| Sustainable Energy Infra Trust | ||||
| 'Crisil AAA/Stable' assigned to non-convertible debentures | ||||
| 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 assigned its ‘Crisil AAA/Stable’ rating to the Rs 500 crore proposed non-convertible debentures (NCDs) of Sustainable Energy Infra Trust (SEIT) and has reaffirmed its ‘Crisil AAA/Stable’ rating on the existing non convertible debentures and long-term loan bank facility.
SEIT is a renewable energy infrastructure investment trust (InvIT), sponsored by Mahindra Susten Pvt Ltd (Mahindra Susten) and 2726522 Ontario Limited (a 100% subsidiary of Ontario Teachers’ Pension Plan Board).
The proceeds are proposed to be utilized to partially replace the outstanding term loans and for transaction expenses. As such, at a consolidated level, debt shall remain materially unchanged. The proposed NCDs are likely to have a bullet-like maturity profile, which exposes the portfolio to moderate refinancing risk. That said, the long tenor of PPAs and tail period of about four years, post the amortisation of the consolidated current debt, provides comfort.
The rating reflects the strong and diversified underlying portfolio of 1.13 GW (AC) operational solar projects. These assets have healthy revenue visibility, supported by long-term power purchase agreements (PPAs) — majority with strong counterparties — at pre-determined tariffs, an operating track record better than P90 generation, healthy receivables period, and expectation of strong debt service coverage ratio (DSCR) over the entire debt tenure, supported by adequate liquidity.
Liquidity is supported by a debt service reserve account (DSRA) equivalent to one quarter of debt servicing. Additionally, the management has articulated that there will be at least four months of liquidity, including the stipulated DSRA and cash accumulating on the books, given the timeline of dividend distribution, inherent in structure of InvITs making distributions at quarterly rests. SEIT also has provisions in its financing arrangements for additional working capital facilities up to Rs 150 crore, providing a cushion to liquidity. Moreover, the management has articulated that bulk of the portfolio will be inclined towards central counterparties and strong state distribution companies (discoms), demonstrating an adequate track record of timely payments.
The InvIT reported its net debt to value of assets of 45% as on March 31, 2025. Net debt is capped at 49% of the SEIT’s value of assets till the first six distributions are complete, in compliance with InvIT regulations. Contingent on the InvIT regulations, the leverage may increase and hence, remains a key monitorable.
These strengths are partially offset by a percentage of the portfolio being exposed to receivables from weaker state discoms (Currently ~4.6% of portfolio AC capacity), and susceptibility to risks inherent in operating renewable assets, and moderate refinancing risk. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of the InvIT and all the solar assets, with cumulative capacity of 1.13 GW (AC). This is in line with the criteria of Crisil Ratings for rating entities in homogenous groups.
The entire outstanding debt is at the InvIT level and will be serviced from cash flows upstreamed from underlying assets. Furthermore, the SPVs will have to mandatorily dispense 90% of their net distributable cash flow (after meeting their debt obligation) to the InvIT, leading to highly fungible cash flow.
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: Revenue visibility with long-term PPAs and healthy generation track record: The overall portfolio of 1.13 GW (AC) spans eight projects across five states. This reduces generation risk, as evident from the track record of plant load factor (PLF) consistently exceeding the P90 value at the overall portfolio level. Average capacity-weighted AC PLF stood at 25.1% for fiscals 2025 and 2024.
The InvIT has PPAs with six counterparties, with 73% of AC capacity under central counterparties and majority of the rest with strong state discoms. The PPAs carry a pre-determined tariff for a 25-year tenure, with a weighted average residual tenure of around 20 years. Furthermore, the weighted average tariff of the portfolio is around Rs 3 per kilowatt-hour (kWh) for most of the loan tenure. This provides revenue visibility, minimises offtake risk and ensures steady cash flow.
Established technology and Mahindra Teqo Pvt Ltd being the operations and maintenance (O&M) operator should also support the business risk profile, given the significant experience of Mahindra Teqo in managing renewable assets.
Receivables were healthy at around 22 days for the overall portfolio as on March 31, 2025. However, historically, there have been significant delays in payment for the 10-megawatt (MW) plant with Southern Power Distribution Company of Telangana Ltd (APSPDCL) as the counterparty, and the 42 MW plant with Northern Power Distribution Company of Telangana Ltd (TSNPDCL) as the counterparty (together accounting for 7-8% of total revenue). That said, under the Late Payment Surcharge (LPS) scheme, receivables from the Andhra Pradesh and Telangana discom have improved significantly. Payments from all other counterparties are received on time.
Healthy financial risk profile: The financial risk profile is supported by strong average DSCR throughout the tenure of the debt (at Crisil Ratings-sensitised projections made at P90 PLF).
An upfront cash DSRA covers three months of debt servicing. As per InvIT guidelines, net debt cannot exceed 49% of asset value (until six consecutive dividend distributions). SEIT has a ‘right-of-first-offer’ on assets of Mahindra Susten for a period of nine years from the date of InvIT listing. Acquisitions could alter the leverage profile of SEIT.
Crisil Ratings will monitor the leverage, and any material increase weakening the DSCR significantly, remains a rating sensitivity factor.
Weaknesses: Exposure to receivables from state discoms: Long-term PPAs with discoms, having relatively weak liquidity and payment track records, pose receivables risk. However, post adoption of LPS scheme, receivables are coming timely for both Andhra Pradesh and Telangana assets. This risk is further mitigated via liquidity held in the form of DSRA of around three months of debt obligation, additional cash and timely payments from most counterparties.
Susceptibility to risks inherent in operating renewable assets: Cash flows of solar projects are sensitive to PLF, which depends on solar irradiation and hence, inherently unpredictable. Solar assets are also vulnerable to annual degradation of solar panels. This may increase exponentially in the later part of the life of an asset.
Moderate refinancing risk: The bullet like maturity profile of existing NCDs exposes the InvIT to moderate refinancing risk. However, PPAs of underlying assets are expected to have at least a 10-year tenure extending beyond the bullet repayment dates, which should help refinance the debt comfortably. SEIT is expected to prudently refinance the maturing debt and maintain its healthy DSCR over the medium term. |
Liquidity: Superior The DSCR is expected to be strong over the debt tenure. The presence of strong counterparties, with no substantial delay expected for over 93% of cash flow, will also support liquidity. DSRA of Rs 85 crore equivalent to three months of interest and amortizing principal obligations has been created. Furthermore, the management has articulated that at least four months of liquidity, including DSRA of one quarter of debt obligation, will be maintained at all times.
Moreover, the InvIT has the provision to avail additional working capital up to Rs 150 crore. Cash accruals for fiscal 2026 are expected to be at a comfortable level against likely debt obligations of ~Rs 300 crore for fiscal 2026. |
Outlook: Stable SEIT will continue to benefit from sustained PLF performance, long-term PPAs with strong counterparties, and diversity in projects. |
Rating sensitivity factors Downward factors:
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About the Trust SEIT is a renewable energy InvIT, sponsored by Mahindra Susten and 2726522 Ontario Limited (a 100% subsidiary of Ontario Teachers’ Pension Plan Board), with Sustainable Energy Infra Investment Managers Pvt Ltd as its investment manager, Green Energy Infra Project Managers Pvt Ltd as its project manager, and Axis Trustee Services Ltd serving as the trustee.
The InvIT received the registration certificate from the Securities and Exchange Board of India on August 11, 2023, and listed its units on January 15, 2024.
The broad details of assets held by SEIT are as follows:
*Yearly escalation of Rs 0.05 from 2nd to 16th year **Yearly escalation of 3% till 10th year [1]SECI: Solar Energy Corporation of India Ltd, MPPMCL: MP Power Management Company Ltd, DMRC: Delhi Metro Rail Corporation, NTPC: National Thermal Power Corporation Ltd, TSNPDCL: Northern Power Distribution Company of Telangana Ltd, APSPDCL: Southern Power Distribution Company of Andhra Pradesh Limited.
[2]Name of the company changed from Mahindra Renewables Pvt Ltd to Megasolis Renewable Pvt Ltd with effect from May 2023. |
About the Sponsors Incorporated in 2010, Mahindra Susten offers turnkey solutions for engineering, procurement and construction (EPC) and development of independent solar power projects. At present, Mahindra & Mahindra Ltd holds around 60% stake through its 100% subsidiary, Mahindra Holdings Ltd, and 2452991 Ontario Limited (a subsidiary of Ontario Teachers’ Pension Plan Board) holds the balance stake.
Canada-based Ontario Teachers’ Pension Plan Board is one of the world’s largest pension plans, with C$255.8 billion in net assets as on June 30, 2024, and presence in over 50 countries. It is jointly sponsored by the Government of Ontario and the Ontario Teachers' Federation. |
Key Financial Indicators
*Not meaningful as InvIT operations began from Jan 2024 |
Any other information: Key covenants of the existing rupee term loan and non convertible debentures (Rs 3,289 crore outstanding)
Name of the company changed from Mahindra Renewables Pvt Ltd to Megasolis Renewable Pvt Ltd with effect from May 2023. |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
# Yet to be issued |
Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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Criteria Details
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