Rating Rationale
January 16, 2025 | Mumbai
Adani Solar Energy Jodhpur Three Private Limited
Rating reaffirmed at 'Crisil A+/Stable'
 
Rating Action
Total Bank Loan Facilities RatedRs.892.49 Crore
Long Term RatingCrisil A+/Stable (Reaffirmed)
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 rating on the long-term bank facilities of Adani Solar Energy Jodhpur Three Pvt Ltd (Adani Jodhpur Three; erstwhile, SB Energy One Pvt Ltd) at ‘Crisil A+/Stable’.

 

The rating reflects above-average managerial and financial support (if required) derived from being a part of AGEL (thereby the Adani group), strong counterparty risk profile and adequate liquidity buffers. These strengths are partially offset by moderate debt servicing cushions and dependence on favourable climatic conditions for power generation.

Analytical Approach

For arriving at the rating, Crisil Ratings has applied its parent notch-up framework to factor in the extent of support available to Adani Jodhpur Three from AGEL, given their common business and the importance of Adani Jodhpur Three to AGEL from the growth and economic perspectives.

 

Crisil Ratings has used its group notch-up framework to factor in the available financial flexibilities, managerial and operational support AGEL receives as part of the Adani group.

Key Rating Drivers & Detailed Description

Strengths:

  • Strong counterparty risk profile and low offtake risk: Adani Jodhpur Three has entered into a 25-year power purchase agreement (PPA) with the Solar Energy Corporation of India (SECI), which is 100% owned by the Government of India. The PPA is fixed at Rs 2.45 per unit, with an offtake guarantee, payment security mechanism ensuring one month cover by letter of credit, and a corpus funded by the Ministry of New and Renewable Energy comprising three months of payment. Some of these features mitigate the counterparty risk and support timely realisation of receivables.

 

  • Healthy track record with satisfactory operating performance, in line with expectations: Adani Jodhpur Three has been operational since November 2018. The operating performance of the asset is satisfactory, with plant load factor (PLF) well above P90 levels in fiscal 2024 and the first three months of fiscal 2025. The project’s performance is backed by performance guarantees from the supplier and its operations and maintenance contractor. The counterparty profile is strong with SECI as the offtaker, with low debtor period (payments being realised within 15 days from the invoice date). Robust liquidity is being maintained through debt service reserve account (DSRA) of six months, along with additional cash, enhancing the liquidity.

 

  • Managerial and financial support from AGEL: Given the strategic importance of the asset to AGEL and the management articulation, Adani Jodhpur Three is likely to receive managerial and financial support (if required) throughout the lifetime of the project.

 

Crisil Ratings has taken note of the issuance of indictment and a civil complaint against specific Adani group senior executives , key functionaries of AGEL by the United States Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) and their likely impact on the financial flexibility of the group, including the fall in the market capitalisation of the listed companies of the group, movement in bond yields, and calling off the $600 million bond offering of AGEL

 

AGEL has an upcoming bullet of $1.06 billion due in March 2025 for the construction facility, where the likely source of repayment is refinancing of the bullet. As per the management, refinancing is expected to be completed by February 2025. AGEL has cash and cash equivalents of Rs. 10,209 crores as of September 2024, to cater to the refinancing, if required, as per the management. Although, the refinancing ability is supported on account of strong business profile of cash flow backed assets and recovery in market capitalisation of listed entities in Adani group, Crisil Ratings will closely monitor the developments and the same will be a key monitorable.

 

Crisil Ratings continues to monitor the developments with respect to the group. Any adverse regulatory/ government action, emerging issues around corporate governance, or a sustained decline in group’s resource raising capabilities from banks or capital markets will be key monitorable.

 

Weaknesses:

  • Modest debt service coverage ratio (DSCR) over debt tenure because of low tariff, despite high power generation: While the performance of the plant is optimal (greater than P90 estimates), the revenue is constrained by the low tariff of Rs 2.45 per unit, leading to modest average DSCR of the project over the tenure of the debt.

 

  • Exposure to variability in solar irradiance levels: Adani Jodhpur Three is in the business of solar power generation, which depends on radiation levels in the location. Changes in the average temperature around the plant's location or in the performance of poly crystalline modules may affect the company's power generation and may lead to higher-than-expected degradation in its solar panels. Given that the sensitivity of cash flow of a solar power project is the highest for the PLF, these risks may impair its debt servicing capability.

Liquidity: Adequate

The project does not have any capital expenditure requirement. Reserve for two quarters of debt obligation is available, to cater to any cash flow mismatches. Additional cash is also available, enhancing the liquidity.

Outlook: Stable

The ratings will continue to benefit from the strong support from the parent, AGEL.

Rating sensitivity factors

Upward factors:

  • Faster-than-expected deleveraging leading to improvement in expected DSCR on P90 basis
  • Sustained performance above P75 PLF

 

Downward factors:

  • Change in support philosophy from the parent or weakening in the credit risk profile of AGEL or the Adani group
  • Performance weaker than P90 PLF for a sustained period

About the Company

Adani Jodhpur Three is ultimately held by AGEL. In 2017, Adani Jodhpur Three won the bid for the 300 megawatt (MW) solar power project in Bhadla Solar Park in Rajasthan in the SECI auction. The project was commissioned in November 2018.

Key Financial Indicators

Particulars

Unit

2024

2023

Revenue

Rs crore

179

204

Profit after tax (PAT)

Rs crore

37

47

PAT margin

%

20.50

23.20

Adjusted debt/adjusted networth

Times

1.18

1.29

Interest coverage

Times

1.58

1.94

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

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Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Term Loan NA NA 28-Feb-38 486.79 NA Crisil A+/Stable
NA Term Loan NA NA 28-Feb-38 405.70 NA Crisil A+/Stable

 

Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 892.49 Crisil A+/Stable   -- 29-11-24 Crisil A+/Stable 23-10-23 Crisil A/Stable   -- Crisil A/Stable
      --   -- 04-10-24 Crisil A+/Stable 06-03-23 Crisil A/Stable   -- --
      --   --   -- 02-02-23 Crisil A/Stable   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Term Loan 486.79 YES Bank Limited Crisil A+/Stable
Term Loan 405.7 State Bank of India Crisil A+/Stable
Criteria Details
Links to related criteria
Criteria for rating instruments backed by guarantees
Criteria for rating solar power projects
Criteria for rating wind power projects
Criteria for Notching up Stand Alone Ratings of Companies based on Parent Support
Criteria for Notching up Stand Alone Ratings of Companies based on Group Support

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