India Ratings upgrades JSW Energy’s credit rating to AA stable

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.

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, it stated.

Moreover, the company generates a steady Ebitda (earnings before interest, tax, depreciation and amortisation) and cash flow due to 84 per cent of its operational portfolio being tied under long-term power purchase agreements, it stated.

The upgrade concurs with the commencement of a capex (capital expenditure) cycle entailing an annual outlay of Rs 8,000-Rs 10,000 crore to reach a 20-gigawatt (GW) operational portfolio comprising 85 per cent renewable energy capacity, it added.

This is a testimony to the pedigree of project implementation capability of the company, the consistent demonstration of appropriate risk management practices, the 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 favourable outcomes with stakeholders, it stated.

Prashant Jain, joint managing director and CEO of JSW Energy, said in the statement, “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.”

JSW Energy Chief Financial Officer Pritesh Vinay said the upgrade of the company’s long-term credit rating 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.

The company has set an ambitious target for a 50 per cent reduction in carbon footprint by 2030 and achieving carbon neutrality by 2050 by transitioning towards renewable energy.

The firm has set a target to reach the 20-gigawatt (GW) capacity by 2030, with the share of renewable energy increasing to 85 per cent of the total.

About 2.2 GW wind and solar projects, tied with SECI and JSW Group, are expected to be commissioned in the next 18 months, while the 240-megawatt (MW) Kutehr Hydro Electric 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 seven GW, with renewable energy contributing to about 55 per cent.

The company is expeditiously securing resources of more than 20 GW in various resource-rich states such as Karnataka, Maharashtra, Rajasthan, Gujarat and Tamil Nadu.

Further, the firm is evaluating opportunities for expansion into emerging energy businesses of hydro-pumped storage, battery energy storage, green hydrogen and energy products and services.