Azure Power EBITDA For Q4/2021 Up 44%

• Azure Power increased its revenues and adjusted EBITDA by 16% and 44%, respectively in Q4/2021
• COVID-19 related challenges under the 2^nd wave negatively impacted its project construction activities
• It has started using trackers for one of its projects to deal with high module prices
• Management sees tariffs increasing going forward owing to high prices and supply chain challenges, but said it will only bid for projects at commercially viable tariffs

The 2^nd wave of COVID-19 in India impacted independent solar power producer from India, Azure Power Global Limited's project construction activities as it was forced to push back 300 MW capacity by a quarter, the management shared while releasing its Q4/2021 (period ending March 2021) financial results.

It commissioned 240 MW DC/156 MW AC solar capacity during the reporting quarter, and 506 MW DC/335 MW AC during the fiscal year ending March 31, 2021. Its total operational capacity at the end of March 2021 reached 1.99 GW, while operating, contracted and awarded MWs were a total of 6.995 GW. Contracted and awarded MWs include 4 GW for which it has received letters of award (LOA), but not power purchase agreements (PPA) (see India PV News Snippets: AGEL, Azure, SECI, Manipur).

Azure Power, however, remains optimistic of a positive development since CEO Ranjit Gupta said there is a 'definite movement towards the finish line'. He explained, "In spite of the pandemic, peak power demand recovery is underway which should encourage discoms to invest in buying power for their future needs. It may be noted that there is backlog of 15 GW to 20 GW awarded capacity which is awaiting PSA to be tied with Discoms. SECI has been supportive by not coming out with any new solar ISTS bid till this backlog is cleared. As the second wave has eased, we have seen renewed interest in buying power from discoms."

The company reported operating revenues of $58.4 million in Q4/2021, up 16% over last year, and grew its adjusted EBITDA by 44% with $52 million. While the increase was driven by projects commissioned during the year, it earned an additional revenue of $1.1 million from the recovery of Safeguard Duties and Goods and Service Tax (GST), it blamed lower insolation for revenues being negatively impacted ($0.7 million) during the quarter. During FY 2021, its operating revenues were a total of $208.3 million.

High module prices

Management also referred to high module prices due to high local demand in China, coupled with rising Yuan and rising raw material costs leading to module suppliers renegotiating contracted price and delivery commitments already signed. To combat the impact of increased panel prices, Azure Power said it is installing tracker-based systems in one of its projects under construction.

Going forward, it does see an increase in tariffs due to supply chain and pricing challenges, but the management said it will only bid for projects at commercially viable tariffs as it pursues opportunities in wind and hybrid.

Roth Capital Partners' Philip Shen pointed out, "With the challenges presented by intermittent power sources, India is moving towards 'dispatchable' power plant designs, which means pairing solar with wind and/or storage. Ranjit and Murali have experience developing ~1GW in wind projects between the two of them, so management is confident in its ability to execute and deliver on hybrid projects."

Azure Power's CEO Ranjit Gupta and President Murali Subramanian previously co-founded wind power company Ostro Energy, backed by Actis. It was later acquired by ReNew Power Ventures (see Ex-Ostro Energy Executives Join Azure Power).

Guidance

Azure Power has guided for fiscal year ending March 31, 2022 to report 2.75 GW to 2.955 GW of operational capacity, excluding the rooftop solar portfolio that it will exit by the end of 2021 (see Azure Power Sells Non-Strategic Rooftop Solar Portfolio). The company expects revenues of $245 million to $258 million for the same period.

Close to 90% of the expected revenues are likely to come from already commissioned projects, with remaining revenues subject to when plants under construction are commissioned. It admitted that pandemic related disruptions make it difficult to predict completion timelines.

For Q1/2022 (period ending June 2021), its forecast is for revenues between $56.1 million and $58.8 million.