The agency has also affirmed the company’s short-term rating at ‘IND A1+’.
India Ratings stated that the affirmation reflects in JSWEL’s consolidated large scale of operations and diversified business profile with presence across thermal, hydro and renewable power generation, power transmission and power trading.
The availability of long-term power purchase agreements (PPAs) for 87% of the company’s consolidated operating portfolio of 7.74GW provides long-term revenue visibility and lowers the offtake risk.
Moreover, the cost-plus tariff structure with availability-linked capacity charges for majority long-term PPAs tied-up for thermal and hydro assets ensures stable cash flows and healthy profitability, as seen over the past few years.
Also, JSWEL looks to expand its total generation capacity to 20GW in the medium term, for which they have enough projects in the pipeline. Furthermore, India Ratings expects JSWEL’s medium-term leverage to remain rangebound at 4.5x-5x, despite the planned high debt-funded capex and recent acquisitions.
The ratings, however, are constrained by the execution risks pertaining to the ongoing debt-funded capacity expansion in the renewable energy hydro segments and debtor risk on account of the weak financial position of discoms (offtakers).
JSW Energy is in the business of power generation and transmission primarily in the states of Karnataka, Maharashtra, Rajasthan, and Himachal Pradesh. The company has its presence across the power sector including generation, power transmission, mining, power plant equipment manufacturing and power trading.
The scrip lost 0.66% to currently trade at Rs 540.40 on the BSE.