ACME Solar Holdings Limited (ASHL) has received a significant boost to its credit profile, with CRISIL Ratings upgrading its rating on the company's long-term bank facilities to 'CRISIL AA-/Stable' from 'CRISIL A+/Positive'. This upgrade, marking ACME Solar's highest rating to date, reflects the company's robust growth and improved financial metrics.

Key Highlights of the Rating Upgrade

• Facilities Rated: Rs. 1,000.00 crore (enhanced from Rs. 350.00 crore)
• New Rating: CRISIL AA-/Stable
• Previous Rating: CRISIL A+/Positive

Factors Contributing to the Upgrade

The rating upgrade is attributed to several positive developments:

1. Operational Growth: ASHL has demonstrated healthy growth in its operating portfolio, commissioning 1,550 MW of renewable capacities.
2. Strong Execution: The company has established a solid track record in project execution and timely asset stabilization.
3. Improved Financial Performance: ASHL has successfully refinanced projects at lower interest rates, enhancing its operating cash flows.
4. Robust Project Pipeline: The company has a signed PPA/BESPA portfolio of 2.84 GW Solar FDRE, Hybrid, and Wind Projects, along with a 550 MWh standalone BESS project.

Financial Outlook

CRISIL Ratings projects ASHL's consolidated EBITDA to improve significantly:

This growth is expected to support a healthy consolidated adjusted debt service coverage ratio (ADSCR).

Liquidity and Cash Position

ASHL maintains a strong liquidity profile:

• Consolidated Free Cash & Cash Equivalents: Over Rs. 1,400.00 crore
• Standalone Cash Position: More than Rs. 800.00 crore

This robust cash position is anticipated to support future equity requirements and any contingency needs.

Operational Portfolio

ASHL's operational asset base stands at 2.89 GWAC, with projects spread across:

• More than 11 states
• 17 counterparties
• 100% tied up in long-term 25-year power purchase agreements (PPAs)

Future Outlook

The 'Stable' outlook reflects CRISIL's expectation that ASHL will continue to benefit from:

1. Sustained operational performance at or above P-90 levels
2. Long-term PPAs with off-takers
3. Prudent capital allocation towards future capacity additions

Potential Risks

While the outlook is positive, CRISIL has identified potential risks:

• Implementation and stabilization risks associated with the under-construction portfolio
• Susceptibility to weather patterns affecting plant load factor (PLF)
• Possible stretches in debtor days (currently at 42 days as of March 2025)

Conclusion

The upgrade to 'CRISIL AA-/Stable' underscores ACME Solar Holdings' strengthening position in the renewable energy sector. With a robust operational portfolio, strong project pipeline, and improved financial metrics, the company is well-positioned for sustained growth. However, investors should remain mindful of the inherent risks associated with the renewable energy sector and the company's expansion plans.

ACME Solar Holdings Limited , a leading integrated renewable energy firm, has received an enhanced credit rating facility with the rated amount increased from Rs 1,000 crore to Rs 1,500 crore. The company's highest-ever credit rating of 'ICRA AA-/Stable' from ICRA Limited has been reaffirmed for its long-term non-fund based bank facilities.

Enhanced Credit Rating Details

The company announced the credit rating enhancement through a regulatory filing, providing the following details:

This significant enhancement in the credit rating facility amount represents a 50.00% increase from the previous rated amount, indicating ICRA's continued confidence in the company's financial strength and operational capabilities.

Rating Rationale and Company Strengths

ICRA's rating decision reflects several key strengths of ACME Solar:

• Diversified Portfolio: The company's assets are spread across multiple locations with central government off-takers, reducing geographical and operational risks
• Revenue Visibility: Long-term power purchase agreements provide stable and predictable cash flows
• Operational Excellence: Optimal generation performance across its portfolio
• Financial Health: Comfortable debt coverage metrics, indicating strong financial management

Operational Capacity and Market Position

ACME Solar operates as an integrated renewable energy firm with 2,890 MW of operational capacity. The company offers diverse solutions including solar, wind, storage, and hybrid technologies, supported by in-house engineering and construction capabilities. This vertical integration and diverse technology mix position ACME Solar as a comprehensive player in the renewable energy sector.

Financial Implications

The enhanced credit rating facility and reaffirmed 'ICRA AA-/Stable' rating are expected to provide several benefits:

• Improved Financial Flexibility: The increased facility amount from Rs 1,000 crore to Rs 1,500 crore provides enhanced access to non-fund based banking facilities
• Reduced Borrowing Costs: The maintained high credit rating supports favorable interest rates on debt facilities
• Strengthened Market Position: The rating enhancement reflects the company's improved financial profile following its successful IPO

The rating rationale issued by ICRA Limited is available on their official website, providing detailed insights into the factors supporting this credit rating enhancement. As the renewable energy sector continues to expand, ACME Solar's strengthened credit profile positions it well to capitalize on growth opportunities and expand its operational footprint.