Rating Rationale

ReNew Power Ltd

17 Jan 2019
Brickwork Ratings assigns rating for the Commercial Paper Issue amounting to Rs. 600 Crs of
ReNew Power Ltd.

Particulars:

Amount
Instrument Tenure Rating *
(Rs. Crs)

BWR A1+
CP Issue 600 Short Term
(Pronounced BWR A One Plus)

Total 600 INR Six Hundred Crores Only

* ​Please refer to BWR website ​www.brickworkratings.com/​ for definition of the ratings

Rationale/Rating Sensitivities:

BWR has principally relied upon the audited financial results of the company up to FY18, provisional
financials for H1 FY19, projected financial statements, publicly available information and
information/clarifications provided by the company.

The ratings draw strength from the resourceful promoters consisting various reputed investors,
experienced & professional management team, RPL’s standing as a leading player in the renewable
energy segment, established track record of the company in commissioning significant capacities, long
term PPAs in place for the operational capacities, diversified geographical and off-taker profile,
considerable growth in revenue generation and comfortable liquidity profile.

The ratings, however, remain constrained on account of debt-funded expansion leading to high gearing,
moderate coverage indicators and reduced financial flexibility, susceptibility to climatic conditions and
counterparty risk/delay in receipts of the receivables as majority of the power is being supplied to state
Discoms. However, the counterparty risk with respect to the Discoms is mitigated to some extent by the
geographic and customer diversification.

Going forward, ability of the company to complete under implementation projects on time and within the
stipulated costs, refinance masala bonds and NCDs maturing in FY21 and FY22, bring down the debt
levels to improve the overall financial risk profile and raise funds from the promoters as and when
required shall remain key rating sensitivities.

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Key Rating Drivers:
Resourceful Promoters​: RPL has been attracting private equity investment since inception with Goldman
Sachs’ investment arm GS Wyvern Holdings Limited (GSW) being the largest shareholder in the
company. Other major investors include South Asia Clean Energy Fund (SACEF), Abu Dhabi Investment
Authority (ADIA), Jera Co. Inc (Jera) and Canada Pension Plan Investment Board (CPPIB). Together
these investors account for more than 93% of the company’s shareholding. RPL has a track record of
successfully raising funds from these investors in the past. It raised more than Rs. 1800 Crs during FY17
and Rs. 1600 Crs during FY18 and thus, the support from promoters is likely to continue in the future as
well for funding expansions and acquisitions.

Considerable Operational Portfolio and Healthy Revenue Visibility: RPL currently has a portfolio of 4.1
GW of operational assets consisting of both wind (70%) and solar (30%) power projects. These assets are
spread over various geographies such as Karnataka, Andhra Pradesh, Gujarat, Maharashtra and Telangana
etc and have an operational track record of 2-3 years on an average. The company has entered into long
term PPAs with tenure of up to 25 years for all its operational assets lending sufficient revenue visibility
for the future.

Improved Revenue Generation: During FY18, the company completed acquisition of approx. 1.5 GW of
operational assets leading to significant growth in its revenue generation. Operating Income of the
company at the consolidated level increased by 88% in FY18 from Rs. 1307 Crs in FY17 to Rs. 2462 Crs
in FY18. The revenue is further expected to increase by almost 100% in FY19. The company has
achieved turnover of Rs. 2704 Crs in H1 FY19 (higher than the revenue for full FY18) which is 55% of
the projected turnover for FY19. Projects under implementation with cumulative capacity of 2.2 GW
(both wind and solar power) are likely to be commissioned in FY20 and thus, the revenues are further
expected to go up.

Liquidity Position of the Company: The company has a comfortable liquidity position with cash & cash
equivalents of more than Rs. 3000 Crs as on Nov 2018. The company’s annual repayment obligation for
FY19 and FY20 are in the range of Rs. 1000-1500 Crs so the surplus available is around Rs. 2000 Crs
providing adequate coverage for the proposed CP Issue of Rs. 600 Crs. Further, the company has
unutilized limit of short term loans amounting to Rs. 110 Crs as on Dec 2018. Also, the company has
earned a cash profit of Rs. 1164.60 Crs during H1 FY19 which is more than the repayment obligation of
Rs. 1062 Crs for FY19.

Sizeable Debt: RPL has a debt of Rs. 23845 Crs as on March 31, 2018 at the consolidated level with
significant maturities in FY21 and FY22. The company has expanded considerably over the last two years
both by way of own developments and acquisitions leading to huge amount of debt. Although, the
company has raised significant amount of equity from promoters during the said period, Gearing remains
high at 3.75x as on March 31, 2018. Debt coverage indicators are also average with a DSCR (Debt
Service Coverage Ratio) of 1.35x and ISCR (Interest Service coverage Ratio) of 1.32x as on March 31,

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2018. Timely refinancing of the masala bonds and NCDs maturing in FY21 and FY22 is critical to
maintain the liquidity position and ensure timely servicing of debt.

Analytical Approach: ​BWR has assessed the consolidated financial position of the company. RPL has
116 subsidiaries whose financials are consolidated with it. Further, given the track record of regular
infusion of funds by the promoters, financial support from them in the future and timely receipt of
refinancing as required has been assumed while arriving at the rating. Please refer to the applicable
criteria at the end.

About the Company:

ReNew Power Limited (RPL, erstwhile ReNew Power Ventures Pvt Ltd) is one of India’s largest IPP
(Independent Power Producer) in the renewable energy space. RPL was incorporated in 2011 by
Mr. Sumant Sinha at New Delhi and commenced its first project in 2012 at Gujarat with a capacity of
25.20 MW. The company has been building up capacities ever since and presently, has a portfolio of 4.1
GW capacity of operational assets. Wind Power constitutes 70% of the operational assets and the
remaining 30% comes from solar power. Apart from this, RPL has wind power assets under
implementation of 1351.90 MW and solar power assets under implementation of 860 MW. The
operations of the company are well-diversified with presence across eight states viz Karnataka, Gujarat,
Andhra Pradesh, Maharashtra, Madhya Pradesh, Rajasthan, Telangana and Tamil Nadu.

Company’s Financial Performance:

The consolidated income of the company increased by 88% during FY18. Promoters infused funds
amounting to more than Rs. 1600 Crs in the company during FY18.

Key Financial Indicators are given in the table below:

Key Financial Indicators - Consolidated

Particulars Unit FY17 (A) FY18 (A)
Operating Income Rs. Crores 1307.30 2461.69
EBITDA Rs. Crores 1067.12 1991.65
PAT Rs. Crores 50.94 52.00
#
Tangible Networth​ Rs. Crores 5649.59 6365.05
Total Debt Rs. Crores 12076.64 23844.88
Total Debt : Equity Times 2.14 3.75

# Customer contracts and development rights which are part of intangible assets are not deducted while arriving at
the tangible networth as these are considered to be revenue generating in nature.

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Rating History for the last three years:

Sl.
Instrument Current Rating (Jan 2019) Rating History
No.
Fund Based Type Amount (Rs Crs) Rating 2018 2017 2016
Short
1. CP 600 BWR A1+ NA NA NA
Term
Total 600 INR Six Hundred Crores Only

Status of Non-Cooperation with Other CRAs: NA

Any Other Information: NA

Hyperlink/Reference to Applicable Criteria:

● General Criteria
● Approach to Financial Ratios
● Infrastructure Sector
● Commercial Paper
● Consolidation of Companies

Analytical Contacts Media

Vipula Sharma media@brickworkratings.com
Director - Ratings
Relationship Contact
analyst@brickworkratings.com bd@brickworkratings.com
Phone: 1-860-425-2742

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Note on complexity levels of the rated instrument:

BWR complexity levels are ​meant for educating investors. ​The BWR complexity levels are available
at​ ​www.brickworkratings.com/download/ComplexityLevels.pdf​ ​ Investors queries can be sent ​to ​info@brickworkratings.com​.

About Brickwork Ratings

Brickwork Ratings (BWR), a SEBI registered Credit Rating Agency, accredited by RBI and empaneled by NSIC, offers
Bank Loan, NCD, Commercial Paper, MSME ratings and grading services. NABARD has empaneled Brickwork for MFI
and NGO grading. BWR is accredited by IREDA & the Ministry of New and Renewable Energy (MNRE), Government of
India. Brickwork Ratings has Canara Bank, a leading public sector bank, as its promoter and strategic partner.

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BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh,
Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

DISCLAIMER
Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the
precision or completeness of the information obtained. And hence, the information in this report is presented “as is” without any
express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such
information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the
rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR has
the right to change, suspend or withdraw the ratings at any time for any reasons.

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