Detailed Rationale

Crisil Ratings has upgraded its rating on the long-term bank facilities of Acme Solar Holdings Ltd (ASHL) to ‘Crisil AA-/Stable’ from ‘Crisil A+/Positive’.

 

The rating upgrade factors in healthy growth in operating portfolio in fiscal 2025, wherein it has seen commissioning of 1,550 MW of renewable capacities (mainly solar ISTS and ASHL’s maiden wind project), establishing a healthy execution track record, timely stabilisation of assets at healthy operating levels (at or above P-90 levels), and timely refinancing of projects with lower cost of debt, which should support improved operating cash flow. Crisil Ratings expects ASHL’s consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) to improve to Rs 2000 crore in fiscal 2026 from Rs 1,406 crore in fiscal 2025 which should support healthy consolidated adjusted debt service coverage ratio (ADSCR) and growing equity requirements for the future growth plans.

 

The rating also factors in the PPA/BESPA signed under-construction portfolio of portfolio of 2.84GW Solar FDRE, Hybrid and Wind Projects and 550MWh standalone BESS project (against operational portfolio of 2.89 GW as of August 2025), which will be executed over the next 2-3 years. Although the under-construction pipeline is sizeable, Crisil Ratings expects capital allocation approach to be prudent. Material debt is expected to be drawn when there are clear visibilities on project commissioning and capital requirement till such time will largely be supported by front loading of equity. This is expected to limit the capital at risk and keep debt servicing requirements aligned with operating cash flows while keeping consolidated net leverage (ratio of gross debt to EBITDA, adjusted for free cash & cash equivalents) at or below 5-5.5 times (on 1-year forward EBITDA basis). Deviation from this understanding would be a rating sensitivity factor.

 

The ratings also take comfort from the strong liquidity profile with consolidated free cash & cash equivalents of more than Rs 1,400 crore (more than Rs 800 crore at standalone level for ASHL) as on August 31, 2025, which should support future equity requirements as well as any contingency requirements.

 

The rating reflects the track record of development and operation of renewable power assets and above average financial profile supported by diverse portfolio of assets. These strengths are partially offset by implementation risk and investment requirement of under-construction portfolio and variability in operating margin of engineering, procurement and construction (EPC) segment.

Analytical Approach

Crisil Ratings has consolidated the business and financial risk profiles of ASHL and all its special-purpose vehicles (SPVs). This is because all these entities, collectively referred to as ASHL, have significant business, financial and managerial linkages; are in the same business; and have common management and treasury.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers – Strengths

Track record in the development and operation of solar power assets

ACME Group has extensive experience of about two decades in the execution and operation of solar power projects in India. This is reflected in commissioning of more than 4 gigawatts (GW) alternate current (AC) of solar power projects without any material cost and time overruns, part of which has been monetized in the past. In the last one year ASHL has commissioned 1,550 MW of capacity, most of which operate at better than P90 levels. Currently, the group has an operational capacity of ~2.89 GWAC.

 

Above average financial risk profile, supported by large and diverse portfolio of assets across multiple counterparties

ASHL has an operational asset base of 2.89 GWAC, Cash flow upstreaming to the holding company from the surplus will remain strong for fiscal 2026 and 2027. The business risk profile is supported by geographical and off-taker diversity. The portfolio assets have strong revenue visibility, with 100% of the portfolio tied up in long-term power purchase agreements (PPAs) of 25 years at pre-determined tariffs which are spread across more than 11 states and 17 counterparties. Additionally, power generation has been satisfactory for the past three years with the operating assets performing at or above P-90 levels. Further, Crisil Ratings expects that future capacity addition mix will remain more skewed towards solar and battery (given the significant majority of under-construction portfolio is hybrid or FDRE [firm and dispatchable renewable energy] projects with storage requirements), with limited or negligible reliance on wind capacity as it involves larger capital expenditure (capex) as well as higher variation in generation between solar and wind.

 

From the initial public offering (IPO) proceeds ASHL has repaid ~Rs 2,070 crores of debt (subsidiary project loan / non project loan). Leverage profile will likely be prudently managed as gross debt at the holding company and operational project debt to run-rate EBITDA of operational projects should stay less than 5.5 times.

 

Healthy financial flexibility

ASHL successfully executed the IPO in November 2024 and raised Rs 2,900 crores (including offer for sale proceeds). Listing has improved the financial flexibility of ASHL by diversifying funding sources as well as liquidity profile to support future growth.

 

Going forward, along with better access to markets, the operational portfolio of around 2.89 GWAC of solar and wind power assets will provide the flexibility to raise funds through fresh issues, project accrual, or refinancing if required.

Key Rating Drivers – Weaknesses

Sizeable under-construction portfolio

ASHL has a PPA signed under-construction portfolio of 2.84GW Solar FDRE, Hybrid and Wind Projects and 550MWh standalone BESS project which exposes the company to implementation and stabilisation risks. PPAs for these projects have been signed with central off-takers, and these projects are expected to be commissioned over next 2- 3 years. Also, the under-construction capacity includes around 2,140 MW is FDRE, peak power and hybrid project which require considerably higher capex and operating risks as compared to pure play solar and wind power projects. As a result, under-construction pipeline entails implementation and stabilisation risks.

 

Material delays in the implementation of these projects and higher-than-projected investment requirement can exert pressure on cash flow upstreaming to holding companies and weaken the financial flexibility of Acme group. However, the rating draws comfort from the progress made by the company towards financial closure, land acquisition, grid connectivity and placement of order for major equipment’s for the PPA signed under-construction projects.

 

Susceptibility to risks inherent in renewable power projects: Cash flows remain sensitive to plant load factor (PLF), which depends entirely on solar irradiance and weather patterns that are inherently unpredictable. This uncertainty may have an impact on the debt servicing capability of some of the SPVs and in turn may reduce the realizations for AHSL through cash upstreaming. That said, all the project SPVs have either performed close to or above the P90 PLF in the past five years.

Liquidity: Strong

Crisil Ratings expects the consolidated annual cash accruals for the company to be Rs. 2,000 - 2,300 crores which should cover debt servicing (principal and interest) of Rs. 1,600 – 1,800 crores for fiscal 2026 and 2027. Further, over the longer term, the consolidate ADSCR are expected to be 1.30-1.35 under Crisil Ratings’ sensitized scenario. Also, the group maintains a DSRA of 3-6 months across SPVs to cover any cashflow mismatches. They have a track record of refinancing projects at lower rate of interest which gives comfort to overall liquidity of the group.

Outlook: Stable

The group ASHL is will continue likely to benefit over the medium term from sustained operational performance (PLF), long-term PPAs with offtaker and prudent capital allocation towards future capacity additions.

Rating sensitivity factors

Upward Factors

• Sustained higher operating performance at higher than P50 level resulting in materially higher operating cash flows
• Faster-than-expected deleveraging resulting in significant improvement in consolidated average DSCR against Crisil Ratings sensitized projections

Downward Factors

• Sustained lower-than-anticipated performance against the P-90 benchmarks or higher-than-expected debt-funded capex (including debt at holding company), adversely impacting leverage and DSCR against Crisil Ratings estimates.
• Material time or cost over-run in under-construction portfolio resulting in increased leverage and reduced debt coverage ratios
• Sustained material stretches in debtor days from current levels (42 days as of March 2025) resulting in deterioration in liquidity profile

About the Company

Established in 2015, ASHL is a renewable power developer with 2.89 GW of operational capacity and another 2.84 GWh of FDRE, Hybrid and Wind Projects and 550MWh of standalone BESS project under construction portfolio for which PPA/BESPA is signed. Their projects include pure play solar and wind power projects and FDRE, hybrid and solar power projects with energy storage systems. Apart from this ASHL is also into EPC and O&M for in-house renewable power projects.

 

It is promoted by Mr. Manoj Kumar Upadhyay, a first-generation entrepreneur, having close to 25 years of experience in clean energy.

Any other information: Not Applicable