HSBC analysts have raised Azure Power’s rating from “buy” to “hold” as the company is expected to benefit from lower borrowing costs and favorable exchange rates.
The company raised green bonds to 3.5%, reducing the cost of borrowing from 9.1% to 8.5%. The research agency said that a 100 basis point (bps) cut in interest impacts the internal rate of return (IRR) by about 300 bps. The company, the first Indian electricity company to be listed on the New York Stock Exchange, would also benefit from the drop in the exchange rate from Rs 74.6 / dollar to Rs 73 / dollar.
In September 2020, HSBC downgraded Azure Power to “hold on,” mainly due to uncertainties the government had found buyers of electricity for the solar projects awarded to the company.
Azure’s unbound capacity is among 12 GW projects awarded in the first auction for the manufacturing-related solar system, through which Adani Green Energy was to build 8 GW of generation capacity and Azure Power develop. 4 GW and provide electricity at Rs 2.92. /unity. As part of the deal, the two companies are also required to build 3 GW of solar manufacturing capacity in the country (Adani 2 GW and Azure 1 GW).