Ratings firm Crisil has revised its outlook on the bank facilities of nine special purpose vehicles (SPVs) under the Renew Power group to ‘negative’from ‘stable’. However, the existing ratings on these facilities, of a total of about Rs 1,086 crore, have been re-affirmed.
The nine SPVs include Renew Wind Energy (Maharashtra) Private Limited, Renew Wind Energy (Rajasthan Four) Private Limited, Renew Agni Power Private Limited, Renew Wind Energy (MP Three) Private Limited, Renew Wind Energy (MP Four) Private Limited, ReNew Wind Energy (AP) Private Limited, Renew Wind Energy (Karnataka 3) Private Limited, Renew Wind Energy (Karnataka 4) Private Limited and Bhumi Prakash Private Limited.
The outlook revision factors in lower-than-expected reduction in the leverage of the group, Crisil said. The debt service coverage ratio (DSCR) of project level debt has weakened due to additional debt or top-ups taken on operational projects.
Additionally, expected correction in the total debt/Ebitda (earnings before interest, tax, depreciation and amortisation) ratio, which was at 7.2 times in fiscal 2019, will be slower in fiscal 2020 to provide liquidity support due to delays from counterparties. The ratio is, however, likely to improve to around 6.5 times by fiscal 2021 driven by management plans to reduce holding company debt, it said.
Crisil observed that while the rating continues to reflect benefits derived from being part of the Renew Power group, these strengths are partially offset by exposure to project implementation risks, an average financial risk profile due to increase in leverage and receivables, and exposure to risks inherent in operating renewable energy assets.
Apart from ReNew Wind Energy (AP) Private Limited, which carries a long-term rating of Crisil A+ and short-term rating of A1, the rest of the SPVs have a long-term rating of Crisil A.