Fitch Pins Greenko's Rating on Hydro Cash Comeback — But Execution Is Everything

Greenko Energy Holdings, one of India’s largest renewable energy firms, is banking on its hydropower assets to rebound from a challenging FY25, where weak wind generation dragged down earnings. According to Fitch Ratings’ latest commentary released on July 30, 2025, the restoration of the Teesta III hydroelectric project and the commissioning of the Andhra Pradesh pumped storage project (AP PSP) are pivotal to improving Greenko’s financial metrics and resolving its negative rating outlook.

Key Highlights from Fitch’s Assessment

• Greenko’s EBITDA for FY25 fell nearly 10 percent below expectations due to underperformance in wind assets across India.
• The company’s net interest coverage dropped to 0.9x in FY25, down from 1.3x in FY24.
• Fitch projects a recovery in FY26, with EBITDA expected to rise by USD 300 million, reaching USD 770 million.

Hydro Projects Take Center Stage

• The Teesta III project, located in Sikkim, is undergoing restoration after flood damage. Greenko expects partial operations to resume by January 2026, with full restoration targeted by FY29.
• A cofferdam is being constructed to enable early cash flow generation. Although floods delayed its start by two months to November 2025, Fitch had already factored in a January restart.
• The AP PSP, partially commissioned as of June 2025, is on track for full commissioning by September 2025. It includes an associated solar project that will contribute significantly to earnings.

Breakdown of FY26 EBITDA Forecast

• USD 200 million is expected from the AP PSP and solar project.
• USD 50 million will come from Teesta’s partial operations.
• The remaining USD 50 million is projected from normalized wind generation, with a 25 percent year-on-year increase in plant load factors anticipated in Q1 FY26.

Risks and Rating Sensitivities

• Any delay in Teesta’s cash flow or slower ramp-up of AP PSP could reduce FY26 EBITDA to just USD 120 million, pushing net interest coverage to 1.2x—well below Fitch’s negative sensitivity threshold of 1.5x.
• Greenko’s ability to refinance USD 1.3 billion in debt maturing by March 2026, including USD 826 million in Dutch B.V. notes, is crucial. The company had USD 860 million in cash at the end of FY25.

Strategic Importance of Diversification

• Once fully operational, Teesta and AP PSP are expected to contribute 44 percent of Greenko’s EBITDA by FY27.
• This diversification will reduce dependence on wind assets, which have shown volatility due to climatic factors.
• Fitch views the hydro and storage projects as central to stabilizing Greenko’s cash flows and improving its credit profile.

Shareholder Strength and Market Confidence

• Greenko’s financial resilience is supported by strong backing from sovereign investors like Singapore’s GIC.
• Any reduction in GIC’s involvement could negatively impact Fitch’s rating outlook.

Conclusion: A Hydropower-Led Comeback

Greenko’s strategic pivot toward hydro and storage assets marks a critical phase in its growth story. With Teesta and AP PSP poised to deliver substantial cash flows, the company is set to regain financial stability after a wind-affected FY25. However, execution risks remain, and Fitch will closely monitor progress through Q4 FY25 to reassess its rating stance.

Sources: Fitch Ratings, VCCircle, Projects Today, News On Projects

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