Rationale

 ICRA’s reaffirmation of the ratings assigned to Sembcorp Green Infra Private Limited (SGIPL) factors in the strong credit profile of its ultimate parent, Sembcorp Industries Limited (SCI), which draws comfort from its diversified asset profile, the increasing share of renewables in its portfolio and a strong parentage with 49.6% shareholding by Temasek Holdings (Private) Limited, rated Moody’s Aaa (Stable). SGIPL remains strategically important to SCI amid its objective to grow the renewable portfolio. Further, ICRA takes note of the completion of the reverse merger of SGIPL with its erstwhile parent, Sembcorp Green Infra Limited (SGIL), in June 2023, which has now made SGIPL the holding company of the renewable energy platform of the Sembcorp Group in India. SGIPL’s consolidated operating capacity has increased to 2.7 GW as of May 2024 from 2.4 GW in January 2024, following the completion of the acquisition of 228-MW operational wind power assets of Leap Green Energy Pvt Ltd in February 2024 and the commissioning of ~75-MW assets since January 2024 as part of regular capex. This apart, the Group has 1.9-GW assets under various stages of development (including recently awarded projects), taking the overall portfolio to 4.6 GW. ICRA continues to positively factor in the presence of long-term power purchase agreements (PPAs) for a large portion of the portfolio with a mix of state distribution utilities, central intermediaries and commercial & industrial (C&I) customers, with a weighted average balance PPA tenure of over 15 years for the operating portfolio. Further, the presence of strong central offtakers like Solar Energy Corporation of India (SECI, [ICRA]AAA (Stable)/A1+), NTPC Limited (NTPC, [ICRA]AAA (Stable)/A1+) and PTC India Limited (PTC, [ICRA]A1+), accounting for ~40% of the operating portfolio, is a credit positive. Moreover, the competitive tariffs offered by the projects tied up with SECI support the credit profile of the company. The generation performance of the operating wind portfolio improved in FY2023 over FY2022 and remained stable in FY2024. Also, the performance of the solar portfolio, including the Vector Green assets, remains satisfactory. The stable generation performance, the long-term PPAs and availability of debt financing at competitive rates are expected to lead to comfortable debt coverage metrics for SGIPL at a consolidated level.