Azure Q4 Results. Firm Expects Tariff Markdown for 4 GW Manufacturing Tender Win

Azure Power Global Limited announced its consolidated results under United States Generally Accepted Accounting Principles (“GAAP”) for the fiscal fourth quarter 2021, period ended March 31, 2021 yesterday. The firm is listed at the New York Stock Exchange, the first power firm from India to achieve the same.

Key Operating Highlights:

• Megawatts (“MW”) Operating* were 1,990 MWs, as of March 31, 2021, an increase of 20% over March 31, 2020. Operating, Contracted & Awarded MW* were 6,955 MWs, as of March 31, 2021. Contracted & Awarded megawatts include 4,000 MWs for which we have received Letters of Award (“LOA”) but the Power Purchase Agreements (“PPAs”) have not yet been signed.
• Operating revenues for the quarter ended March 31, 2021 were INR 4,271 million (US$ 58.4 million), an increase of 16% over the quarter ended March 31, 2020.
• Net loss for the quarter ended March 31, 2021 was INR 2,791 million (US$ 38.1 million). During the quarter, the firm said its results were negatively impacted by impairment loss on assets of INR 3,255 million (US$ 44.5 million), partially offset by reversal in stock appreciation rights (SARs) expense of INR 560 million (US$ 7.7 million).
• Adjusted EBITDA for the quarter ended March 31, 2021 was INR 3,799 million (US$ 52.0 million), an increase of 44% over the quarter ended March 31, 2020.
• Non-GAAP Cash Flow to Equity (“CFe”) from Operating Assets for the quarter ended March 31, 2021 was INR 1,743 million (US$ 23.9 million), an increase of 55% over the quarter ended March 31, 2020.

Key Operating Metrics

Electricity generation during the quarter and fiscal year ended March 31, 2021 was 1,058 million kWh and 3,495 million kWh, respectively, an increase of 190 million kWh or 21.9 %, over the quarter ended March 31, 2020, and an increase of 626 million kWh, or 21.8%, over the year ended March 31, 2020. The increase in electricity generation was principally a result of an additional 335 MWs of AC (506 MWs DC) operating capacity, including their  Rooftop portfolio commissioned since March 31, 2020. Their “Plant Load Factor (“PLF”) for the quarter and the fiscal year ended March 31, 2021, was 23.4 % and 20.9% respectively, compared to 22.3% and 19.5%, respectively, for the same comparable periods in 2020, which increased principally due to the addition of AC and DC capacity and improved performance.

The company commissioned 156 MWs AC (240 MWs DC) during the three months ended March 31, 2021, and 335 MWs AC (506 MWs DC) during the fiscal year ended March 31, 2021, including the 6 MWs and 10 MWs (both AC & DC) for rooftop portfolio for the quarter and fiscal year ended March 31, 2021, respectively.

The project cost per megawatt (DC) operating for the fiscal year ended March 31, 2021 decreased by INR 6.7 million (US$ 0.09 million), or 19%, to INR 28.8 million (US$ 0.39 million) primarily due to lower costs on account of the reduction in solar module prices for the projects commissioned during the period. The project cost per megawatt (AC) operating for the fiscal year ended March 31, 2021 was INR 42.9 million (US$ 0.59 million), compared to INR 48.9 million, for the year ended March 31, 2020, on account of a reduction in solar module prices.

As of March 31, 2021, their  Operating, Contracted & Awarded megawatts were 6,955 MWs. There was no change compared to prior comparable period, other than to reflect the disposal of the rooftop portfolio. Contracted & Awarded megawatts include 4,000 MWs for the manufacturing linked tender for which the firm has received LOAs but the PPAs have not yet been signed. The Solar Energy Corporation of India (“SECI”) has informed the firm that so far there has not been adequate response from the state electricity distribution companies (“DISCOMs”) .

A saving grace till now was that  capital costs, interest rates and foreign exchange rates have improved since Azure Power won the 4 GW auction in December 2019 which have resulted in lower tariffs in other recent SECI auctions. Thus, the firm seems to  expect a tariff markdown from the price achieved in the auction, which will facilitate signing of PSAs.