Azure Power Global Limited · OTC:AZREF
Azure Power Global — Investor Presentation (December 2019)
49 slides from Azure Power Global's investor presentation, December 2019
Slide 1: Investor Presentation
Investor Presentation December 2019
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements This information contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including statements regarding our future financial and operating guidance, op
Slide 3: Executive Summary
Executive Summary 2
Slide 4: Entrepreneurship | Excellence | Honesty | Socially Responsible
CF Entrepreneurship | Excellence | Honesty | _ Socially Responsible Azure Power 3
Slide 5: Azure Power Overview (AZRE: NYSE)
Azure Power Overview (AZRE: NYSE) A Leading Pan Indian Solar Power Developer Portfolio of 3,370 MWs(1): 1,789 MWs Operational(1), 1,581 MW Contracted Pipeline(2) 3,168 MWs 202MWs Utility-Scale Projects Azure Roof Power •• Founded in 2008, built India’s first private utility-scale solar project in 20
Slide 6: 3,370 MW Committed Portfolio
3,370(1) MW Committed Portfolio ~83% (2) in High Radiation Zone ~14%(2) in Mid Radiation Zone Focus on Strong Counterparty Credit Punjab (214 MW) 214 MW Rajasthan (1,745 MW) 475 MW Uttar Pradesh (100 MW) 100 MW 1,270 MW BBB- & above Gujarat (270 MW) Bihar (10 MW) 87% ~87% of the portfolio is 10 MW 2
Slide 7: Visible Historical and Future Growth
Visible Historical and Future Growth Growing Portfolio with Strong Contracts in Place Substantial Revenue Growth to Portfolio Run-Rate(1)(2) 3,900 3,370 $358(4) 900 2,815 Revenues (US $ Million) 2,600 Committed 1,798 117 Under Construction MWs 1,300 $161 $144 $112 Operating - $44 $61 Operational Und
Slide 8: Management Commitment to Capital Discipline
Management Commitment to Capital Discipline Capital discipline is the foundation to our success 1 Delivery of projects on time and on budget 2 Enhance returns on invested capital with efficiency gains and cost optimisation 3 Optimize capital structure to lower risk and cost of capital 4 Risk mitigat
Slide 9: Delivery of Current Pipeline On Time and On Budget
1 Delivery of Current Pipeline On Time and On Budget Azure’s Integrated Approach Lowers Risk and Enhances Project Returns Returns Development Construction Operations Value engineering, design and procurement expertise ~1.8 GW (1) operational portfolio, one of the largest in the Strong track re
Slide 10: Delivery of Current Pipeline On Time and On Budget
1 Delivery of Current Pipeline On Time and On Budget Superior Technology – Continue To Lower Costs While Retaining High Quality Assets Strong supplier relationships > $1.0 Bn in supplier purchases Achieved an 86% cost decline since inception due to value engineering, design and procurement efforts $
Slide 11: MW Commissioned in Q2 FY20
1 Delivery of Current Pipeline On Time and On Budget 189 MW(1) Commissioned in Q2 FY20 Rajasthan 5 Maharashtra 3 Azure Roof Power Projects 50 MWs 130 MWs 9 MWs PPA Duration: 25 Years PPA Duration: 25 Years PPA Duration: 25 Years Tariff: 2.48 INR/kWh (~US 3.6¢/kWh)(2) Tariff:2.72 INR/kWh (~US 3.9¢/kW
Slide 12: Projects Under-Construction
1 Delivery of Current Pipeline On Time and On Budget 117 MWs Projects Under-Construction Fencing work Rooftop project under construction Assam 1|90 MW Azure Roof Power Projects |27 MW Tariff: 3.34 INR/kWh (US 4.7¢ / kWh) Tariff: 4.50 - 6.19 INR/kWh (US 6.5 – 9.0¢ / kWh) Expected COD : Q1 FY21 Expect
Slide 13: Enhance Returns on Invested Capital with Efficiency Gains and Cost Optimisation
2 Enhance Returns on Invested Capital with Efficiency Gains and Cost Optimisation Ongoing review of efficiency and costs. Have found meaningful opportunities Identified meaningful future capital cost savings Opportunities to reduce cost of capital Wider deployment of more efficient cleaning technolo
Slide 14: Optimize Capital Structure to Lower Risk and Cost of Capital
3 Optimize Capital Structure to Lower Risk and Cost of Capital $75 million Private Placement of Equity, $350 million Green Bond Issuance Ready Access to Capital Diversified Capital Base and Investor Group Equity Raise Highlights Green Bond Highlights US$75 million of equity, or ~6.49 million shares,
Slide 15: Risk mitigated approach to new projects that must meet threshold returns
4 Risk mitigated approach to new projects that must meet threshold returns Exited 350 MWs of Contracts That Did Not Meet Minimum Thresholds Focused on value creation; all project must be value enhancing Exited 350 MWs through allowable clauses in PPAs to ensure no reputational and relationship risk
Slide 16: If Returns on Future Growth do not Meet Thresholds, Will Explore Giving Back Capital
5 If Returns on Future Growth do not Meet Thresholds, Will Explore Giving Back Capital Current Market Dynamics Support Returns Above Thresholds Significant Demand for Solar (1) Solar is the Lowest Cost Source of Electricity (3) Gov’t 100GW Solar Target 100 CAGR: 37% US Cents / kWh 3.7 3.9 33 4 Oppor
Slide 17: Strong Governance and Disclosure Standards
Strong Governance and Disclosure Standards Only Indian Solar Independent Power Producer listed on NYSE Standards reinforced by listing requirements Strong Corporate Governance Home country SGX-ST SEC & NYSE requirements regulatory requirements that also requiring periodic requirements require regula
Slide 18: Experienced Board Backed by Long Term Marquee Shareholders
Experienced Board Backed by Long Term Marquee Shareholders IFC Global Infrastructure Fund Increased stake in Azure Power to c.41.4% (1) through multiple rounds Made its first investment in company in 2010 and increased stake & open market purchase through multiple rounds with current holding of
Slide 19: Stringent Bidding Standards
Stringent Bidding Standards A Pre-bidding B Project approval process C Project Planning & Development BD department presents the bids and After the bid is won - project initiation e-mails recommendations to Bid Committee where are sent to respective departments for project Prudent project sele
Slide 20: World Class ESG Standards Are Core To Our Business
World Class ESG Standards Are Core To Our Business Environment Social Governance 4.9 million tons of CO2 emission avoided Provided clean water for 66,000+ to date = 3.4 million tons of coal burning people (2) ISO 9001 certification Created 4,650 local jobs (2) NYSE / SGX governance complia
Slide 21: Industry Overview
Industry Overview 20
Slide 22: Industry and Regulatory Update
Industry and Regulatory Update Industry Update Basic Custom Duty (BCD) on Solar Rising tariff caps - Ceiling tariff increased by SECI for recent ISTS tender from INR 2.65/ kWh to INR 2.78/ kWh MNRE has proposed a basic custom duty (BCD) ranging from 10% in first year up to 30% in the third year on i
Slide 23: The Solar Advantage in India
The Solar Advantage in India Electricity Usage per Capita (MWh) 12.8 US: ~14x > India Azure’s solar plants have high ~100 mn people without direct availability power source Seasonal Energy Curve Summer Monsoon China: ~5x > India 4.3 India-Demand Peak Low 0.9 Solar-Generation Peak Low USA China India
Slide 24: Operating and Financial Metrics
Operating and Financial Metrics 23
Slide 25: 1H' FY20 Key Performance Metrics
1H’ FY20 Key Performance Metrics 1,798 MW Operating 2,815 MW Operating & US$ 0.46 Mn Project US$88.3m Revenue Contracted Cost/MW (DC) 34% increase(1) 77% increase(1) 45% increase(1) 25% reduction(1)(2) • 189 MWs Commissioned • vs DC cost per MW US$ 0.61 mn prior • INR 6,235.9 million revenue for • 3
Slide 26: Azure Power Delivered 28% Revenue Growth in Q2 FY'20
Azure Power Delivered 28 % Revenue Growth in Q2 FY’20 % Change Quarter Ended September 30, Q2FY’20 vs Commentary (in million) Q2FY’19 2018 2019 2019 INR INR US$ MWs Operating increased 77% 28% Average tariff (INR/kWh) lower by 40% Revenue 2,226 2,847 40.3 PLF of 16.8%, up from 16.4% Extended monsoon
Slide 27: Balance Sheet Highlights
Balance Sheet Highlights As at March 31, 2019 As at September 30, 2019 (in million) (in million) INR INR US$ Cash, Cash Equivalents and Current Investments* 10,545 7,463 105.6 Property, Plant & Equipment, Net 83,445 94,246 1,334.2 Net Debt# 59,007 72,703** 1,029.4** *Does not include Restricted cash
Slide 28: Contracted 2,815 MW Portfolio: Liquidity and Funding
Contracted 2,815 MW Portfolio: Liquidity and Funding US$ million 700 Current Cash Cash Available for Under Construction 600 and Committed Projects Equity Raised (1) US$ million 500 As of Sept 30, 2019 Cash and Current Investments $ 106 900 MWs Short Term Restricted Cash 311 400 Contracted Total Cash
Slide 29: Forecast and Guidance
Forecast and Guidance 28
Slide 30: Strong EBITDA, FFO and NAV Growth
Strong EBITDA, FFO and NAV Growth EBITDA, FFO(1), and Net Debt Forecasts NAV/Share of Contracted 2,815 MW Portfolio (no value added for future growth, cost reductions or platform) $ million $ / Share EBITDA: $350 $300 - $330 $35 EBITDA: $300 $260 - $285 $30 $250 EBITDA: $25 $190 - $205 NAV/Share $20
Slide 31: Contracted 2,815 MW Portfolio: Operational, Capex, Cost per Watt Outlook
Contracted 2,815 MW Portfolio: Operational, Capex, Cost per Watt Outlook 3,000 2,815 MWs Operational 2,500 1,800 - 1,825 MWs 2,000 Operational FY'20 FY'21 (US$ millions) Cap Ex $350 - $400 $450 - $500 1,500 $/watt 1,000 Cost per Watt Operating FY’20 – FY’22 DC before SGD/BCD $0.40 - $0.45 AC before
Slide 32: FY'20 Guidance
FY’20 Guidance 1,800 – 1,825 MWs Operating INR 12,770 – 13,350 million(1) by March 31, 2020 of Revenue for FY’20 _________________________ 1) US$ 181-189 Mn (at September 30, 2019 exchange rate- INR70.64 to US$1) 31
Slide 33: Restricted Groups
Restricted Groups 32
Slide 34: Restricted Groups Overview
Restricted Groups Overview Restricted Group I Restricted Group II Highlights Highlights 621 MWs included in the Bond offering 648 MWs included in the Bond offering US$500mn Bond is non amortizing US$350mn Bond non amortizing with cash trap 5.50% Coupon 5.65% Coupon Maturity in 2022 Maturity in 2024
Slide 35: Restricted Groups Have High Offtake Credit and Diversification
Restricted Groups Have High Offtake Credit and Diversification 1 2 Projects in RGs represent Important … With All Projects Operational … Part of Azure’s Operating Assets… Outside RG I 621 MW 520 MW RGs 648 MW RG II 3 Large Offtake to Highest Rated Counterparties and … And Well Positioned to Diversif
Slide 36: Restricted Groups – Financial Overview
Restricted Groups – Financial Overview Restricted Group I Restricted Group II RG I Revenue RG I EBITDA (USD mn) (USD mn) 90 90 88 89 78 72 RG II Revenue RG II EBITDA (USD mn) (1) (USD mn) (1) 69 57 63 51 FY'18 FY'19 LTM FY'18 FY'19 LTM Debt to EBITDA (X) FFO/Debt (%) EBITDA/Interest (X) FY'20 FY'21
Slide 37: Appendix- Industry & Projects Overview
Appendix- Industry & Projects Overview 36
Slide 38: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Adjusted EBITDA is a non-GAAP financial measure. The Company presents Adjusted EBITDA as a supplemental measure of its performance. This measurement is not recognized in accordance with USGAAP GAAP and should not be viewed as an alternative to USGAAP GAAP measures
Slide 39: Reconciliation of Non-GAAP Measures to Comparable GAAP measures
Reconciliation of Non-GAAP Measures to Comparable GAAP measures Quarter Ended September 30, Six month Ended September 30, (in million) (in million) 2018 2019 2019 2018 2019 2019 INR INR US$ INR INR US$ Net loss (298) (756) (10.7) (268) (586) (8.3) Income tax expense 14 27 0.4 109 171 2.4 Interest ex
Slide 40: Historical Plant Load Factor (PLF)
Historical Plant Load Factor (PLF) 22.0% 21.5% 21.0% 20.5% 20.0% 19.4% 19.0% 18.0% 17.9% 16.8% 17.0% 16.4% 16.0% 15.0% 1Q 2Q 3Q 4Q FY'19 FY'20 39
Slide 41: DSO by Counterparty
DSO by Counterparty Amounts in US$ million Total Due Customer Name Project Name Capacity (MWs) Due 91-365 Due greater than 365 DSO outstanding 0-90 SECI , NTPC, NVVN 689 11.2 11.2 0.0 - 60 Southern Power Distribution Com of AP AP-1 50 8.6 2.9 5.8 0.0 422 Ltd Hubli Electricity Supply Company Ltd K-3
Slide 42: Projects Commissioned - Utility
Projects Commissioned - Utility As on September 30, 2019 Commercial Duration PPA Capacity DC Capacity Tariff Project Names Operation Off taker of PPA in Credit Rating(6) (MW) (MW) (INR/kWh) Date(1) Years Operational – Utility Punjab 1 (3) Q4 2009 2 2 17.91 NTPC Vidyut Vyapar Nigam Limited 25 AAA Pun
Slide 43: Projects Commissioned– Utility and C&I
Projects Commissioned– Utility and C&I As on September 30, 2019 Commercial Duration PPA Capacity DC Capacity Tariff Project Names Operation Off taker of PPA in Credit Ratings(5) (MW) (MW) (INR/kWh) Date(1) Years Operational – Utility North & South Bihar Power Distribution Bihar1 (4) Q3 2016 10 11 8.
Slide 44: Under Construction Projects –Utility and C&I
Under Construction Projects –Utility and C&I As on September 30, 2019 Expected Duration PPA Capacity Tariff Credit Ratings(2) Project Names Commercial Off taker of PPA in (MW) (INR/kWh) Operation Date(1) Years Under Construction Assam 1 Q2 2020 90 3.34 Assam Power Distribution Company 25 B+ Total Un
Slide 45: Project Debt Schedule
Project Debt Schedule As of September 30, 2019 Outstanding Principal Amount (In thousands) Type of Interest Currency Maturity Date(1) Name of Project INR US$ (2) Gujarat 2 4,674,908 66,179 Floating US$ 2019 Andhra Pradesh 1 2,508,312 35,508 Fixed INR 2022 Bihar 1 438,767 6,211 Fixed INR 2022 Gujarat
Slide 46: Project Debt Schedule
Project Debt Schedule As of September 30, 2019 Outstanding Principal Amount (In thousands) Type of Interest Currency Maturity Date(2) Name of Project INR US$ (5) Uttar Pradesh 3 1,453,322 20,574 Floating INR 2033 Andhra Pradesh 3 2,087,313 29,549 Floating INR 2034 Punjab 3.1 and 3.2 1,398,416 19,796
Slide 47: Glossary of Select Terms
Glossary of Select Terms Accelerated Depreciation – Accelerated depreciation can be elected at the project level, such that projects that reach COD in the first half of the year can expense 100% of eligible project costs in year 1, and otherwise can expense 50% of project costs in year 1 and the rem
Slide 48: Contacts
Contacts Investor Contact Media Contact Nathan Judge, CFA Samitla Subba ir@azurepower.com pr@azurepower.com +1 (917) 209-6750 +91-11- 4940 9854 Investor Relations, Marketing, Azure Power Azure Power 47
Slide 49: Thank You
Thank You 48 48
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