Rating Rationale
May 08, 2025 | Mumbai
Solex Energy Limited
'Crisil BBB/Stable/Crisil A3+' assigned to Bank Debt
Rating Action
Total Bank Loan Facilities Rated Rs.320.59 Crore
Long Term Rating Crisil BBB/Stable (Assigned)
Short Term Rating Crisil A3+ (Assigned)
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings.
The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities
Detailed Rationale
Crisil Ratings has assigned its ‘Crisil BBB/Stable/Crisil A3+’ ratings to the bank facilities of Solex Energy Limited (SEL).
The rating reflects SEL's extensive industry experience of the promoters, significant growth in scale with improving margins,
favourable demand outlook for the solar industry, and above-average financial profile. These strengths are partially offset by
its susceptibility to increasing competition and volatility in raw material prices & regulatory changes, concentrated order
book and risks related to large, planned capex.
Analytical Approach
Crisil Ratings has analyzed business and financial risk profile of SEL
Key Rating Drivers & Detailed Description
Strengths:
Extensive industry experience of the promoters: The promoters entered into solar modules/panels business in 2007 &
has since ramped up operations significantly in last few fiscals. Currently, the company has solar photovoltaic (PV) module
manufacturing capacity of 1.5 GW recently enhanced from 700 MW. Company has successfully executed more than
10000+ projects and is currently associated with 24 OEM’s, out of which 2 are international clients. It supplied more than 2
million modules till December 2024 depicting strong execution capabilities.
Significant growth in scale with improving margins: Scale of operations have increased as witnessed in estimated
revenue of Rs. 665 crore in fiscal 2025 improving from Rs. 163 crore in fiscal 2023 . With recent increase in capacity from
700 MW to 1.5 GW (functional from March-25) and healthy orderbook of ~Rs. 1450 crore to be executed in 12-18 months,
revenues are expected to improve significantly in fiscal 2026. With improving top line, operating margins also improved to
around 10% in fiscal 2025, from 8.3% in fiscal 2023, backed by capacity expansion, tech enabled machinery, lower module
rejection rates and reduced production time.
Favorable demand outlook for the solar industry: SEL will benefit from the growing emphasis on solar power in
India and the long-term plans of the government to increase generation from renewable sources. Introduction of
protectionist measures by the government, such as basic customs duty (BCD) of 40% and 25% on imported solar modules
and solar cells, respectively, from April 2022, and implementation of Approved List of Models and Manufacturers (ALMM)
along with incentives for domestic players under the Production-Linked Incentive (PLI) scheme increases the
competitiveness of domestic modules compared with imported ones. Government-approved schemes such as Kisan Urja
Suraksha Utthan Mahabhiyan, Central Public Sector Undertaking, PM Surya Ghar Muft Bijli Yojana and rooftop scheme are
also expected to drive demand.
Above-average financial profile: The financial risk profile is above average, marked by net worth estimated at over Rs 150
crore as on March 31, 2025. With recent and expected debt-funded capex, capital structure remains moderate as reflected
in estimated gearing of unity and total outside liabilities to adj tangible net worth (TOL/ANW) of 1.9 times as of March 31,
2025. With planned capex in fiscal 2026, the capital structure is expected to deteriorate but will improve in medium term with
increasing accretion. Debt protection metrics are comfortable as reflected in the interest coverage and net cash accrual to
total debt (NCATD) estimated at around 5.5 times and 0.3 times, respectively, for fiscal 2025 supported by moderate
profitability. Debt protection measures are expected to remain at comfortable level over medium term with steady
profitability.
Weaknesses:
Susceptibility to increasing competition and volatility in raw material prices and regulatory changes: The company
is exposed to increasing competition on account of large capacity additions being undertaken (and planned) in the domestic
market and from Chinese imports. Growth also remains vulnerable to any adverse changes in government policies and tariff
barriers. Further, operating margin remains vulnerable to sharp fluctuations in raw material prices, which accounts for 80-
82% of the operating income. Also, as majority of the raw material is imported any sharp fluctuation in forex rates affects the
company’s profitability.
Concentrated order book and: Majority of the pending orderbook is concentrated with one client. Out of total orderbook of
Rs. 1450 crore, around Rs. 1275 crore is from single client. It thus remains exposed to risks associated with fluctuation in
demand, negotiating power shift and termination of contract. Though the company has several tie-ups with OEM’s, over the
past few years, customer concentration risk is sizeable. Hence, diversification in client base remains a key rating sensitivity
factor.
Risks related to planned capex: SEL is undertaking brownfield expansion to increase the production capacity from 1.5
GW to 4 GW, which is expected to be completed in 6-9 months’. Total project cost is around Rs. 200-210 crore, out of which
75% is debt funded. Timely commissioning of project without any major cost overruns and subsequent offtake of enhanced
capacities will remain monitorable.
Liquidity: Adequate
Bank limit utilization is moderate at around 60% for the past twelve months ended March 2025. Cash accruals are expected
to be around Rs 100 crore which are sufficient against term debt obligation of Rs 18-40 crore over the medium term. Current
ratio is moderate at 1.22 times on March 31, 2024. Free cash and cash equivalents of Rs. 16.92 crore as on March 31st, 25
Outlook: Stable
Crisil Ratings believe SEL will continue to benefit from the extensive experience of its promoter, and strong execution
capabilities supported by increased capacities and healthy orderbook and enquiries.
Rating Sensitivity Factors
Upward factors
Sustained improvement in scale of operation and sustenance of operating margin, leading to higher cash accruals
Improvement in financial risk profile marked by TOLANW less than 2.2 times on sustained basis.
Improved working capital management
Downward factors
Decline in scale of operations or operating margin, leading to cash accruals of lower than Rs 35 crore.
Substantial increase in its working capital requirements or higher debt funded capex, weakening its liquidity & financial
profile.
About the Company
Surat based, SEL was initially set up as proprietorship firm “M/s Sun Energy Systems” in 1995, later incorporated as private
limited company in 2014 and reconstituted as public limited company in 2018. SEL is engaged in manufacturing
monocrystalline and polycrystalline solar panel modules, solar home and street lights, solar lantern, invertors, water heating
systems, etc. and also provides engineering, procurement and construction (EPC) services. Its manufacturing facility is at
Tadkeshwar, Mandvi, Surat (Gujarat). SEL is promoted by Mr Chetan Sureshchandra Shah (Chairman & Managing
Director).
The company is listed on the SME Platform of the National Stock Exchange of India Ltd (NSE Emerge).
Key Financial Indicators
As on/for the period ended March 31 Unit H1 2025 2024 2023
Operating income Rs crore 274.16 366.96 163.71
Reported profit after tax Rs crore 13.08 8.73 2.71
PAT margins % 4.8% 2.38 1.66
Adjusted Debt/Adjusted Networth Times 0.55 2.09 1.81
Interest coverage Times 2.32 2.87 2.44
Any other information: Not Applicable
Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable)
in the 'Annexure - Details of Instrument' in this Rating Rationale.
Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available
information. The complexity level for instruments may be updated, where required, in the rating rationale published
subsequent to the issuance of the instrument when details on such features are available.
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Annexure - Details of Instrument(s)
Name Of Date Of Coupon Maturity Issue Size Complexity Rating Outstanding
ISIN
Instrument Allotment Rate (%) Date ([Link]) Levels with Outlook
NA Cash Credit NA NA NA 115.00 NA Crisil BBB/Stable
Letter of
NA NA NA NA 105.00 NA Crisil A3+
Credit
31-May-
NA Term Loan NA NA 21.97 NA Crisil BBB/Stable
30
30-Sep-
NA Term Loan NA NA 66.00 NA Crisil BBB/Stable
32
31-May-
NA Term Loan NA NA 7.55 NA Crisil BBB/Stable
30
28-Feb-
NA Term Loan NA NA 0.70 NA Crisil BBB/Stable
27
31-Dec-
NA Term Loan NA NA 4.37 NA Crisil BBB/Stable
32
Annexure - Rating History for last 3 Years
Start of
Current 2025 (History) 2024 2023 2022
2022
Outstanding
Instrument Type Rating Date Rating Date Rating Date Rating Date Rating Rating
Amount
Fund Based Crisil
LT 215.59 -- -- -- -- --
Facilities BBB/Stable
Non-Fund Based
ST 105.0 Crisil A3+ -- -- -- -- --
Facilities
All amounts are in [Link].
Annexure - Details of Bank Lenders & Facilities
Facility Amount ([Link]) Name of Lender Rating
Cash Credit 60 State Bank of India Crisil BBB/Stable
Cash Credit 55 Bank of Baroda Crisil BBB/Stable
Letter of Credit 70 State Bank of India Crisil A3+
Letter of Credit 35 Bank of Baroda Crisil A3+
Term Loan 21.97 State Bank of India Crisil BBB/Stable
Term Loan 66 State Bank of India Crisil BBB/Stable
Term Loan 7.55 Bank of Baroda Crisil BBB/Stable
Term Loan 0.7 Bank of Baroda Crisil BBB/Stable
Term Loan 4.37 Union Bank of India Crisil BBB/Stable
Criteria Details
Links to related criteria
Criteria for manufacturing, trading and corporate services sector (including approach for financial ratios)
Basics of Ratings (including default recognition, assessing information adequacy)
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