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 its highest-ever credit rating of 'ICRA AA-/Stable' from ICRA Limited for its long-term non-fund based bank facilities. This significant upgrade in credit rating is expected to have positive implications for the company's borrowing costs and financial flexibility.

Rating Rationale

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.

Post-IPO Financial Strength

ICRA highlighted ACME Solar's strengthened financial position following its successful initial public offering (IPO). The improved financial standing, coupled with the availability of equity funding for construction projects, has contributed to the company's enhanced credit profile.

Operational Capacity and Capabilities

ACME Solar operates as an integrated renewable energy firm with:

• 2,890 MW of operational capacity
• Diverse offerings including solar, wind, storage, and hybrid solutions
• 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.

Market Performance

On the day of this announcement, ACME Solar Holdings Limited's shares closed at ₹286.60 on the National Stock Exchange (NSE), experiencing a marginal decline of ₹1.70 or 0.59%.

Implications of the Credit Rating Upgrade

The 'ICRA AA-/Stable' rating, being the highest ever assigned to ACME Solar, is expected to yield several benefits:

1. Reduced Borrowing Costs: The company and its subsidiaries are likely to enjoy more favorable interest rates on their debt.
2. Enhanced Financial Flexibility: A higher credit rating may provide easier access to capital markets and diverse funding sources.
3. Increased Investor Confidence: The rating upgrade could potentially attract a wider range of investors, both institutional and retail.

As the renewable energy sector continues to grow, ACME Solar's improved credit profile positions it well to capitalize on emerging opportunities and potentially expand its operational footprint.