPC REL and all its subsidiaries. CRISIL Ratings has also applied its parent notch-up framework to factor in support from NTPC due to the strategic importance of NGEL to NTPC and strong financial, operational and managerial linkages with it.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Superior Liquidity is driven by annual cash accrual of Rs 2,500-3,000 crore from operational renewable energy assets, which is adequate to meet debt obligation of Rs 900-1,000 crore during fiscal 2025. The company had cash and cash equivalent of Rs 470 crore as of 31st March 2024. The management intends to build and maintain liquidity (cash and unutilised fund-based bank lines) of at least one quarter of debt servicing over the medium term. Being a subsidiary of NTPC also adds to its ability to raise funds. |
Outlook: Stable NGEL will benefit from its strategic importance to NTPC. The ability to generate steady cash accrual on the back of a diversified portfolio and long-term PPAs will continue to support the credit risk profile. |
Rating Sensitivity factors Downward factors
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About the Company NGEL was incorporated in April 2022 as a wholly owned subsidiary of NTPC for consolidation of identified renewable energy assets of NTPC along with NTPC REL. NTPC REL is currently a wholly owned subsidiary of NGEL, which holds all the operational assets transferred from NTPC. As on March 31, 2024, NGEL had an operational capacity of 2,925 MW. Business transfer of renewable energy assets and share purchase agreement of NTPC REL were executed in July 2022, while the transfer of assets was done in February 2023. NGEL has an under-construction capacity of 7.9 GW, with additional 9.8 GW under pipeline, along with plans to commission 3.8 GW in fiscal 2025, and 5-5.5 GW per annum going forward. |
Key Financial Indicators* - (CRISIL Ratings-adjusted financials)
*The company was incorporated in April 2022, while the assets were transferred in February 2023; NA- not applicable **PAT is adjusted for deferred tax of Rs. 118 crores |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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Criteria Details
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