SAEL Limited / SAEL Restricted Group 1 Issuer Summary

Report date: 2026-05-12
Issuer: SAEL Limited / SAEL Restricted Group 1
Bond covered: USD 305mn 7.80% Senior Secured Notes due 31 Jul 2031
Listing market: India INX Global Securities Market
ISIN: US78637MAA62 / USY7389MAA81

1. Business Snapshot and Recent Developments

SAEL Limited / SAEL Restricted Group 1 is the credit entity for U.S. dollar-denominated senior secured notes backed by Indian renewable power generation assets. The substantive focus of the credit analysis is not the SAEL group as a whole, nor SAEL Industries Limited on a standalone basis, which filed a DRHP in 2025, but Restricted Group 1 as constituted by the Co-Issuers under the Offering Memorandum. This report refers to the bond as the "SAEL RG1 bond."

The bond is a USD 305mn 7.80% Senior Secured Notes due 31 July 2031, listed on the India INX Global Securities Market. The Co-Issuers under the Offering Memorandum are SAEL Limited, Sunfree Paschim Renewable Energy Private Limited, SAEL Solar Solutions Private Limited, Jasrasar Green Power Energy Private Limited, SAEL Kaithal Renewable Energy Private Limited, and Universal Biomass Energy Private Limited. The notes are supported by the cash flows of the Restricted Group, centered on SAEL Limited, including solar power generation and waste-to-energy / biomass generation using agricultural residue, referred to by SAEL as AgWTE.

At the time of the OM, the forecast group covered power generation assets of 243.3 MW AC of solar and 90.5 MW AC of biomass, for a total of 333.8 MW AC. The 9M FY2026 RG financials as of end-December 2025, published on 27 March 2026, also disclose a Restricted Group of approximately 334 MW, including 173 MW of solar and 46 MW of biomass within SAEL Limited and assets held by each Co-Issuer. The scale is small compared with listed renewable issuers in India, but the assets are mainly operational and long-term PPAs form the foundation of the credit. However, while Jasrasar Green Power’s 14.9/15 MW is included in the 9M FY2026 capacity table, its formal COD and operating status cannot be independently and sufficiently confirmed from public materials alone. This should therefore be reconfirmed in the next periodic disclosure.

The broader SAEL group is much larger than RG1. According to the DRHP of SAEL Industries Limited, the group had contracted and awarded capacity of 5,765.7 MW as of end-September 2025, or 8,464.4 MWp on a DC basis. It is a vertically integrated renewable energy group spanning solar IPP, AgWTE, solar module manufacturing, and EPC, and has received investments from Norfund and the U.S. DFC. However, the group’s overall scale and growth potential are only supplementary information for the RG1 bond, indicating sponsor support capacity and market access. They are not the direct repayment source for the RG1 bond. In assessing the RG1 bond, the main focus is on the relevant assets, PPAs, offtakers, collateral and account control, restricted payments, foreign exchange, and AgWTE fuel procurement.

Recent developments include the reflection of major refinancing and U.S. dollar bond issuance in the FY2025 Restricted Group financials, while 9M FY2026 shows operating cash flow remaining positive. At the same time, FY2025 saw a large long-term, interest-free loan from Universal Biomass Energy Private Limited to the unrestricted group, and net parent investment turned substantially negative through fair value accounting under Ind AS. Even if this was legally permitted, it is an important monitoring item in assessing the retention of cash within the RG, transfers of funds to sponsor-related parties, and the practical effectiveness of creditor protection.

2. Entity Scope and Cash Flow Map

The first analytical point for the SAEL RG1 bond is whose credit is being assessed. The SAEL name is used across SAEL Limited, SAEL Industries Limited, multiple SPVs, module manufacturing companies, EPC companies, and AgWTE companies. It is therefore risky to read the group-wide growth story directly across into the bond credit.

Cash flow is managed in the order of electricity sales revenue from each generation asset, operating expenses, taxes, major maintenance reserves, senior debt service, MCS, DSRA funding, and surplus cash. Under the OM waterfall, funds are allocated in the order of taxes and statutory expenses, O&M, the solar inverter replacement reserve and biomass major maintenance reserve, senior debt / hedging payments, MCS, DSRA, and surplus funds. This is a typical project bond-style structure, intended to place generation asset revenue closer to debt service than to general corporate free cash.

However, structure alone does not complete the credit. First, some assets are excluded from the collateral package. Warehousing business assets, shares in subsidiaries outside the RG, inter-corporate loans / deposits to entities outside the RG made before issuance or from excluded amounts, DSRAs for other permitted debt, and unused note issuance proceeds are excluded. Second, permitted pari passu secured indebtedness can share the same collateral under certain conditions. Third, the OM provides that MCS is not mandatory amortization and that non-payment of a certain amount of MCS does not constitute a Default or Event of Default. Credit risk through maturity therefore depends heavily on the small size of scheduled amortization, the optional nature of MCS, the remaining balance at final maturity, and refinancing capacity.

3. Asset Portfolio and PPA Profile

RG1’s asset portfolio is a mix of solar and AgWTE / biomass. Solar has relatively low technology risk and long-term PPAs, but is still affected by DISCOM payment delays in India, state-by-state regulatory and counterparty risk, solar resource, and plant availability. AgWTE can have more inflation resilience than solar because it has fixed and variable tariffs and fuel cost escalation, but it adds risks related to agricultural residue procurement, storage, transportation, stable operation of combustion equipment, ash disposal, environmental regulation, and strong seasonality.

The main projects based on the OM are as follows.

For Jasrasar Green Power, the OM stated expected COD in August 2024, and the 9M FY2026 capacity table includes Jasrasar Green Power Energy Private Limited in Restricted Group capacity at 14.9 MW. However, the 9M materials do not confirm the formal COD date or operational start details. This report therefore treats the overall portfolio as mainly operational, while leaving the formal operating status of Jasrasar as an unverified item.

The credit strengths visible from this list are, first, that most of the portfolio consists of generation assets under long-term PPAs; second, that some solar assets have high legacy FITs; and third, that variable tariff escalation for AgWTE may partially absorb fuel cost increases. In particular, Unit 7 at Rs 7.02/kWh, Unit 8 at Rs 4.43/kWh, and the fixed and variable tariffs of several AgWTE assets can more easily support profitability than solar tariffs that have declined in recent competitive tenders.

At the same time, the portfolio is not a simple solar pool. AgWTE accounts for a large share, and biomass assets also make a meaningful contribution in the OM’s EBITDA forecast. Of the OM’s FY2025E total EBITDA forecast of INR 4.15bn, Biomass Unit 10, Unit 11, Universal Biomass, SAEL Kaithal, Unit 15, and Jasrasar Green Power together account for about INR 2.49bn. This means that AgWTE is a revenue differentiator, but also that fuel supply chain risk, availability, environmental compliance, and maintenance cost uncertainty drive credit sensitivity.

On the offtaker side, counterparties are mainly public or quasi-public Indian power sector entities such as UPPCL, PSPCL, SECI, MSEDCL, HPPC, and RUVNL. A central government-linked offtaker such as SECI is relatively stronger, while state DISCOMs continue to carry payment delay risk. RG1 trade receivables were INR 855mn at FY2025-end and INR 727mn at end-December 2025. These amounts are not excessive relative to annual revenue, but in the Indian power sector, DSO deterioration could directly result in temporary DSRA usage or restricted payment limitations.

4. Industry Position and Sponsor Context

The SAEL group is a vertically integrated renewable energy platform in India combining solar, AgWTE, module manufacturing, and EPC. The DRHP states that contracted and awarded capacity was just under 5.8 GW as of end-September 2025, or just under 8.5 GW on a DC basis, and positions SAEL as one of India’s largest operators in AgWTE. At the group level, SAEL presents a business model that procures large volumes of agricultural residue such as paddy straw and seeks both to mitigate air pollution from burning and to supply renewable power.

This sponsor context has three implications for the RG1 bond. First, SAEL’s experience and procurement network in AgWTE reduces the operating risk of the biomass assets within RG1. Collection, drying, storage, transport, boiler operation, and ash disposal for agricultural residue are difficult for new entrants, and an experienced operator is important. Second, the group’s relationships with capital markets and development finance institutions as a large renewable developer provide supplementary support for refinancing and potential support. Third, the more the group carries IPO plans, module manufacturing, EPC, and a large development pipeline, the greater the growth funding needs outside RG become, making discipline around fund outflows from RG1 and investment in the parent important.

The consolidated financials of SAEL Industries Limited in the DRHP should not be overused for direct analysis of the RG1 bond. On consolidation, EPC and module manufacturing internal transactions are large, and FY2025 revenue and EBITDA are heavily affected by inter-segment eliminations. In addition, at the group level, negative free cash flow and funding reliance are likely to continue as a result of large-scale investment. This indicates the growth potential of the SAEL brand, but also means that it is difficult for RG1 bond analysis to assume that the sponsor always has surplus cash.

5. Financial Profile

SAEL RG1’s financial profile changed materially with the issuance of the U.S. dollar notes in July 2024. The Combined Financial Statements for FY2022-FY2024 included in the OM showed a highly leveraged state including existing project debt and non-convertible debentures. The FY2025 Restricted Group financials then reflected repayment of old borrowings and issuance of the USD notes, with most debt replaced by fixed-rate, foreign-currency, long-term bonds.

5.1 P&L and Cash Flow

EBITDA for FY2022-FY2024 is the company-defined EBITDA disclosed in the OM. For FY2025 and 9M FY2026, EBITDA under the same definition cannot be confirmed, so the table separately shows operating profit before working capital changes from the cash flow statement. This metric is useful as a rough cash earnings proxy that is closer to debt service capacity than P&L profit, but it is not EBITDA itself, covenant EBITDA, or actual DSCR. Comparisons with FY2024 and earlier, and leverage calculations, should therefore be limited to directional analysis.

Revenue increased from INR 3.8bn in FY2022 to INR 6.1bn in FY2025, and 9M FY2026 revenue of INR 5.4bn is running above FY2025 on an annualized basis. Commissioning of solar and AgWTE assets contributed to the growth. On the other hand, P&L losses continue. These are heavily affected by depreciation, interest costs, and FY2025 loan prepayment fees, and do not necessarily indicate immediate cash shortfall under project asset accounting. For creditors, however, it remains necessary to examine rigorously whether cash EBITDA or CFO is sufficient to cover interest and principal payments.

FY2025 CFO was INR 4.19bn, about 1.8x P&L finance costs of INR 2.32bn. However, finance costs paid in the FY2025 cash flow statement were much larger at INR 5.15bn, apparently including the effects of repayment/refinancing of old borrowings and upfront costs. In 9M FY2026, CFO was INR 3.01bn and finance costs paid were INR 1.29bn, indicating improved cover against normalized cash interest burden. Going forward, it will be necessary to confirm FY2026 full-year CFO, DSCR, MCS execution amount, and DSRA balance, rather than relying on annualized 9M FY2026 figures.

5.2 Balance Sheet and Leverage

Gross debt at FY2025-end was about INR 26.4bn, and net debt was about INR 25.7bn. This is a large increase from OM-stage FY2024 net debt of INR 16.2bn. However, the increase is not simply additional leverage; it also includes the effects of refinancing existing borrowings, project additions, U.S. dollar bond issuance, issuance costs, and intragroup fund transfers. FY2025 borrowings show the 7.80% notes as the main component, with fixed-rate borrowings of INR 24.8bn and floating-rate borrowings of INR 1.6bn.

Leverage is high. Net debt to FY2025 operating profit before working capital changes of INR 3.63bn is about 7.1x, and even simple annualization of 9M FY2026 gives roughly 6x. However, this multiple is not formal EBITDA leverage or a covenant ratio, but a rough reference measure constructed from publicly disclosed financials. The OM FY2025E and FY2026E EBITDA forecasts were INR 4.15bn and INR 4.62bn, respectively, and actual cash earnings proxy may be lower than the OM forecast. This depends on the timing of contribution from new assets such as Jasrasar, AgWTE availability, fuel costs, interest, and differences in accounting classification, so comparison with FY2026 full-year results is necessary.

The most important balance sheet item to watch is the negative net parent investment, at INR -1.97bn at FY2025-end and INR -2.76bn at end-December 2025. The FY2025 financials explain that Universal Biomass Energy Private Limited made an INR 8.74bn loan to the unrestricted group, and that this loan is an interest-free loan recoverable after 15 years. Under Ind AS 109, the difference between gross proceeds and fair value was treated as an investment in an equity instrument, and a distribution to the unrestricted group of INR 4.28bn net of tax was recognized. This transaction is not merely an accounting note; it is an important credit issue because it indicates that RG1 assets and cash may be used for funding needs outside the RG.

Related-party and contingent liability notes also require review. The FY2025 financials disclose co-guarantees issued of INR 26.38bn, compared with INR 11.40bn in the prior year, and the related-party note refers to co-guarantees by the Restricted Group for bonds of the restricted group and fellow subsidiaries forming part of the unrestricted group. This may reflect Co-Issuer cross-guarantees associated with the USD notes issuance, but from the wording in public materials alone it is difficult to fully separate the extent to which contingent liabilities to fellow subsidiaries outside the RG remain. As with the interest-free loan, the scope of guarantees and contingent liabilities should be treated as an unverified item for assessing the effectiveness of the ring-fence.

6. Debt Structure and Bondholder Protection

The SAEL RG1 bond is closer to a project bond backed by an Indian renewable asset pool than to a typical high-yield corporate bond. Collateral, account control, DSRA, PPAs, insurance, share pledges, restrictions on use of funds, and the Restricted Group concept support the credit. At the same time, amortization is very gradual, and refinancing risk at final maturity is significant.

6.1 Scheduled Amortization and MCS

Mandatory amortization under the OM is very small relative to the original principal amount. Redemption in the first two years is almost zero, and even after 2.5 years it only increases stepwise to 0.25%, 0.38%, 0.75%, and 1.00%. Most of the bond balance therefore remains outstanding until close to maturity.

MCS Amortization Redemption can economically accelerate principal reduction, but it is an optional redemption mechanism based on the Co-Issuers’ option and is not legally mandatory amortization. The OM states that if the MCS amount is not paid in full, the unpaid portion is carried forward to the next MCS date and does not constitute a Default or Event of Default. As a result, deleveraging can progress if MCS is executed, but if performance is weak, the bond may reach 2031 maturity without much reduction in principal.

This is important for a project bond around the BB rating category. DSRA and collateral can mitigate short-term payment delays, but when scheduled amortization is thin, ultimate recovery is heavily affected by capital market access, sponsor support, the refinancing market for Indian renewable assets, foreign exchange, and the interest rate environment.

6.2 Security Package

The collateral package is broad. According to the OM, it is expected to include first-ranking pari passu security over the Co-Issuers’ major immovable and movable assets, current assets, cash flows, book debts, revenues, receivables, TRA accounts, PPAs and key project contracts, insurance, DSRA, and shares of each Co-Issuer. There are some restrictions, such as the fact that shares of SAEL Limited itself cannot be pledged to secure the obligations of other Co-Issuers.

The strength of the collateral is that it covers power generation assets, contracts, and accounts as an integrated package. For renewable assets in India, PPAs and permits, land rights, grid connections, and the practical mechanics of DISCOM payments account for much of the value, so a package that includes contracts, accounts, and shares is more important than simple equipment collateral.

However, practical recovery value has several limitations. First, enforcement involves Indian law, state-level land and permitting issues, PPA assignment approvals, offtaker consent, and operational continuity. Second, AgWTE assets depend on fuel supply networks and O&M capability, making it difficult to preserve value through ownership transfer alone. Third, if permitted pari passu debt increases, the number of creditors sharing the same collateral value increases. Fourth, excluded assets and transactions with the unrestricted group can dilute collateral value remaining within the RG.

6.3 DSRA and Liquidity

Under the OM, the Required DSRA Balance for the Notes is based on the sum of interest and amortization amount payable on the next interest payment date, excluding amortization payable on the maturity date. For other senior debt, the requirement is based on amounts such as six months of debt service required under the respective agreements.

The DSRA provides a short-term buffer against DISCOM payment delays and seasonal AgWTE fuel cost pressure. However, it does not directly cover the large bullet repayment at maturity. The DSRA is therefore short-term liquidity protection and does not eliminate 2031 refinancing risk.

7. Foreign Exchange and Interest Rate Risk

SAEL RG1’s revenues, expenses, and asset value are mainly denominated in INR, while the bond is denominated in USD. This is a major structural asymmetry in the credit. The 7.80% fixed coupon locks in some USD interest rate risk, but debt service is paid from INR cash flows, making FX hedging, hedge costs, INR depreciation, and foreign-currency liquidity relevant to repayment capacity.

The FY2025 financials disclose a bond balance of USD 296.23mn, translated to INR 24.78bn. If the INR depreciates, the INR-translated amount of foreign-currency debt on the balance sheet increases, as do the INR cash flows needed for principal, interest, MCS, and DSRA funding. PPA tariffs are fundamentally INR-denominated and not FX-linked, so INR depreciation pressures DSCR. In particular, under a structure where MCS is close to optional and scheduled amortization is thin, INR depreciation increases the INR-based refinancing amount needed at 2031 maturity.

Hedging details need further confirmation. The OM includes hedging payments in the waterfall, and the FY2025 financials state that option contracts have been entered into to hedge foreign exchange risk related to the 7.80% Senior Secured USD Notes. FY2025 financial assets also disclose foreign currency derivative contracts of INR 1.90bn non-current and INR 70.9mn current. However, the hedge ratio through maturity, notional, tenor, hedge counterparties, hedge costs, MTM, break costs, and DSRA currency composition cannot be sufficiently confirmed. Accordingly, in assessing the SAEL RG1 bond, investors need to continue monitoring not only INR-based DSCR but also USD-equivalent cash available for debt service, post-hedge DSCR, and the currency composition of the DSRA.

8. AgWTE / Biomass Operating Risk

The distinguishing feature of RG1 is that it has a large AgWTE / biomass component, not only solar. Against the backdrop of agricultural residue issues in northern India, the SAEL group operates a business model that uses agricultural residue such as paddy straw as power generation fuel. This is a policy-relevant field that combines renewable power generation, agricultural waste treatment, and mitigation of air pollution.

From a credit perspective, AgWTE is more complex than solar. Fuel procurement is concentrated around the harvest season, and the required volume must be secured and stored for a long period. Deterioration during storage, fire, humidity, transportation costs, competing regional demand, and fluctuations in agricultural residue prices all affect profitability. Tariffs with fuel cost escalation provide some protection, but actual increases in fuel prices, logistics costs, storage losses, and plant outages are not necessarily fully passed through.

Biomass generation also requires heavier O&M than solar, including boilers, turbines, combustion control, ash disposal, and flue gas management. If outages are prolonged, not only does power generation decline, but fuel inventory and fixed costs remain. Environmental regulation and local community issues, as well as rules related to groundwater, soil, and ash disposal, are also business risks. The DRHP also describes risks related to agricultural residue procurement sources, supply concentration, storage and transportation, and environmental matters.

SAEL’s position as one of the largest AgWTE operators at the group level is positive. However, for the RG1 bond, it is necessary to look not only at the fact that SAEL is strong in this field, but also at plant availability, PLF, fuel inventory days, fuel costs, realization of tariff escalation, and the funding status of O&M reserves for each RG asset. The biomass major maintenance reserve in the OM is stated to be funded every three years, totaling INR 35mn, with 5% annual escalation, but this may not be sufficient to fully absorb a major outage or fuel procurement shock.

9. Rating Agency View

The OM states that the Notes were expected to receive a BB+ expected rating from Fitch. As of this report date, the latest post-issuance Fitch surveillance could not be directly confirmed from the public materials reviewed, so the final current rating and outlook remain unverified items.

Information from Indian domestic rating agencies is useful as supplementary information for SAEL group bank relationships, project credit, and sponsor assessment. CRISIL assigned SAEL Industries Limited’s bank facilities a long-term A-/Stable and short-term A2+ rating in April 2026. The DRHP also shows ICRA BBB/Stable and CARE BBB/Stable ratings for project companies outside RG1, such as SAEL Solar P5 Private Limited and SAEL Solar P4 Private Limited.

However, these domestic ratings are not ratings of the SAEL RG1 bond itself. CRISIL A-/Stable is a domestic-scale rating on INR-denominated bank facilities and does not directly assess the foreign-currency default risk, collateral enforcement, FX risk, MCS, or 2031 maturity refinancing of the USD-denominated RG1 bond. The ICRA and CARE BBB ratings should also be treated only as reference information for individual project companies outside RG1. What should be read from the domestic ratings is that the SAEL group receives a certain level of credit assessment from Indian financial institutions, while the group’s rapid growth and reliance on borrowings can also be key issues in domestic ratings.

10. Credit Strengths

The first strength is that most assets are operational and supported by long-term PPAs. Greenfield construction risk is limited, and the published FY2025 and 9M FY2026 financials confirm that revenue and operating cash flow are actually being generated.

The second strength is that the mix of solar and AgWTE provides some mitigation of concentration in a single technology, state, or offtaker. The portfolio spans multiple states such as UP, Punjab, Maharashtra, Haryana, and Rajasthan, and has multiple offtakers including UPPCL, PSPCL, SECI, MSEDCL, HPPC, and RUVNL. In AgWTE, variable tariff escalation provides partial protection against fuel cost increases.

The third strength is the project bond-style protection through collateral, account control, DSRA, waterfall, and Co-Issuer guarantees. Compared with unsecured corporate bonds, the structure places cash flows and assets closer to creditors.

The fourth strength is the growth potential of the broader SAEL group and its expertise in AgWTE. At the group level, SAEL has a large solar and AgWTE pipeline, module manufacturing capability, capital participation from development finance institutions, and IPO plans, and its capital market access and sponsor profile can provide supplementary support for refinancing of the RG1 bond.

11. Credit Constraints

The largest constraint is high leverage. FY2025-end net debt was about INR 25.7bn, or about 7x the non-EBITDA cash earnings proxy. Even annualizing 9M FY2026 gives roughly 6x, which does not indicate substantial headroom for a project bond around the BB rating category. P&L losses continue, with a heavy burden from interest and depreciation.

The second constraint is that scheduled amortization is thin and MCS is not mandatory redemption backed by a Default trigger. If cash flow is strong, early repayment may progress, but if performance is weak, debt may not reduce sufficiently and the bond will depend on a large refinancing in 2031.

The third constraint is the mismatch between INR-denominated revenue and USD-denominated debt. INR depreciation, higher hedge costs, and weaker foreign-currency liquidity affect interest payments, DSRA, MCS, and maturity refinancing. Because hedge disclosure is limited, investors need to confirm post-hedge debt service capacity in periodic disclosures.

The fourth constraint is AgWTE operating and fuel procurement risk. Deterioration in agricultural residue prices, procurement competition, storage and transport, plant outages, ash disposal, or environmental regulation could make earnings more volatile than for solar assets. Because the OM forecast shows a large EBITDA contribution from biomass assets, this risk directly affects portfolio-level credit sensitivity.

The fifth constraint is fund transfer outside the RG. The FY2025 interest-free loan to the unrestricted group and the negative net parent investment are important in testing the effectiveness of the Restricted Group structure. If similar transactions continue, the protection provided by cash trap and restricted payment covenants for bondholders will need to be carefully reassessed.

12. Downside Scenarios and Monitoring Triggers

The downside for the SAEL RG1 bond is more likely to materialize through the overlap of several factors than through a single event. Typical downside combinations include lower AgWTE availability, fuel cost increases, DISCOM payment delays, INR depreciation, non-execution of MCS, and fund transfers outside the RG. In such a case, the DSRA may provide a short-term buffer, but principal reduction would not progress and 2031 maturity refinancing risk would rise rapidly.

Key monitoring items are as follows.

Particular early warning signs for investors include prolonged non-execution of MCS as scheduled, delayed DSRA replenishment, a sharp increase in trade receivables relative to revenue, additional fund transfers to the unrestricted group, and concerns raised by Fitch or domestic rating agencies regarding group liquidity or the RG structure.

13. Relative Positioning and Sensitivity

The SAEL RG1 bond has a somewhat different position from pure solar and wind pools among Indian renewable USD Restricted Group bonds. Existing Indian renewable RG bonds such as those of Adani Green Energy, Greenko, Continuum, and Hero Future Energies share features including long-term solar/wind PPAs, USD bonds, DSRA, cash waterfalls, and sponsor/group context. SAEL RG1, however, has a high share of AgWTE / biomass, so the SAEL group’s differentiated operating capability can work both positively and negatively for the credit.

For pure solar and wind RG bonds, the main operating risks are resource, equipment availability, transmission constraints, and DISCOM payment delays. In SAEL RG1, the same PPA, DISCOM, and FX risks are joined by agricultural residue procurement and plant operation as credit sensitivities. AgWTE has relatively high tariff levels and fuel cost escalation clauses, so if operated well, it can generate higher cash yields than an all-solar asset pool. However, if the fuel supply chain breaks down or plant outages increase, EBITDA underperformance can be sharper than for a solar pool.

SAEL RG1’s base case depends on four assumptions. First, existing solar assets maintain P50 or near-P50 generation, and offtaker payment delays remain a temporary working capital absorption. Second, AgWTE assets secure fuel volumes and prices close to plan, and variable tariff escalation absorbs a meaningful portion of fuel cost increases. Third, post-hedge INR cash flow is sufficient for USD debt service and the DSRA is not drawn on a recurring basis. Fourth, additional large fund transfers from the Restricted Group to the unrestricted group are restrained, and MCS is executed at least to some extent.

From a sensitivity perspective, CFO, DSCR, MCS, DSRA, and receivables should be viewed in combination, rather than focusing on single-year accounting losses. For example, if FY2026 full-year CFO increases from FY2025, sufficiently exceeds cash finance cost, trade receivables are contained within a range consistent with revenue growth, and optional MCS Amortization Redemption is executed, the credit story would not deteriorate materially even if P&L losses continue. Conversely, if revenue grows but CFO is weak, receivables rise, MCS is carried forward, and DSRA replenishment is delayed, cash leakage and refinancing risk should be weighted more heavily than profit or revenue growth.

Upside could arise from stable AgWTE operations and full-year contribution from FY2026 onward, balance reduction through optional MCS execution, stable Fitch surveillance, and improvement in SAEL group IPO or capital market access. In particular, if RG1 demonstrates disciplined cash retention independent of group growth, expansion of sponsor scale can become positive supplementary support for refinancing. Conversely, downside grows if the sponsor’s growth investment needs work in the direction of absorbing RG1 cash. Whether RG1 is maintained as a “generation asset pool for bond repayment,” rather than a “funding source for a growth group,” will determine the relative valuation of the bond.

For this reason, spread valuation of the SAEL RG1 bond should not simply place it at the average level of Indian renewable RG bonds; both an AgWTE premium and a ring-fence discount should be considered at the same time. AgWTE profitability and SAEL’s expertise are spread-tightening factors, while fuel procurement, operational complexity, related-party transactions, and USD maturity refinancing are spread-widening factors. At this stage, it is premature to value the bond based only on sponsor growth without adequately pricing the latter risks.

14. Credit View and Monitoring Focus

The SAEL RG1 bond should be positioned as a project bond-style credit around the BB rating category backed by a pool of Indian renewable and AgWTE assets. The assets are mainly operational, and the credit benefits from long-term PPAs, collateral, DSRA, waterfall, and the sponsor’s AgWTE expertise. At the same time, high leverage, USD/INR mismatch, AgWTE operating complexity, thin mandatory amortization, the optional nature of MCS, and fund transfers outside the RG are clear constraints.

The central credit hypothesis is that from FY2026 onward, full-year contribution from new AgWTE and solar assets will come through, CFO will sufficiently cover interest and limited principal amortization, and discretionary MCS Amortization Redemption will gradually reduce the debt balance. If this hypothesis holds, the 7.80% USD notes can maintain some credit headroom as high-coupon Indian renewable secured debt. Conversely, if MCS does not materially progress, net debt remains high, and INR depreciation or AgWTE underperformance overlaps, refinancing dependence before maturity will increase and the credit will become rapidly more fragile.

As a preliminary view at this stage, the SAEL RG1 bond is a “highly levered project bond whose asset quality and PPA structure make it investable for consideration, but where ring-fence effectiveness and foreign-currency maturity refinancing should be heavily weighted.” The growth potential of the SAEL group as a whole is a positive backdrop, but bond analysis should prioritize RG1’s actual cash flow, MCS, DSRA, and related-party transactions.

Short Summary & Conclusion

SAEL Limited / SAEL Restricted Group 1 is the credit entity for the USD 305mn 7.80% Senior Secured Notes due 2031 backed by Indian solar and AgWTE / biomass generation assets. This is a bond that should be assessed primarily on the PPA revenue, collateral, account waterfall, DSRA, and MCS performance of RG1, which is constituted by the Co-Issuers, rather than on the SAEL group as a whole.

Strengths include approximately 334 MW of generation assets included in the 9M FY2026 capacity table, long-term PPAs, multiple states and multiple offtakers, SAEL’s expertise in AgWTE, and project bond-style collateral and account control. On the other hand, Jasrasar’s formal COD and operating status require reconfirmation in the next disclosure, leverage is high, mandatory amortization is thin, and non-payment of MCS is not a Default. In addition, the FX mismatch between INR revenue and USD debt, AgWTE fuel and O&M risk, and fund transfers outside the RG as seen in the FY2025 interest-free loan to the unrestricted group are important constraints.

In conclusion, the SAEL RG1 bond should be treated as an Indian renewable project bond around the BB rating category, with asset and PPA support but substantial dependence on maturity refinancing and ring-fence effectiveness. Future assessment should prioritize FY2026 full-year RG financials, MCS execution amount, DSRA, AgWTE availability, trade receivables, FX hedging, and related-party transactions.

Sources

• India INX, Offering Memorandum, "SAEL Limited, US$305,000,000 7.80% Senior Secured Notes due 2031", file name OMUS78637MAA62.pdf, available from India INX Issuer Details: https://www.indiainx.com/IssuerDetails/OMUS78637MAA62.pdf
• SAEL Limited, Investor Downloads page: https://www.sael.co/investors/financials-and-reports/investor-downloads/
• SAEL Restricted Group, "Financial Statements for the year ended 31 March 2025": https://www.sael.co/documents/investors/financials-and-reports/investor-downloads/FY-2025/SAEL-Restricted-Group-Financials-and-Report-March-2025.pdf
• SAEL Restricted Group, "Financial Statements for the period ended 31 December 2025 / 9M FY2026": https://www.sael.co/documents/investors/financials-and-reports/investor-downloads/FY-2026/SAEL-RG-Financials-9M-FY-2026.pdf
• SAEL Restricted Group, "Compliance Certificate 2025": https://www.sael.co/documents/investors/financials-and-reports/investor-downloads/FY-2025/Compliance-Certificate-2025.pdf
• SAEL, "H1 FY2025 presentation": https://www.sael.co/documents/investors/financials-and-reports/investor-downloads/FY-2025/H1-FY2025-presentation-updated.pdf
• SAEL Industries Limited, Draft Red Herring Prospectus: https://www.sael.co/documents/investors/offer-documents/drhp/SAEL_DRHP.pdf
• CRISIL Ratings, SAEL Industries Limited rating rationale, 9 Apr 2026: https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/SAELIndustriesLimited_April%2009_%202026_RR_393372.html
• SAEL press release, group operational capacity crosses 2 GWp: https://www.sael.co/newsroom/press-release/sael-commissions-1-gwp-solar-project-at-worlds-largest-re-park-groups-total-operational-capacity-crosses-2-gwp/
• SAEL press release, commissioning of 600 MW solar projects in Kurnool: https://www.sael.co/newsroom/press-release/sael-commissions-600-mw-solar-power-projects-in-kurnool-andhra-pradesh/

Unverified / Pending Items

• The latest Fitch surveillance rating, outlook, and rating action commentary could not be directly confirmed. The BB+ expected rating in the OM should not be treated as the confirmed current rating.
• The 9M FY2026 financials as of end-December 2025 were reviewed from key tables in an image PDF. They need to be reconfirmed in the audited full-year FY2026 RG financials.
• The hedge ratio, hedge period, hedge cost, and DSRA currency composition for the bond’s FX hedging cannot be sufficiently confirmed from public materials.
• Actual MCS payments, carry-forward amounts, DSRA balance, and practical operation of the cash waterfall need to be confirmed in future bondholder reporting.
• The recoverability of the FY2025 interest-free loan to the unrestricted group, its covenant treatment, and whether additional such loans occur require ongoing monitoring.
• The co-guarantees issued and the related-party note in the FY2025 financials require confirmation regarding the presence, amount, and resolution status of any contingent liabilities to fellow subsidiaries outside the RG.
• The formal COD, operating status, and post-end-December 2025 operating performance of Jasrasar Green Power need to be confirmed in the next RG financials or bondholder disclosure.