Ind-Ra upgrades JSW Energy's Credit Rating to AA (Stable); Stock gains ~2%

8 Feb 2022 , 09:38 AM

Long Term Credit rating of JSW Energy Ltd has been upgraded to IND AA (Stable) from IND AA- (Stable) by India Ratings Pvt Ltd. (Ind-Ra), the wholly owned Indian subsidiary of Fitch Ratings. An upgrade of a company within the AA family of ratings is a clear recognition of the robust business and risk management practices of the company and its strong financial profile.

At around 9.40 am, JSW Energy Ltd was trading at Rs308.35 per share up by Rs5.55 or 1.83% from its previous closing of Rs302.80 per share on the BSE.

The company said in a filing that JSW Energy has one of the strongest balance sheets in the sector with a Net Debt/Equity of 0.37x and Net Debt/EBITDA of 1.74x. Moreover, the Company generates a steady EBITDA and cash flow due to 84% of its operational portfolio being tied under long-term power purchase agreements.

The upgrade concurs with the commencement of a Capex cycle entailing an annual outlay of Rs8,000 to Rs10,000cr to reach a 20 GW operational portfolio comprising 85% Renewable Energy capacity.

“We believe that this is a testimony to the pedigree of project implementation capability of the Company, the consistent demonstration of appropriate risk management practices, application of stringent risk-return metrics to identify new growth opportunities and the strong viability of the projects under implementation.

This outcome also demonstrates that a clear and transparent articulation of growth strategies backed by sound planning, and efficient project execution can have favorable outcomes with stakeholders,” company said.

Prashant Jain, Joint Managing Director and CEO of JSW Energy, said: “The upgrade of the long term credit rating of the Company reinforces our belief that growth can be pursued while maintaining the key financial metrics of the Company as long as the growth opportunities are value accretive, sustainable and have sound management practices to mitigate the risks of
pursuing such opportunities”.

Pritesh Vinay, CFO of JSW Energy, said: “The upgrade of the long term credit rating of the Company is a testimony to the strong business and financial profile of the Company, its robust risk management practices and the capability of the business to diversify into green and new energy businesses to sustain a growth path which balances out the risk return metrics in the long term”.

JSW Energy has set an ambitious target for 50% reduction in carbon footprint by 2030 and achieving Carbon Neutrality by 2050 by transitioning towards renewable energy. The Company has set a target to reach 20 GW capacity by 2030, with the share of renewable energy increasing to 85% of total. Around 2.5 GW renewable projects are currently under-construction: 2.2 GW wind and solar projects, tied with SECI and JSW Group, are expected be commissioned in the next 18 months, while the 240 MW Kutehr hydro project is expected to be commissioned in the next 36 months.

With the commissioning of these projects, the Company’s total generation capacity will increase to ~7 GW, with renewable energy contributing to about 55%. The Company is expeditiously securing resources of more than 20 GW in various resource rich states such as Karnataka, Maharashtra, Rajasthan, Gujarat, Tamil Nadu etc. Further, the Company is evaluating opportunities for expansion into emerging energy businesses of hydro pumped storage, battery energy storage, green hydrogen and energy products & services.