Azure Power Global Limited (AZRE)

Transcription

1 Americas/United States Equity Research Electric Utilities Rating OUTPERFORM Price (04-Nov-16,US$) Target price (US$) week price range Market cap (US$ m) 439 *Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector. ¹Target price is for 12 months. [V] = Stock Considered Volatile (see Disclosure Appendix) Research Analysts Maheep Mandloi maheep.mandloi@credit-suisse.com Share price performance Patrick Jobin patrick.jobin@credit-suisse.com Andrew Hughes andrew.hughes@credit-suisse.com O c t O c t O c t N o v A Z RE.N S& P IN D EX On 04-Nov-2016 the S&P 500 INDEX closed at Daily Oct12, Nov04, 2016, 10/12/16 = US$14.6 Quarterly EPS Q1 Q2 Q3 Q4 2016A E E Azure Power Global Limited (AZRE) INITIATION Tapping High Growth Indian Solar Market with Differentiated Model to Boost Returns Initiating with an Outperform Rating and a $21 Target Price: We initiate coverage of Azure Power (AZRE), an Indian solar independent power producer (IPP) with 1 GW of contracted assets. Our positive thesis is predicated upon (1) a booming solar market expected to grow at a 50%+ CAGR through 2022 driven by policy initiatives, (2) attractive project returns benefitting from global module oversupply, and (3) a differentiated strategy delivering lower costs. We note potential volatility around quarterly earnings given the seasonality, inherent lumpiness of large-project development, and limited track record operating as a public company. Our constructive stance, however, is based on long-term value creation and supportive secular trends. A Large Growing Solar Opportunity: We forecast solar demand in India to grow from 5 GW in 2016 to 18 GW by 2020 driven by (1) strong government support to achieve 100 GW of solar by 2022 and (2) potential further demand elasticity, as solar PPAs are competitive with traditional coal/gas today. Attractive Economics and Visible Growth: AZRE has benefitted from a decline in module costs (down 29% ytd) and non-module costs (down 59% over 5 years) which results in unlevered returns >16% (>40% levered). AZRE operates 357 MWs and has contracted 648 MWs to be built by CY17. Differentiated Strategy with Proven Track Record: AZRE has differentiated in-house EPC capabilities that drive a 12-15% cost advantage. The company has maintained healthy mid-teens project returns by not being the lowest bidder and avoiding states with higher credit and curtailment risk. Valuation Reflects Backlog, Upside from Future Project Wins: Our $21 target price is based on 7.5x our CY18 EBITDA est, which we believe reflects the value of the portfolio by We see several sources of further upside beyond $21 due to (1) multiple expansion as asset performance is further appreciated by markets, and (2) backlog growth. We see risks from counterparty credit, curtailment, FX, interest rates, and capital availability to fund growth. Financial and valuation metrics Year 3/16A 3/17E 3/18E 3/19E EPS (CS adj.) (US$) (1.26) (0.46) Prev. EPS (US$) P/E (x) P/E rel. (%) EBITDA (US$ m) EV/EBITDA (current) Net debt (US$ m) FFO/Interest FFO/Total Debt Number of shares (m) IC (current, US$ m) BV/share (Next Qtr., US$) 5.4 EV/IC (x) 1.7 Net debt (Next Qtr., US$ m) Dividend (current, US$) - Net debt/tot eq (Next Qtr.,%) Dividend yield (%) - Source: Company data, Thomson Reuters, Credit Suisse estimates DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 Azure Power Global Limited (AZRE) Price (04 Nov 2016): US$16.95; Rating: OUTPERFORM; Target Price: US$21.00; Analyst: Maheep Mandloi Income Statement 3/16A 3/17E 3/18E 3/19E Revenue (US$ m) EBITDA Depr. & amort. (10) (18) (33) (43) EBIT (US$) Net interest exp (30) (41) (62) (74) PBT (US$) (19) (14) Income taxes (5) 4 (9) (19) Profit after tax (24) (10) Minorities Reported net income (US$) (25) (11) Other NPAT adjustments Adjusted net income (24) (10) Cash Flow 3/16A 3/17E 3/18E 3/19E EBIT Net interest (30) (41) (62) (74) Change in working capital 4 (17) 7 (5) CAPEX (137) (332) (351) (107) Free cashflow to the firm (126) (337) (293) (31) Aquisitions Divestments Cash flow from investments (138) (326) (351) (107) Cashflow from financing activities (0) 0 Changes in Net Cash/Debt (13) (173) (293) (31) Balance Sheet (US$) 3/16A 3/17E 3/18E 3/19E Assets Cash & cash equivalents Total current assets Total assets ,130 1,201 Liabilities Total current liabilities Total liabilities Total liabilities and equity ,130 1,201 Net debt Per share 3/16A 3/17E 3/18E 3/19E No. of shares (wtd avg) CS adj. EPS (1.26) (0.46) Prev. EPS (US$) Dividend (US$) Free cash flow per share (6.47) (14.84) (11.17) (1.20) Earnings 3/16A 3/17E 3/18E 3/19E Sales growth (%) EBIT growth (%) (4.6) Net profit growth (%) (4185.7) EPS growth (%) (4185.7) EBITDA margin (%) EBIT margin (%) Pretax margin (%) (48.8) (20.8) Net margin (%) (61.8) (15.5) Valuation 3/16A 3/17E 3/18E 3/19E EV/Sales (x) EV/EBITDA (x) EV/EBIT (x) P/E (x) (13.5) (36.7) Price to book (x) Asset turnover Returns 3/16A 3/17E 3/18E 3/19E ROE stated-return on (%) (393.4) (6.8) ROIC (%) Gearing 3/16A 3/17E 3/18E 3/19E Net debt/equity (%) Interest coverage ratio (X) Source: Company data, Thomson Reuters, Credit Suisse estimates Company Background Azure Power is a leading India solar project developer and independent power producer. Blue/Grey Sky Scenario Our Blue Sky Scenario (US$) Our blue sky value of $36 is based on a 9x of 2018 EBITDA assuming a faster installation growth. We assume company's installation grows to 1.8GW by CY18 and 2.5 GW by CY19, raises additional $200m in capital. Our Grey Sky Scenario (US$) Our grey sky value of $15 implies 7x CY18 EBITDA for the currently contracted portfolio. Our grey sky scenario assumes that the company does not grow beyond the current contracted asset base Share price performance O c t O c t O c t N o v A Z RE.N S& P IN D EX On 04-Nov-2016 the S&P 500 INDEX closed at Daily Oct12, Nov04, 2016, 10/12/16 = US$14.6 Azure Power Global Limited (AZRE) 2

3 Table of Contents Key Charts 4 Investment Thesis 5 (1) A Large, Growing Opportunity for Solar Development in India...5 (2) Attractive Project Returns and Highly Visible Growth...5 (3) Differentiated Strategy and Proven Track Record...6 (4) Valuation Reflects Current Backlog, Upside from Future Project Wins...7 Investment Risks...7 Catalysts and Events to Monitor...8 Solar in India A Large, Growing Opportunity 9 Company Overview 14 Model Drivers 19 Earnings Outlook and Valuation 23 Valuation...25 Investment Risks 27 Appendix 29 Company Management...29 Management Compensation...30 Board Composition...30 Shareholders...31 Detailed Financials...32 Azure Power's Projects...34 Solar in India...37 Azure Power Global Limited (AZRE) 3

4 Key Charts Figure 1: Growing Solar Demand in India GW % 14.0 CAGR of 55% % % % % % 0.4% 0.6% E2016E2017E2018E2019E2020E Solar demand, GW Solar generation as % of total mix Figure 2: Bolstered by Declining Solar PPAs India wt avg PPA bids, $/kwh - (USD/INR of 65) $ 0.20 $ 0.18 $ 0.16 $ 0.14 $ 0.12 $ 0.10 $ 0.08 $ 0.06 bubble size MW 500 MW $ 0.04 Aug-10 Dec-11 May-13 Sep-14 Jan-16 Figure 3: Declining Module/System Cost $ 4.00 $ 3.50 $ 3.00 $ 2.50 $ 2.00 $ 1.50 $ 1.00 $ 0.50 $ FY10A FY11A FY12A FY13A Module cost $/w FY14A FY15A BOS cost $/w Current spot module price is <40c/w Figure 5: Visible Growth with Multi-Year Backlog 1,600 1,400 1,200 1, , ,025 1,355 FY16A 1,495 CY16E CY17E CY18E CY19E MW operating MWs committed FY17E Figure 4: Attractive Project Returns Unlevered project IRR sensitivity to PPA and cash cost Capex - cash cost/watt current cost $ 0.60 $ 0.65 $ 0.70 $ 0.75 $ 0.80 PPA % 13.9% 12.7% 11.6% 10.6% INR/kwh % 15.0% 13.7% 12.6% 11.5% % 16.2% 14.8% 13.5% 12.5% % 17.3% 15.8% 14.5% 13.4% current % 18.4% 16.8% 15.5% 14.3% PPA % 19.6% 17.9% 16.4% 15.2% % 20.2% 18.5% 17.0% 15.7% *Note - doesn't include VGF, assumes EPC margin of 12% IRR benefits from cost declines while PPAs remain the same Note: Single project economics model available on request. Figure 6: Upside from Future Wins and Rerating New auctions on 3-month horizon 2.4 GW NTPC 350 SECI 1,275 MP state utility 750 Punjab state utility 15 Other central agencies 10 Total MW 2,400 Scenario TP Assumptions Base $ GW operational by 2018 Bull $36 Growth in line with market, access to capital Bear $15 Only 1 GW of contracted backlog Azure Power Global Limited (AZRE) 4

5 Investment Thesis We initiate coverage of AZRE with an Outperform rating and a $21 target price. In our view, Azure Power is well positioned in a structurally power deficit country with a large and fast-growing solar market as its local focus, differentiated development strategy, and disciplined approach in solar bids that deliver attractive project returns. (1) A Large, Growing Opportunity for Solar Development in India We forecast that solar demand in India will grow from 2 GW in 2015 to 5 GW in 2016 and grow at a CAGR of 38% through Demand in the country is driven by a strong federal level policy that targets 100 GW of installed solar capacity by Total installed capacity of 8.6 GWs as of September 2016 represents just 1% of energy consumption, 2.5% of total installed generation capacity, and 5% of peak electricity demand, and it has room for growth given higher penetration levels in major solar markets today (Germany at 48% of peak demand, Japan at 23%). In addition to policy support, we also expect demand for solar to potentially grow due to demand elasticity, as solar tariffs are now cheaper than imported fossil fuels and even wind energy. Solar also proves to be an economic option to meet the growing energy demand as the country reduces its power deficit (5% average deficit in the past five years) and increases per capita consumption (which at 1,010 kwh/yr is among the lowest in the world today). Figure 7: We Forecast Demand Grows to 58 GW by 2020, While the Country Targets 100 GW by 2022 Figure 8: Solar PPAs Have Declined 48% in the Past Five Years and Are Cheaper Than Other Tech 70 $ 0.16 $ CAGR 59.7% 58 $ 0.14 $ 0.13 GW E 2018E 2020E Levelized PPA/tariff - $/kwh $ 0.12 $ 0.10 $ 0.08 $ 0.06 $ 0.04 $ 0.02 $ % decline in 5 years $ 0.08 $ 0.07 $ 0.05 Previous year installed capacity New installed capacity $ - Gas - peaker Solar 2011 Solar 2014 Wind Solar 2016 Coal Source: MNRE, Company data, Credit Suisse estimates. (2) Attractive Project Returns and Highly Visible Growth AZRE is fully funded to build its contracted portfolio of 1GW of projects with an attractive 16% unlevered returns or 40%+ equity returns for projects under construction. The company benefits from an in-house EPC development strategy that saves ~12-15% margin on system cost thereby resulting in cost efficiencies of ~$0.10/w at today's Azure Power Global Limited (AZRE) 5

6 construction cost. However, the company's higher unlevered returns (~200 bps above threshold) are a result of steeper-than-expected decline in module prices (down 29% or $0.15/w YTD versus down 65% over five years in spot market) while the PPAs in the backlog contracted through reverse bids remain unchanged. We calculate that every $0.05/w reduction in system costs increases unlevered IRR by ~100 bps. While sustaining these high returns beyond the contracted portfolio could be difficult due to intensifying competition, we expect new projects would be bid at healthy unlevered returns of ~14% (and >20% equity returns). Figure 9: Attractive Project IRRs Have Room to Grow with Lower PPAs Figure 10: Strong Visibility in Future Auctions Unlevered project IRR sensitivity to PPA and cash cost 100 Capex - cash cost/watt current cost 90 $ 0.60 $ 0.65 $ 0.70 $ 0.75 $ PPA % 13.9% 12.7% 11.6% 10.6% INR/kwh % 15.0% 13.7% 12.6% 11.5% % 16.2% 14.8% 13.5% 12.5% % 17.3% 15.8% 14.5% 13.4% 50 current % 18.4% 16.8% 15.5% 14.3% 40 PPA % 19.6% 17.9% 16.4% 15.2% % 20.2% 18.5% 17.0% 15.7% 20 returns on backlog *Note - doesn't include VGF, assumes EPC margin of 12% Installed GW Tenders to be installed Total bids tendered Tenders expected in 2016 Future tenders 2022 target Source: Company data, MNRE, Credit Suisse estimates. (3) Differentiated Strategy and Proven Track Record In a highly competitive solar industry driven by limited barriers to project development, Azure Power differentiates itself from competition as (1) in-house EPC reduces cash costs for project under development by 12-15%, increases leverage ratio to ~80-85% compared with ~75% for peers, and hence results in higher equity returns; (2) the company has deliberately avoided states with higher counterparty risk and has 49% of PPAs with federally backed AA/AAA-rated NTPC and SECI as well as 37% with BB/BBB-rated states Punjab and Karnataka; and (3) management has avoided being the lowest cost bidder in many projects despite strong competition as it leverages its local expertise and in-house visibility on system prices. Development expertise is focal. While we believe more entrants will aggressively pursue the Indian solar market, the multi-year lead and local connections, coupled with the in-house EPC capabilities that reduce costs and accelerate commercialization of value enhancing technologies and techniques, will enable Azure Power to continue to earn healthy returns above its cost of capital in the near to medium term. Azure Power Global Limited (AZRE) 6

7 Figure 11: Azure Power's Counterparty Exposure in the Contracted Backlog Counterparty MWs as % of total Credit rating NTPC % AAA Punjab state % BB+ SECI % AA Karnataka state % BBB+/B- AP state % BB Chhattisgarh state % A Gujarat state % A+ UP state % Bihar state % Ordinance factory 7 0.7% Rooftop % Total 1,005 Figure 12: Azure Power's PPA Premium over Lowest Competitive Bids premium over lower bidder, % 16% 14% 12% 10% 8% 6% 4% 2% 0% Punjab 2.2 Punjab 3.1 Gujarat 1.1 Rajasthan 1 Rajasthan 2.2 Rajasthan 3.2 Rajasthan 4 Karnataka 2 Chhattisgarh 1.1 Chhattisgarh 1.3 Andhra Pradesh 1 Maharashtra 1.1 Delhi 1.2 Karnataka 3.2 Punjab 4.1 Punjab 4.3 Uttar Pradesh 2 Andhra Pradesh 3 Source: Company data, MNRE, Credit Suisse estimates. (4) Valuation Reflects Current Backlog, Upside from Future Project Wins Our target price of $21 reflects a 7.5x CY18 EV/EBITDA multiple, which assumes 1.35 GW of projects are operational by CY18 with enough cash buffer to grow ~10%/yr organically. The multiple just slightly above traditional Indian IPPs reflects lower long-term commodity risk. (Traditional Indian IPPs trade at 6x-9x, with an average of 7.3x.) Our target price also represents a 13% equity discount rate on DCF of contracted project cash flows. Given the low-risk nature of these cash flows, we believe a 13% equity rate is appropriate. (We note that this is a burn down value, as it doesn't assume any future growth.) We see upside from future project wins and calculate equity value of $36/sh under our blue sky where operational MWs grow to 2.5 GW by 2019 (a 53% CAGR over contracted MWs and in-line with demand growth). Our grey sky scenario values the stock at $15/sh and doesn't include any future growth in projects. Investment Risks We see the following risks associated with realizing our $21 target price. Seasonality and lumpiness: We note potential volatility around quarterly earnings given the seasonality, inherent lumpiness of large-project development, and limited track record operating as a public company. FX Risk: Investors are exposed to FX risks, as the company's operations are INR denominated. INR has depreciated 8%/yr on average in the past five years. Interest Rate Risk: 72% of current debt (and all new debt) is floating and INR denominated and is based of RBI's repo rate, which increases risks to interest rate volatility. On the flip side, the company could benefit from rate spread compression as the sector evolves. Azure Power Global Limited (AZRE) 7

8 Competition for New Awards: Project development is highly competitive in India and project returns on new awards are predicated on rational bidding behavior by developers. Capital Needs for Growth: We believe that the company remains fully funded to build 1.35 GW of projects by 2018 and then grow organically at ~10%/yr. However, achieving the company's target of 5 GW of committed and operating projects by 2020 would require additional capital, in our view. Counterparty and Curtailment Risk: PPAs with state-owned electricity distribution companies (discoms) may have higher counterparty risk given the perceived risk of non-payments and curtailments for renewable projects. The company has tried to avoid contracts with discoms with lower credit ratings. In the 1 GW of contracted backlog, federally backed entities with AA/AAA credit ratings (NTPC and SECI) represent 49% of contracts, while states with >BB ratings represent 46% of contracts. Policy Changes: Current solar demand is aided by federal/state government bids that are guided by the 100 GW national solar mission. Solar policy could change in the future due to political developments or other factors, though such a scenario looks unlikely since solar is one of the cheapest sources of electricity in the country. We could see positive impact if new policy measures are introduced to create a carbon market or strictly enforce renewable procurement obligations. Catalysts and Events to Monitor Demonstrating Growth Through Project Wins in Upcoming Auctions: Growth beyond the 1 GW of contracted assets depends on the company's ability to win new projects in upcoming auctions at >14% unlevered project returns. The company expects 2.4 GW of new tenders in the next two to three months, and its prior win rate of 10% implies additional MWs of project wins. A 100 GW target implies 15 GW/yr auctions from 2017 to Cost Declines amid Oversupplied Market: We currently expect solar system costs to decline ~14% through CY16 and an additional 6% in CY17, the decline primarily driven by a sharp decline in module costs. We could see upside to estimates from even lower costs stemming from lower-than-expected global demand in Lock-Up Expirations: Current shareholders excluding insiders (15.8m shares or 61.1% of outstanding shares) have a 180-day lock-up period post-ipo ending April 10, CDPQ (4.167m shares or 16.1% of total) has a 270-day lock-up period ending July 9, Azure Power Global Limited (AZRE) 8

9 Solar in India A Large, Growing Opportunity We forecast solar demand in India will grow from 2 GW in 2015 to 5 GW in 2016 and then grow at an annual CAGR of 38% until Demand in the country is primarily driven by the central government target to achieve 100 GW of solar capacity by 2022, a power deficit country with one of the world's fastest-growing electricity demands, and declining solar system costs making it cheaper than most other sources of energy (including gas, coal, and wind) on an LCOE basis. Figure 13: India Is the Fastest-Growing Solar Market Figure 14: India Renewable Target Requires Solar Installations of ~15GW/Yr 200 Demand (GWs) E 2018E 2020E Other markets Europe India Japan US China GW Solar Wind Biomass Small Hydro Installed renewable capacity Additional 2022 renewable target Source: Credit Suisse estimates. Source: MNRE, Credit Suisse estimates. Strong Policy Support Learning from other countries, the Indian government launched a National Solar Mission (NSM) policy in 2010 that targets 100 GW of solar operating capacity by The deployment has been planned over three phases, with Phase 1 from 2012 to 2013, Phase 2 from 2013 to 2017, and Phase 3 from 2017 to The country had targeted 2 GW of solar installations in FY16, growing to 12 GW in FY17, 15 GW in FY18, and then ramping up to 17.5 GW by FY21. Our demand estimates ramping gradually from 5 GW in 2016 to 12 GW in 2019 and 18 GW in 2020, which seems conservative compared with the country's target because (1) the 100 GW target includes 40 GW of rooftop projects (versus <1 GW installed today), which we believe would ramp slower than targeted as these projects have smaller ticket sizes and require more customer education, and (2) a tight capital market for a nascent industry. Under the national solar mission, central and state governments issue RfPs to meet the targets. In a reverse bidding mechanism, developers either bid for the lowest subsidy (either long-term feed in tariff adder or upfront viability gap funding) or bid for the lowest PPA without subsidy below the benchmark tariff decided by the government regulator. This reverse auction policy differs compared with other major solar markets that have fixed Azure Power Global Limited (AZRE) 9

10 FiTs for qualifying assets (e.g., in Germany, Spain, China etc.). A fixed FiT provides a higher degree of certainty to investors but does put undue burden on the tax payers if timely FiT reductions do not match system costs decline, giving investors the ability to dramatically over earn. We view the Indian reverse auction system as a more sustainable and healthy system that provides for more stable growth. The country also revised its renewable purchase obligations (RPO) for the states, which now requires 17% of renewable generation by 2022 (versus the prior target of 15% by 2020) and includes solar carve out. The RPO targets renewable penetration levels of 11.5%, 14.25%, and 17% in FY17/18/19, with solar carve-outs of 2.75%, 4.75%, and 6.75% in FY17/18/19 (excludes hydro), respectively. The RPO seems in-line with the national solar mission targets. Solar projects are also eligible to receive ten-year tax holiday during the first 15 years of operation. During the tax holiday period, the corporate tax rate of 34% is reduced to a minimum alternative tax rate of 21%. A Reverse Bid Process with Room for Multiple Winners Despite being a highly competitive market, Indian solar auctions have room for multiple winners at different PPA price points. The bids don t have just one winner, instead the bids are designed so that each auction is won by a group of developers. Bids are accepted at the quoted tariffs (with or without an upfront subsidy) starting with the lowest bid until the total auctioned capacity is reached. Higher Sunshine and Near Load Centers India receives an average sunshine (5.1 hrs/day) across the country that is higher compared with other major solar markets. (The top two in the solar market are the United States with 4.7 hrs/day and China with 3.6 hrs/day on average.) This equates to a ~21% capacity factor (or plant load factor). Regions with strong solar insolation are spread across the country and are closer to load centers, unlike in China where the majority of higher sunshine regions are in the sparsely populous western states, requiring significant investments in west-to-east transmission capacities. Azure Power Global Limited (AZRE) 10

11 7 November 2016 Figure 15: India Solar Radiation Is Higher in Western and Southern States Figure 16:.. Near Higher Population Regions Source: MNRE. Source: Census of India. Growing Energy Demand in a Power Deficit Country India's electricity demand has grown by mid to high single % digits every year over the past decade, in-line with the country's GDP growth rate. Energy demand is expected to grow at 9% in 2017 versus a real GDP growth expectation of 7.7%. Demand has increased due to industrial growth but also as the country tries to bridge its energy deficit that averaged at a deficit of 5% in the past five years from 2011 to In addition, per capital energy consumption is also expected to grow, which at 1,010 kwh/yr is among the lowest globally compared with >10,000 kwh/yr in United States and >3,700 kwh/yr in China. Growing Renewable Demand Energy in the country is predominantly sourced from fossil fuels, which represent ~70% of the total installed capacity base that generates ~74% total electricity. Solar represents only ~3% of installed capacity today and generates ~1% of total electricity. The country plans to increase its renewable mix to reduce pollution levels and reduce its fuel import bill. Under the Paris Climate Change Agreement signed in September 2016, the country has agreed to produce ~40% of electricity with non-fossil fuel sources by 2030 (from 26% today). Azure Power Global Limited (AZRE) 11

12 Figure 17: India's Growing Energy Demand Figure 18: A Heavily Fossil Fuel Dependent Market Today Energy consumption, TWh 1,400 1,200 1, ,075 1, ,114 1, , ,200 1, Per capita consumption, kwh/yr Nuclear 2% Diesel 0% Hydro 14% Gas 8% Wind 9% Solar 3% Other renewables 3% Coal 61% Energy consumption, TWh Per capita consumption kwh/yr 0 Installed capacity by type of technology Source: CEA, Credit Suisse estimates. Source: CEA, Credit Suisse estimates. Demand Elasticity from Declining Solar Module Prices and PPAs As evident from Figure 19, project sizes in the country have increased from a couple of MWs in 2011 to hundreds of MWs as project economics have improved due to declining system costs. Solar PPAs have declined by 46% in the past five years, while benchmark solar system prices have declined 75% in the same duration. Solar tariffs today are cheaper than other technologies for a new build project. Variable cost of energy produced from low-cost imported natural gas projects is ~INR 3-5/kWh, (assuming landed LNG prices of ~$5-6/MMBtu), while the all-in tariff for solar projects is already at INR 4/kWh in higher sunshine states today. Solar tariffs are also cheaper compared with recent coal tariffs signed at INR 4.9/kWh and wind tariffs of INR 4.93/kWh. Azure Power Global Limited (AZRE) 12

13 Figure 19: Solar PPAs Have Declined 46% Since 2011 Figure 20: Benchmark Solar Costs Have Also Declined 75% in the Past Five Years $ 0.20 bubble size MW 500 MW $ 4.50 $ 0.18 $ 4.00 India wt avg PPA bids, $/kwh - (USD/INR of 65) $ 0.16 $ 0.14 $ 0.12 $ 0.10 $ 0.08 $ 0.06 CERC benchmark PV cost /watt $ 3.50 $ 3.00 $ 2.50 $ 2.00 $ 1.50 $ 1.00 $ 0.50 $ - $ 3.84 $ 3.26 $ 1.90 $ 1.49 $ 1.15 $ 0.95 $ 0.79 $ 0.04 Aug-10 Dec-11 May-13 Sep-14 Jan Source: MNRE, Credit Suisse estimates. Source: CERC. Azure Power Global Limited (AZRE) 13

14 Company Overview Azure Power is an Indian solar project developer and IPP. The company develops, constructs, owns, and operates utility scale and distributed solar assets in India. The company was founded in 2008 by CEO Inderpreet Wadhwa, developed its first project in 2009, and has since won ~1 GW of projects under various auctions, representing a 10% win rate. As of July 2016, the company has installed 357 MW of projects that are now operational, representing a CAGR of 114% in the past four years. In addition, 390 MW projects are under construction, while 298 MW of projects are contracted but yet to start construction. Azure Power has 360 full-time employees, of which 37 are in project development, 135 in EPC, 72 in O&M, and 116 handling Management and Administrative tasks. While projects generally fetch 14% unlevered returns ( bps above current project debt terms), the company expects to achieve a strong 16.6% unlevered return on the projects in the backlog mainly due to the recent decline in module and system prices, which was not priced in when the contracts were bid. The company also benefits from inhouse EPC and higher leverage which results in equity IRRs of >40%. Figure 21: Azure Power's History SK Gupta joins as CFO Glen Minyard joins R&D team Azure founded by Inderpreet Wadhwa Rob Kelly joins board Installed 1st utility scale project Installed first rooftop project *IPO Announced 100 MW target in 3-5 years Cummulative MWs installed ,005 MWs installed Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q PPA - INR/kWh Total MW PPA - Wt avg, Rs/kWh (RHS) Figure 22: Typical Utility Scale Solar Bid Execution Azure Power Global Limited (AZRE) 14

15 Customers Azure Power signs PPA agreements with utilities (federal or state owned) and private entities (commercial contracts). Of the 1GW portfolio, 969 MWs are utility scale projects with a weighted average PPA of INR 5.98/kWh or $0.0892/kWh. The customer base includes NTPC, an AAA-rated federal government owned generator (292 MWs or 29% of contracted portfolio); SECI, an AA-rated federal government backed agency (198 MWs or 19.7% of portfolio); distribution companies owned by Indian states (482 MWs or 48% of portfolio); and commercial offtakers (33 MWs or 3.3% of total). The customer mix could tilt more toward central government entities in the future, as management is expected to give preference to bids with lower counterparty risk. We could see upside in commercial and rooftop mix as adoption increases due to lower costs, though higher upfront financing cost will remain a bottleneck. Suppliers Modules: Solar modules represent >50% of total system cost for Azure Power. The company's annual module requirements of ~650 MWs represent just 1% of global module demand. The company sources c-si modules from Asian suppliers like HQCL and other China-based tier-1 manufacturers. The company also sources thin-film CdTe modules from FSLR. Inverters: The company procures inverters from domestic manufacturers like Schneider Electric India and Bonfiglioli Renewable Power Conversion as well international supplier like SMA Solar. Purchase orders are generally priced at prevailing spot prices, giving the company the flexibility to take advantage of declining component prices. The company doesn't have any long-term fixed-priced contracts. AZRE's Current Operating Portfolio and Backlog As of June 2016, Azure Power has a total backlog of ~1GW of which 357 MWs of projects are operational, 390 MW are under construction, and 258 MW are committed and yet to be constructed. We forecast that the company will grow its operating portfolio to 1GW by 2017, 1.35 GW by 2018, and 1.5 GW by 2019, resulting in EBITDA of $105/$165/$186m in the three years, respectively. Azure Power Global Limited (AZRE) 15

16 Figure 23: Azure Power Project List Operational and Committed Project Names COD Capacity Tariff Offtaker Utility rating Credit rating PPA duration Calendar Qtr (MW) (Rs/kWh) Years Operational Punjab 1 Q NTPC Vidyut Vyapar Nigam AAA 25 Punjab 2.1 Q Punjab State Power Corporation Limited A+ BB+ 25 Punjab 2.2 Q Punjab State Power Corporation Limited A+ BB+ 25 Punjab 2.3 Q Punjab State Power Corporation Limited A+ BB+ 25 Punjab 3.1 Q Punjab State Power Corporation Limited A+ BB+ 25 Punjab 3.2 Q Punjab State Power Corporation Limited A+ BB+ 25 Gujarat 1.1 Q Gujarat Urja Vikas Nigam Limited A+ 25 Gujarat 1.2 Q Gujarat Urja Vikas Nigam Limited A+ 25 Rajasthan 1 Q NTPC Vidyut Vyapar Nigam Limited AAA 25 Rajasthan 2.1 Q NTPC Vidyut Vyapar Nigam Limited AAA 25 Rajasthan 2.2 Q NTPC Vidyut Vyapar Nigam Limited AAA 25 Rajasthan 3.1 Q Solar Energy Corporation of India AA 25 Rajasthan 3.2 Q Solar Energy Corporation of India AA 25 Rajasthan 3.3 Q Solar Energy Corporation of India AA 25 Rajasthan 4 Q Solar Energy Corporation of India AA 25 Karnataka 1 Q Bangalore Electricity Supply Company Limited B+ 25 Karnataka 2 Q Bangalore Electricity Supply Company Limited B+ 25 Uttar Pradesh 1 Q Uttar Pradesh Power Corporation Limited C+ 12 Chhattisgarh 1.1 Q Chhattisgarh State Power Distribution Company Limited B+ 25 Chhattisgarh 1.2 Q Chhattisgarh State Power Distribution Company Limited B+ 25 Chhattisgarh 1.3 Q Chhattisgarh State Power Distribution Company Limited B+ 25 Delhi 1.1 Q Solar Energy Corporation of India AA 25 Andhra Pradesh 1(4) Q Southern Power Distribution Company of Andhra Pradesh B+ 25 Bihar 1 Q North Bihar Power Distribution Company Limited and Sou B+ 25 Operational Capacity Under Construction Maharashtra 1.1 Q Ordinance Factory Bhandara 25 Maharashtra 1.2 Q Ordinance Factory Ambajhari 25 Delhi 1.2 Q Solar Energy Corporation of India AA 25 Karnataka 3.1 Q Chamundeshwari Electricity Supply Corporation Limited B 25 Karnataka 3.2 Q Hubli Electricity Supply Company Limited C+ 25 Karnataka 3.3 Q Gulbarga Electricity Supply Company Limited B 25 Punjab 4.1 Q Punjab State Power Corporation Limited A+ BB+ 25 Punjab 4.2 Q Punjab State Power Corporation Limited A+ BB+ 25 Punjab 4.3 Q Punjab State Power Corporation Limited A+ BB+ 25 Andhra Pradesh 2 Q NTPC VidyutVyapar Nigam Limited AAA 25 Capacity Under Construction Committed Uttar Pradesh 2 Q NTPC Vidyut Vyapar Nigam Limited AAA 25 Telangana 1(5) Q NTPC Limited AAA 25 Andhra Pradesh 3(5) T Q4 2017) Solar Energy Corporation of India AA 25 Uttar Pradesh 3 T Q4 2017) Solar Energy Corporation of India AA 25 Capacity Committed Commercial Rooftop Commissioned Gujarat Rooftops Torrent Power Limited 25 DLF (total) DLF Limited 25 Uttar Pradesh Rooftop 1 Q Indosolar Limited 25 Delhi Rooftop 1 Q Delhi Gymkhana Club Limited 25 Delhi Rooftop 2 Q Taj Sats Air Catering Limited 20 Delhi Rooftop 3 Q Indraprastha Power Generation Co. Limited 25 Punjab Rooftop 1 Q JCBL Limited 25 Punjab Rooftop 2(7) Q Punjab State Power Corporation Limited A+ BB+ 25 Operational rooftop Under Construction Oberoi (total) Q Oberoi Resorts/EIH Limited 15 Delhi Rooftop 3 Q Indraprastha Power Generation Co. Limited 25 Under Construction rooftop 1.39 Committed Tamil Nadu Rooftop 1 Q Pennar Industries Limited 20 Delhi Rooftop 4 Q Delhi Metro Rail Corporation 25 Odisha Rooftop 1 Q Green Energy Development Corporation of Odisha 25 Committed rooftop 18.2 Total Capacity (all projects) 1,005.2 Azure Power Global Limited (AZRE) 16

17 Differentiated Strategy and Proven Track Record In an increasingly competitive project development business, Azure Power stands out among competition, as it has (1) a proven track record in the country with >10% win rate in ~8.5 GW projects tendered since 2012; (2) a different development strategy with in-house EPC resulting in 12-15% cost savings; (3) disciplined selective bidding to reduce counterparty risk and maintain project returns, as 49% of the current portfolio is contracted with central government-backed entities NTPC and SECI (AAA/AA rated); and (4) investments from developments banks (IFC, German bank DEG, French bank PROPARCO) and venture capital (Helion Ventures, Foundation Capital) attesting to quality of assets and belief in management. Figure 24: Win Rate of ~10% in Prior Auctions MWs % % 8% % 12% 10% 8% 6% 4% 2% 0% Win rate, % Figure 25: Mix of Projects by Counterparties Counterparty MWs as % of total Credit rating NTPC % AAA Punjab state % BB+ SECI % AA Karnataka state % BBB+/B- AP state % BB Chhattisgarh state % A Gujarat state % A+ UP state % Bihar state % Ordinance factory 7 0.7% Rooftop % Total 1,005 MWs won in prior auctions Win rate in tenders participated Growth Visibility The company has built 357 MWs to date and contracted an additional 649 MWs, giving visibility of ~1 GW projects operational by Given the company's proven track record and local expertise, we expect the company could win additional awards to take total operating portfolio to 1.35 GW by 2018 and 1.5 GW by We expect the organic growth would stem from existing cash reserves and cash flow from the operating portfolio. The government's 100 GW target by 2022 implies additional 91 GW of bids would be issued until 2022 (run rate of 15+ GW/yr). In the very near term, we expect 2.4 GW of bidding activity this year. Azure Power Global Limited (AZRE) 17

18 Figure 26: Growth Expectations MWs 1,600 1,400 1,200 1, ,495 1,355 1, CY16E CY17E CY18E CY19E GWh 3,000 2,500 2,000 1,500 1, ,549 2,214 1, CY16E CY17E CY18E CY19E $m $ 200 $ 180 $ 160 $ 140 $ 120 $ 100 $ 80 $ 60 $ 40 $ 20 $ - $ 186 $ 165 $ 105 $ 40 CY16E CY17E CY18E CY19E MW Operating Energy generated, GWh EBITDA Competition Indian solar auctions are highly competitive, and the Top 20 project developers in the country represent 81% of the total bids in the country. While Azure Power's backlog of ~1 GW represents 6% of total bids announced in the country to date, other competitors in the top 20 include conglomerates (24% of total bids), IPP and infrastructure developers (11.5% of total), and other renewable developers (7% of total bids), though pure-play solar developers have won the most projects (36% of total bids), The market has seen some consolidation as bidders with lower returns exit the market. Tata power acquired ~1 GW of Welspun energy projects in June 2016 for an EV of $1.21/w, and the media suggests that Greenko will acquire SunEdison's 390 MW operating assets for $315m assets and an additional 800 MW of development pipeline. Figure 27: Competitive Market Contracted projects as of Aug 2016 Operational Under Development Contracted as % of total Adani 688 1,292 1,980 11% ACME 565 1,085 1,650 9% SunEdison 440 1,176 1,616 9% ReNew Power 231 1,358 1,589 9% Tata Power (incl 1 GW of Welspun Energy) ,278 7% Azure ,055 6% NTPC % Hero Future Energies % Suzlon % Hindustan Power % Mytrah % Solairedirect % SBG Cleantech (Softbank) % SkyPower % Shapporji Pallonji % Mahindra % RattanIndia % First Solar % Essel % OPG Power % Subtotal of top-20 4,141 10,395 14,535 81% Total bids 18,024 Source: Company data, Mercom, Credit Suisse estimates. Azure Power Global Limited (AZRE) 18

19 Model Drivers Attractive Project Returns Despite Low PPAs We calculate unlevered returns for projects in the backlog of 16.6%, which is primarily driven by a system cost of $0.77/w, average PPA of INR 5.40/kWh ($0.08/kWh) flat lined for 25 years, 2000 hrs of annual sunshine (22% of capacity factor), 0.6%/yr panel degradation, 3% O&M costs with a 5.7% annual inflation escalator, no renewal value, straight-line depreciation over the 25 years, a tax rate of 34% through the life of project but for a 21% minimum alternative tax due to tax holiday from year six to year 15, and inverter replacements every 11th year. We calculate equity project returns of >40%, assuming 75% of project leverage (calculated on system cost and including a 12% in-house EPC margin), cost of debt of 10%, and debt amortization over 15 years. The primary driver of higher returns is the sharp drop in module prices this year (down 29% YTD or down $0.15/w in spot market). We calculate that a ~$0.10/w system cost reduction has enabled the company to capture 2% points above threshold unlevered IRRs. In addition, the company also benefits from in-house EPC, which saves >$0.10/w versus competitors, and has a disciplined approach to not be the lowest PPA bidder in auctions. Figure 28: Attractive Economics for Projects in the Backlog Assumptions System size MW 50 USD/INR System cost, $/w $0.87 $/w PPA 5.40 INR/kWh Debt/capital 75.0% EPC margin captured (as % of cos 12.0% PPA escalator 0.0% Cost of Debt 10.0% Net system cost, $/w $ 0.77 $/w VGF - INR/watt Debt duration 15 Net system cost, INR/w 52 INR/watt O&M 0.3 INR/watt/yr System life 25 years O&M escalator 5.7% EPC margin (pre-tax) 18.2% panel derate 0.6% PPA duration 25 years Inverter cost - 11th year 4.1 INR/watt Residual discount 100% Cost of equity for NPV 12% Inverter cost - 21st year 3.4 INR/watt D&A schedule 25 year straight line Sunhours 2,200 hrs/yr Tax rate 34% curtailment 0.0% DC/AC efficiency 90.0% MAT rate 21% Net utilization/plf 22.6% Tax holiday duration, y 10 Unlevered economics Energy generated, GWh Operating cash flow Capex, INR mm (2,582.26) FCF - unlevered (2,204) Unlevered IRR, contracted 16.6% Unlevered PPA PV, $/w $ 0.87 Levered economics FCFE (295) Levered IRR, contracted 41% Equity NPV (INR mm) 922 Equity NPV ($/w) $ 0.27 Azure Power Global Limited (AZRE) 19

20 Project Costs Benefits from Lower Spot Prices and In-House EPC System cost have declined from $3.50/w in 2010 to $0.59/w by YE16, and management has managed to keep it below competition and benchmark prices due to an in-house EPC. We forecast the company will achieve a system cost of $0.72/w in CY17, $0.66/w in CY18, and $0.60/w in CY19. Figure 29: AZRE's System Cost Has Declined at a 20% CAGR Since 2010 Figure 30:... and Is Below CERC's Benchmark Capital Cost Assumptions $ 4.00 $ 3.50 $ 3.00 $ 2.50 $ 2.00 $ 1.50 $ 1.00 $ $ 4.50 declined at 20% compounded rate $ 4.00 $ 3.50 $ CERC benchmark PV cost /watt $ 3.00 $ 2.50 $ 2.00 $ 1.50 $ 1.00 $ 3.26 $ 1.90 $ 1.49 $ 1.15 $ - $ 0.50 $ 0.95 $ 0.79 FY10A FY11A FY12A FY13A FY14A FY15A FY16A FY17E FY18E $ - Module cost $/w BOS cost $/w Source: Company data, Credit Suisse estimates, CERC. Deliberately Trying to Not Be the Lowest Bidder Comparing Azure Power's project PPAs with the lowest competing bids, we find that Azure Power's bids have been on an average INR 0.32/kWh above the lowest bids (or $0.004/kWh). Based on our single project model, we calculate that every INR 0.10/kWh higher PPA increases unlevered project returns by ~40bps. Figure 31: Azure Power Bid Premium over Lowest Bids Deliberate Attempt to Not Be the Lowest Bidder 16.0% 14.0% premium over lower bidder, % 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Punjab 2.1 Punjab 2.2 Punjab 2.3 Punjab 3.1 Punjab 3.2 Gujarat 1.1 Gujarat 1.2 Rajasthan 1 Rajasthan 2.1 Rajasthan 2.2 Rajasthan 3.1 Rajasthan 3.2 Rajasthan 3.3 Rajasthan 4 Karnataka 1 Karnataka 2 Uttar Pradesh 1 Chhattisgarh 1.1 Chhattisgarh 1.2 Chhattisgarh 1.3 Delhi 1.1 Andhra Pradesh 1 Bihar 1 Maharashtra 1.1 Maharashtra 1.2 Delhi 1.2 Karnataka 3.1 Karnataka 3.2 Karnataka 3.3 Punjab 4.1 Punjab 4.2 Punjab 4.3 Andhra Pradesh 2 Uttar Pradesh 2 Telangana 1 Andhra Pradesh 3 Source: Company data, MNRE, Credit Suisse estimates. Azure Power Global Limited (AZRE) 20

21 Financing Cost of Debt Continues to Decline Azure Power's projects are 80-85% levered, and hence cost of debt becomes an important driver in equity returns. We calculate that a 100 bps decline in cost of debt results in ~400 bps higher equity return for projects in the backlog. Project debt is predominantly sourced from domestic banks, is INR denominated, and is priced a spread on RBI's base rate. While weighted average interest rate is ~10% today, we expect it will decline in the future due to (1) a general declining trend in RBI's base rate (down 50 bps YTD and down 150 bps since early 2015) and (2) rate compression as lenders get more comfortable with 25-yr fixed cash flows backed by state-owned enterprises and with no commodity fuel price risk; we calculate rate spread of ~4-5% for projects constructed compared with ~3.5% for new term sheets and ~1% spread for NTPC's green bond issued in September 2016 to fund renewable assets. Figure 32: RBI's Base Rate (Repo Rate) Has Declined 50 bps YTD and 150bps Since Early % Figure 33: Rate Spread Compression Chart 6.0% 8.00% 5.0% RBI REPO rate 7.50% 7.00% 4.0% 3.0% 2.0% quarterly rate spread progression from 2014 to 2016 latest term sheet 6.50% 1.0% NTPC green bond 6.00% Mar-13 Mar-14 Mar-15 Mar % Azure Power Global Limited (AZRE) 21

22 Figure 34: Unlevered Project Economics Sensitivity Unlevered project IRR sensitivity to PPA and cash cost Capex - cash cost/watt 12.9% $ 0.60 $ 0.65 $ 0.70 $ 0.75 $ 0.80 PPA % 13.9% 12.7% 11.6% 10.6% INR/kwh % 15.0% 13.7% 12.6% 11.5% % 16.2% 14.8% 13.5% 12.5% % 17.3% 15.8% 14.5% 13.4% % 18.4% 16.8% 15.5% 14.3% % 19.6% 17.9% 16.4% 15.2% % 20.7% 18.9% 17.4% 16.1% *Note - doesn't include VGF, assumes EPC margin of 12% of cost Unlevered project IRR sensitivity to PPA and VGF VGF INR/watt 12.9% PPA % 12.5% 12.7% 12.9% 13.1% INR/kwh % 13.5% 13.7% 13.9% 14.2% % 14.5% 14.7% 15.0% 15.2% % 15.5% 15.8% 16.0% 16.3% % 16.5% 16.8% 17.0% 17.3% % 17.5% 17.8% 18.1% 18.3% % 18.5% 18.8% 19.1% 19.4% *Note - assumes system cost of $0.87/w, EPC margin of 12% of cost Figure 35: Current Benchmark Tariff with No VGF Requires Project Cash Cost of $0.65/w or Lower Unlevered project IRR sensitivity to VGF and cash cost Capex - cash cost/watt 12.9% $ 0.50 $ 0.55 $ 0.60 $ 0.65 $ 0.70 $ 0.75 VGF $ % 19.4% 17.5% 15.8% 14.5% 13.3% $/w and $ % 19.8% 17.8% 16.1% 14.7% 13.5% INR/w $ % 20.2% 18.1% 16.4% 14.9% 13.7% $ % 20.6% 18.5% 16.7% 15.2% 13.9% $ % 21.0% 18.8% 17.0% 15.5% 14.1% $ % 21.4% 19.2% 17.3% 15.7% 14.4% $ % 21.9% 19.5% 17.6% 16.0% 14.6% $ % 22.3% 19.9% 17.9% 16.3% 14.8% $ % 22.8% 20.3% 18.2% 16.5% 15.1% $ % 23.2% 20.7% 18.6% 16.8% 15.3% $ % 23.7% 21.1% 18.9% 17.1% 15.6% VGF $/w VGF INR/w *Assumes no EPC margin, PPA of 4.43INR/kWh Azure Power Global Limited (AZRE) 22

23 Earnings Outlook and Valuation Key Metrics The company focuses on six key metrics: (1) Energy generated (in GWh), representing revenue earning electricity produced in the period; (2) the corresponding utilization or plant load factor (PLF); (3) revenues in the period; (4) average cash cost of system installed in the period reported in $/w; (5) MW operating exiting the period; and (6) MW committed, which represents project bids won/contracted and either in development or yet to be constructed. Seasonality We would like to note that Azure Power's revenues are seasonal and much stronger in CQ2/CQ3 quarters (ending June and September) due to higher sunshine in those quarters versus CQ1/CQ4. FY16 Review (Ending March 2016) In FY 2016, the company reported total energy generation of 365 GWh (up 184% y/y) and revenues of $39.6m (up 133% y/y). The growth in energy generated and revenues was driven by 230 MW of projects installed in the period (340 MWs operating exiting the period), mainly because Rajasthan 3.1, 3.2, and 3.3; Chhattisgarh 1; Rajasthan 4; and Punjab 3 projects came online in the year. Average PPA tariff for projects operating was $0.09/kWh (down 12% y/y). Total committed projects increased to 625 MWs (from 374 MWs in FY15), mainly because the company won 481 MWs of tenders in the period. PLF was 18.1% in the year and was below 18.7% in FY15 and average PLF of ~20% for projects in the country due to project ramp up in the year. The company reported adjusted EBITDA of $26.6m in the period (up 186% y/y). C2Q16 Review (Quarter Ending June 2016) In the June-ending quarter, the company reported 147 GWh of energy generated, total revenues of $15.1m, and implied average PPA tariff of $0.09/kWh. MWs operating increased by 6 MWs to 346 MWs in the quarter, while MWs committed decreased by a similar magnitude to 619 MWs. No new projects were won in the quarter, though the company did win 90 MW of projects in July, which brings the total portfolio to 1050 MWs. PLF of 19.7% was higher in the quarter due to seasonality. The company reported Adj EBITDA of $12m in the period, while we calculate run rate annualized EBITDA of $47m exiting the period. FY 2017 and 2018 Earnings Outlook In FY 2017 (ending March 2017), we estimate energy generated to grow to 664 GWh (up 82% y/y), with a PLF of 18.9% and total revenues of $68m (up 71% y/y). We estimate total MWs operational will increase to 750 MWs (up 121% y/y). We estimate annual EBITDA of $51m in the period and a run rate annualized EBITDA of $114m exiting the March 2017 quarter. We estimate diluted EPS of ($0.46). In FY 2018 (ending March 2018), we estimate energy generated to grow to 1,559 GWh (up 135% y/y), with a PLF of 20.1% and total revenues of $138m (up 103% y/y). We forecast total operational portfolio to grow to 1.2 GWs. We estimate annual EBITDA of 120m in the period and a run rate EBITDA of $160m exiting the March 2018 quarter. We estimate diluted EPS of $0.64 (up 240% y/y). CY 2017 and 2018 Earnings Outlook In CY 2017 (ending December), we estimate energy generated to grow to 1,336 GWh (up 149% y/y), with a PLF of 20% and total revenues of $122m. Total projects operational will increase to 1,025 MWs. We estimate annual EBITDA of $105m in the period and a run rate EBITDA of $138m exiting We estimate diluted EPS of $0.49. Azure Power Global Limited (AZRE) 23