Azure Power is planning to refinance $150 to $180 million (Rs 1,250 crore to Rs 1,500 crore) worth of loans by the end of this financial year to reduce costs and replace maturing loans.
“Until March 2025, we are primarily focusing on refinancing, not raising any fresh debt. We are considering two cases where refinancing might be appropriate,” said Sugata Sircar, group chief financial officer and executive director, finance at Azure Power.
Azure currently holds a total debt of $1.3 billion (approximately Rs 10,790 crore).
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Earlier this month, REC refinanced one tranche of Azure’s green bonds, valued at $310 million (nearly Rs 2,573 crore). “We have also done some down-selling of $77 million. In total, we have refinanced about $500 million (nearly Rs 4,150 crore) between July and October this year,” Sircar added.
Sircar highlighted that refinancing loans has resulted in savings on interest costs. In July, HSBC refinanced Rs 1,300 crore of Azure’s project debt, resulting in cost savings of about 200 basis points.
“We have refinanced 45% of our loan portfolio, which has lowered the average cost of the portfolio. Additionally, there are other benefits. Importantly, we are seeing increased appetite from existing lenders like REC, which has expanded its participation. Furthermore, we are also attracting new lenders, such as REC,” Sircar explained.
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In some of these refinancing deals, the debt is also resized. “Resizing provides a top-up, which improves liquidity,” he said.
However, some loans are being refinanced simply because they are nearing maturity. For example, the green bonds refinanced by REC are due to mature in December 2024.
The REC loans cover 10 assets with underlying debt. These projects have 25-year power purchase agreements (PPAs), and the debt for these assets is structured over 21 years. Since four to five years have already passed,
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