Product Quantum (Rs. Cr) (SEBI) Quantum (Rs. Cr) (Other FSR) Long Term Rating Short Term Rating Regulated By
Bank Loan Ratings 0.00 32.80 ACUITE A- | Stable | Assigned - RBI
Bank Loan Ratings 0.00 44.00 ACUITE A- | Stable | Upgraded - RBI
Total Outstanding 0.00 76.80 - - -
Total Withdrawn 0.00 0.00 - - -
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
 
Rating Rationale

Acuité has upgraded its long-term rating to ‘ACUITE A-’ (read as ACUITE A minus) from ‘ACUITE BBB+’ (read as ACUITE triple B plus) on Rs. 44.00 Cr. bank facilities of Pemmasani Solar Power Private Limited (PSPPL). The outlook is ‘Stable.’
Also, Acuité has assigned its long-term rating of ‘ACUITE A-’ (read as ACUITE A minus) on Rs. 32.80 Cr. bank facilities of Pemmasani Solar Power Private Limited (PSPPL). The outlook is ‘Stable.’

Rationale for rating
The rating upgrade takes into account the commencement of operations of the four new solar power plants with a total capacity of 26.73 MW (AC) in FY26 and sustained operations of the existing plant. Further, the rating reflects long-standing experience of the management in the power generation industry along with established track record of operations and continued focus on expansion with 8 MW capacity under development. The rating also factors in the existence of long-term power purchase agreement (PPA) with Telangana State Southern Power Distribution Company Limited (TSSPDCL) and Hubli Electricity Supply Company Limited (HESCOM) for the existing plants and with Bangalore Electricity Supply Company Limited (BESCOM) for the upcoming plant along with the revolving letter of credit opened by discoms in favour of PSPPL providing comfort on receivable risks. However, the rating is constrained on account of implementation risk associated with the proposed capital expenditure and stabilisation of the new operational plants. Further, the timely receipt of payments from discoms, along with continued achievement of adequate Plant Load Factor (PLF) levels, shall remain a key monitorable.


About the Company

Incorporated in 2014, Hyderabad-based, Pemmasani Solar Power Private Limited (PSPPL) is engaged in operating five solar power plants located in Telangana and Karnataka with total installed capacity of 36.73 MW (AC). The company has proposed to set up sixth power plant of 8 MW (AC) at Nandiganhali, Karnataka. The directors of the company are Mr. P. Satyanarayana Reddy, Mr. P. Panduranga Rao, Mrs. Sudha Rani, and Mr. C. Mallikarjuna Rao.

 
Unsupported Rating

­Not Applicable

 
Analytical Approach

­Acuité has considered the standalone business and financial risk profile of Pemmasani Solar Power Private Limited (PSPPL) to arrive at the rating.

 
Key Rating Drivers

Strengths

Experienced promoter group and established track record
The company, being a part of Pemmasani Group, is managed through promoters having long-standing experience in the power generation of almost three decades via thermal, biomass, solar and wind energy. Over the years, the group has successfully developed and commissioned almost 54 MW (AC) of solar projects and 3 MW of wind power plants, while an additional 14 MW (AC) solar projects are under development stage. The five operational solar power plant of the company are located in Makthal, Muttagi, Babaleshwar, Todalbagi and Indi with installed capacity of 10 MW, 6.01 MW, 8.05 MW, 6.38 MW and 6.29 MW respectively having PLF generations levels of 21.27%, 19.40%, 21.58%, 21.16% and 19.35% for FY26.

Long-term off-take arrangement in the form of PPA with moderate counterparty risk
The company has entered into long-term PPAs with TSSPDCL and HESCOM for their existing plants. Further, the company has entered into a PPA with BESCOM for the development of their sixth solar plant. The agreement features a tenure of 25 years with fixed-tariff rates, thereby ensuring long-term revenue visibility and protection against market price volatility. Also, the PPAs are secured by an irrevocable revolving letter of credit (LC) opened by the discoms in favour of the PSPPL for payment assurance. Moreover, the payments under the PPA are backed by central-level support mechanisms (PRAAPTI portal), offering significant comfort regarding the project’s cash flow stability and credit quality.

Moderate financial risk profile
The financial risk profile of the company is moderate, marked by improving net worth that stood at Rs. 51.21 Cr. as on March 31, 2025, as against Rs. 41.99 Cr. as on March 31, 2024, on account of accretion of profits to reserves. Further, the total debt stood reduced at Rs. 21.24 Cr. as on March 31, 2025, as against Rs. 23.13 Cr. as on March 31, 2024, and therefore, the gearing ratio (debt/equity) stood reduced at 0.41 times in FY25 (0.55 times in FY24). Moreover, the debt protection metrics stood comfortable with interest service coverage ratio of 7.51 times in FY25 and debt service coverage ratio of 2.46 times in FY25. Additionally, in FY26, although the company has availed debt for setting up new four power plants, the financial risk profile is expected to remain moderate.


Weaknesses

Implementation and stabilisation risk
The company has proposed setting up a new solar power plant with installed capacity of 8 MW (AC) at Nandiganhali, Karnataka. The estimated cost for this plant is ~Rs. 34.32 Cr. which is expected to be financed through a term loan of ~Rs. 27.46 Cr. (debt tie-up under process) and remaining through internal cash accruals. The construction of this plant is expected to commence in September 2026 with anticipated commercialization of the plant in January 2027. Therefore, timely completion and commercialization of the new solar power plant shall remain key rating monitorable. Also, FY27 will be first full year of operations for the recently commissioned power plants of 26.73 MW and hence, stabilization and adequate generation of PLF levels remain monitorable.

Exposure to inherent risks in renewable energy generation
The operations of power plant inherently face risks related to both natural hazards and operational failures. While natural hazards like earthquakes, floods, and landslides can damage structures and disrupt operations, operational risks include equipment malfunctions, such as module or generator failures, as well as potential for accidents or disasters. Further, the performance of the solar plant is highly dependent on favourable climatic conditions including the solar radiation levels which directly impact the PLF. Moreover, the company is exposed to regulatory risk as it is associated with the State Electricity Board, however, the risk is mitigated to an extent on the back of long-term PPA with the counterparty.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:
  • ­Higher than expected generations on a sustained basis
  • Reducing debt obligations leading to improvement in DSCR above 2.50 times
Potential triggers (individual or collective) for a downward rating action:
  • ­Lower than expected generations leading to DSCR falling below 1.50 times
  • Significant delay in payments by counterparty, resulting in steady build-up of receivables
Liquidity Position
Adequate

The company's liquidity position is adequate marked by sufficient net cash accruals of Rs. 11.99 Cr. generated in FY25 against maturing debt obligations of Rs. 3.60 Cr. for the same period. Going forward, the company is expected to generate sufficient cash accruals against the maturing debt obligations. Moreover, DSCR is expected to remain around 2.18 times till the tenure of the loans. Further, the liquidity is supported by liquid investments of Rs. 17.01 Cr. as on March 31, 2025, in the form of fixed deposits and cash and bank balances of Rs. 0.12 Cr. as on March 31, 2025. Additionally, the promoters have timely infused required capital in the form of equity and unsecured loans to support the business. Furthermore, the receipt from central financial assistance shall provide additional liquidity cushion to the company (Rs. 16.67 Cr. received in FY26). Moreover, the company is required to maintain debt service reserve account (DSRA) for 2 quarter of principal and interest repayment obligations for the term loan availed from IREDA which is to be maintained from September 2026, shall remain monitorable.

 
Outlook: Stable
­
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 25 (Actual) FY 24 (Actual)
Operating Income Rs. Cr. 12.98 13.47
PAT Rs. Cr. 9.22 5.13
PAT Margin (%) 71.03 38.05
Total Debt/Tangible Net Worth Times 0.41 0.55
PBDIT/Interest Times 7.51 4.63
Status of non-cooperation with previous CRA (if applicable)
­Not Applicable
 
Any other information
­None
 
Applicable Criteria
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
Note on complexity levels of the rated instrument

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
19 Mar 2025 Term Loan Long Term 19.00 ACUITE BBB+ | Stable (Reaffirmed)
Proposed Long Term Bank Facility Long Term 25.00 ACUITE BBB+ | Stable (Reaffirmed)
28 Dec 2023 Term Loan Long Term 23.83 ACUITE BBB+ | Stable (Reaffirmed)
Proposed Long Term Bank Facility Long Term 20.17 ACUITE BBB+ | Stable (Reaffirmed)
­

Lender’s Name ISIN Facilities Listing Status Regulated By Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)
Complexity Level Rating
State Bank of India Not avl. / Not appl. Term Loan Unlisted RBI 15 Aug 2015 Not avl. / Not appl. 15 Jun 2030 14.25 Simple ACUITE A- | Stable | Upgraded ( from ACUITE BBB+ )
Indian Renewable Energy Development Agency Ltd. (IREDA) Not avl. / Not appl. Term Loan Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2041 29.75 Simple ACUITE A- | Stable | Upgraded ( from ACUITE BBB+ )
Indian Renewable Energy Development Agency Ltd. (IREDA) Not avl. / Not appl. Term Loan Unlisted RBI Not avl. / Not appl. Not avl. / Not appl. 30 Sep 2041 32.80 Simple ACUITE A- | Stable | Assigned
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Contacts

List of instruments and names of regulators of the instruments

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