Detailed Rationale

Crisil Ratings has assigned its ‘Crisil AAA/Stable’ rating to the proposed non-convertible debentures (NCDs) of Rs 5,000 crore of NTPC Green Energy Limited (NGEL; a part of NTPC group). Also, Crisil Ratings has reaffirmed its ‘Crisil AAA/Stable/Crisil A1+’ ratings on the bank facilities of NGEL.

 

The ratings factor the consolidated operational capacity of 3.8-gigawatt (GW) at the end of fiscal 2025, which supports the overall credit profile of NGEL. While the pace of capacity addition remained below expectations last fiscal, it is expected to ramp up from the current fiscal as articulated by the management. The delay in commissioning was owing to a slower pace of execution with lower capital expenditure (capex) incurred and hence did not impact the debt protection metrics. That said, any significant delay in commissioning capacities, leading to material cost overruns impacting the viability and debt protection metrics of NGEL, will remain a key rating sensitivity factor.

 

During fiscal 2025, the plant load factors (PLFs) of operational assets were in line with their respective P90 levels. Also, NGEL has reported revenue from operations of Rs 2,210 crore and earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 1,917 crore for the same period. Receivables were healthy at ~85 days as on March 31, 2025 (~131 days as on March 31, 2024). However, receivables excluding unbilled and not due amounts were ~ 21 days (~49 days as on March 31, 2024).

 

Liquidity is supported by annual cash accrual of more than Rs 1,500 crore over the medium term. Furthermore, the company had a cash balance of Rs 3,517 crore as on March 31, 2025. The company had raised Rs 10,000 crore through an initial public offer (IPO) in November 2024. Of this, around Rs 4,150 crore was used to invest in its subsidiary NTPC Renewable Energy Ltd (NREL) for repayment of debt and Rs 3,350 crore is pending utilisation. Further, Rs 2,500 crore under general corporate purpose was used partly to fund NGEL’s share towards acquiring Ayana Renewable Power Pvt Ltd (Ayana; 2.1 GW operational and 1.9 GW under construction capacity) through a 50:50 joint venture (JV) with ONGC Green Energy Ltd.

 

The ratings continue to reflect the 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 capex.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of NGEL, NREL and its subsidiaries and JVs. 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:

High strategic importance to NTPC and strong financial and managerial linkages with it: NTPC has experience in operating and maintaining power stations at par with the best-run utilities in the world, with respect to availability, reliability and efficiency. It is a dominant player in the domestic power sector, apart from having a robust financial risk profile and track record of providing timely support to subsidiaries. NTPC plans to increase total renewable energy capacity to 60 GW by 2032, which will be mainly carried out through NGEL/ NREL (wholly owned subsidiary). Furthermore, the functional directors on the board of NGEL are from NTPC. Similarly, the personnel manning key management positions are on secondment from NTPC. NTPC provides benefits of high project execution capabilities and timely realisation of receivables, driven by strong market position in the power sector. Crisil Ratings understands NTPC shall provide need-based growth and distress support to NGEL.

 

Low offtake risk along with healthy DSCR: All the tied-up projects have a PPA of 25 years with a fixed tariff, leading to high revenue visibility. The operating renewable assets witnessed adequate average PLF of around 24% in fiscal 2025, but sustenance of healthy PLFs will be a key monitorable. Sustained operating performance is expected to support a comfortable consolidated average DSCR for NGEL. 

 

Significant renewable generation portfolio with diversity in terms of geography and technology: NGEL is one of the large players in the Indian renewable energy space, with around 3.8 GW of installed capacity (excluding an additional operational capacity of around 2.1 GW in Ayana), and around 13.5 GW (excluding Ayana capacity of 1.9 GW and 1.8 GW in other JVs) of projects under construction. Diversified portfolio of solar-wind power capacity, spread across 9 states, mitigates the risk of resource and location-specific generation variability. The under-construction portfolio is fairly diversified across geographies and comprises of around ~80% solar and ~20% wind projects with a cumulative portfolio of ~ 32 GW (including pipeline projects). Commissioning of the under construction/pipeline capacities shall make NGEL one of the largest renewable players in the country. The well-diversified portfolio with pan-India coverage and established operational track record will continue to support the credit risk profile.

 

Weaknesses:

Weak credit risk profiles of the counterparties: Long-term PPAs with distribution companies (discoms) having relatively weaker financial risk profiles and payment track records pose receivables risk. While receivables for operational renewable assets stood at ~85 days as on March 31, 2025 (~ 21 days excluding unbilled and not due), the weak financial health of state discoms could lead to a stretch in payments, constraining the credit risk profile of NGEL. However, the discoms have started making payments under the New Electricity (Late Payment Surcharge and Related Matters) Rules, 2022. This risk is also mitigated by diversity in counterparties with presence of over six state discoms and central public sector enterprises (CPSEs) in the portfolio, and benefits of being a part of the NTPC group. Presence of payment security mechanisms such as letters of credit also lend comfort.

 

Susceptibility to implementation risk owing to large capex: The company has large capex plans to reach an overall capacity of 60 GW by 2032 from around 3.8 GW currently. Around 13.5 GW of capacity is under construction in NGEL and its subsidiaries and around 1.9 GW is under construction in Ayana and another 1.8 GW in other JVs. The company is exposed to time and cost overruns in these under-construction assets. It executes projects primarily through the engineering, procurement and construction (EPC) route and has provisions for getting liquidated damages for delays in commissioning. However, it remains exposed to an increase in costs for projects not yet awarded. Nevertheless, the implementation risk is mitigated by NGEL’s ability to raise funds in the capital markets given the association with NTPC.

Liquidity: Superior

Liquidity is driven by annual cash accrual of over Rs 1,500 crore from operational renewable energy assets, which is adequate to meet debt repayment obligations of Rs 600-700 crore during fiscal 2026. The company had cash and equivalents of Rs 3,517 crore as on March 31, 2025, however, majority of it is earmarked for investment in NREL as part of the IPO proceeds. 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

• Downgrade in the rating of NTPC by one or more notches
• Change in the support philosophy of NTPC or significant reduction in shareholding
• Weakening of the operating performance of the operational assets impacting cash flow, including recovery of dues from customers
• Significant delay in commissioning of the assets leading to material cost overruns impacting the debt protection metrics of NGEL

About the Company

NGEL was incorporated in April 2022 as a wholly owned subsidiary of NTPC for the consolidation of identified renewable energy assets of NTPC along with NTPC REL. NTPC REL is currently a wholly owned subsidiary of NGEL. As on March 31, 2025, NGEL had an operational capacity of 3,779 MW. Business transfer of renewable energy assets and share purchase agreement of NTPC REL were executed in February 2023 and July 2022, respectively. NGEL has an under-construction capacity of 13.5 GW and an additional 3.7 GW under construction in JVs.

Key Financial Indicators - (Crisil Ratings-adjusted financials)

Particulars	Unit	2025	2024
Operating income	Rs crore	2,210	1,962
Profit after tax (PAT)	Rs crore	474	343
PAT margin	%	21	17
Adjusted debt/adjusted net worth	Times	0.97	2.1
Adjusted interest coverage	Times	2.9	2.6

*As per analytical adjustments made by Crisil Ratings

Any other information: Not Applicable