Claro Energy Limited

Brickwork Ratings assigns the long-term and short-term ratings for the Bank Loan Facilities of Rs. 77.59 Crs. of Claro Energy Limited.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	47.59	Long Term	BWR BBB /Stable Assignment
Non Fund Based	30.00	Short Term	BWR A3 Assignment
Grand Total	77.59	(Rupees Seventy Seven Crores and Fifty Nine lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Ratings has assigned the long-term rating and short-term rating of BWR BBB (Stable) and BWR A3 for the bank loan facilities of Rs. 77.59 Crore of Claro Energy Limited.

For assigning the ratings, BWR has relied on the audited financials of the company up to FY25, management-certified provisional financials for FY26, projected financials for FY27-FY28, clarification provided by the company, and publicly available information.

Brickwork Ratings (BWR) has assigned the ratings of Claro Energy Limited, considering factors such as the Extensive experience of the promoters, a healthy order book providing revenue visibility, operating efficiency, a healthy financial risk profile, a strong distribution network, and improving geographical diversity.

The ratings are, however, constrained by high working capital intensity, highlighted by an elongated receivable cycle of 107 days in FY26 due to high sales in the last quarter. A significant portion of the outstanding receivable pertains to sales made from February to March 2026. Execution timeline and cash flows are supported by the company's established operating framework and government-backed policy.

The rating outlook is "Stable," reflecting BWR's expectation that Claro Energy Limited will sustain its business risk profile over the medium term. This outlook suggests a minimal probability of rating revision within the foreseeable future. Upward revision to "Positive" may be considered should revenue and profitability demonstrate sustained growth, while a "Negative" revision could be triggered by a deterioration in the financial risk profile.

KEY RATING DRIVERS

Credit Strengths:

• Extensive experience of the promoters :

  Claro Energy Limited is guided by highly educated founders (alumni of IIT Bombay, MIT, and Kellogg School of Management) possessing over 12 to 18 years of core industry experience in clean technology and financial planning. 

  Under their leadership, the entity has pioneered rural solar pumping technology and achieved significant institutional recognition, including winning the Asian Entrepreneurship Award in Tokyo. The management's deep technical and commercial expertise provides a strong strategic anchor for the company's growth plans.

• Healthy order book providing revenue visibility and operating efficiency :

  The company has demonstrated rapid top-line growth, with its Total Operating Income more than doubling from Rs. 170.10 Crs in FY25 to Rs. 370.44 Crs in provisional FY26 (a year-on-year increase of 117.78%). 

  While the revenue scale remains modest relative to long-term targets, medium-term revenue stability is strongly underpinned by a healthy outstanding order book valued at Rs. 908.05 Crs as of March 2026. Backed heavily by government-subsidized frameworks like the PM-KUSUM and PM Surya Ghar Yojana schemes, this order book provides high revenue visibility over the coming fiscal periods.

  Claro Energy exhibits robust operational efficiency driven by its asset-light model, which circumvents the heavy overheads of captive manufacturing facilities. Operating profitability (EBITDA) surged from Rs. 19.19 Crs in FY25 to Rs. 50.61 Crs in provisional FY26 results due to operational scaling. Benefiting from economies of scale, the company's operating margin expanded from 11.28% in FY25 to 13.66% in FY26, while its Net Profit Margin (PAT Margin) simultaneously improved from 8.60% to 9.83% over the same period.

• Healthy financial risk profile :

  Claro Energy maintains a very healthy financial risk profile characterized by a conservative capital structure and superior debt-servicing capabilities. Supported by strong profit retention and successful equity infusions (Rs. 18 Crs in 2024 and Rs. 35 Crs in 2025), Tangible Net Worth strengthened from Rs. 53.77 Crs in FY25 to Rs. 125.30 Crs in provisional FY26. 

  This capital accretion helped lower leverage, reducing the Total Debt/TNW ratio from 0.33x in FY25 to 0.21x in FY26. Concurrently, coverage metrics remain exceptionally strong, with the Interest Service Coverage Ratio (ISCR) rising from 11.65x in FY25 to 20.68x in FY26, indicating low default risk.

• Strong distribution network and improving geographical diversity :

  The company has built a strong execution footprint, delivering more than 1,04,000 solar projects via a distribution network of over 204 localized installation partners across India. Simultaneously, Claro Energy has successfully mitigated regional concentration risks. In FY24, the business was overwhelmingly reliant on Haryana (81.4% of revenue), but by FY26, Haryana's share dropped to a minor 2.7%. Maharashtra has emerged as a healthy, diversified core market at 53.8% of domestic revenue in FY26, alongside an expanded footprint into profitable state domains like Telangana (18.0%) and Andhra Pradesh (13.1%).

Credit Risks:

• Structural Reliance on Government Subsidies and Regulatory Frameworks :

  Claro Energy's operational framework is intrinsically anchored to a B2G2C subsidy-execution funnel, where government-aligned programs constitute the entirety of its business volume. Key verticals are fundamentally incentivized by central and state mandates, specifically the PM-KUSUM initiative for solar pumping and the PM Surya Ghar Yojana for rooftop infrastructure. This profound policy dependency exposes the entity to significant regulatory risks, including bureaucratic disbursement lags, evolving political priorities, or amendments to DISCOM-governed net-metering protocols.

• Working Capital Requirements and Operational Project Risks :

  Claro Energy Limited faces high working capital requirements due to substantial upfront engineering and procurement expenses.

  Since final payments are contingent upon public-sector subsidy disbursement mechanisms, administrative inefficiencies may result in delayed cash realisation, as reflected by the receivable period of 107 days in FY26 due to high sales in the last quarter. A significant portion of the outstanding receivable pertains to sales made from February to March 2026. Execution timeline and cash flows are supported by the company's established operating framework and government-backed policy. 

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has considered the standalone Audited Financial results up to FY25, management-certified provisional financials for FY26, and projections for FY27 and FY28 of Claro Energy Limited, along with the information/clarification provided by the entity. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Upward:

• Significant improvement in scale of operations with TOI of over Rs. 850 crores, along with EBIDTA margin sustaining over 16% for FY27, leading to healthy cash accruals, while maintaining the financial risk profile.
• The receivable cycle is sustaining below 110 days.

Downward 

• An increase in the collection period leads to a deterioration in the financial risk profile, profitability margins, or a higher-than-envisioned reliance on external debt.
• A decline in revenue or a deterioration in operating profitability, reflecting weakening business fundamentals, or a reduction in the net profit margin below 7%, could lead to consideration of a rating downgrade.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity characterized by cash accruals of Rs 36.18 Crs in FY 26 (prov), vis-a-vis minimal repayment obligations in FY 26 (prov), expected cash accruals of Rs 80.93 Crs against CPLTD of Rs 0.628  Crs in FY 27, and a moderate cash balance of Rs 4.05 Crs in FY 26 (prov). The company's current ratio stood at 2.21x in FY 25 and 2.20x in FY 26, indicating moderate liquidity. The liquidity position remains supported by promoter-infused unsecured loans on a need basis. The cash credit average utilisation has been 38.84% at ICICI Bank from April 2025 to Feb 2026, and 85.24% at SBI Bank from November 2025 to May 2026. During the review period, the company migrated its banking arrangements from ICICI Bank to the State Bank of India (SBI), resulting in an enhanced credit sanction limit from ₹10 Crores to ₹13 Crores. The overall average utilisation is a heavy 62% of the non-fund-based limit of the bank guarantee.

ABOUT THE ENTITY

Claro Energy Limited is an unlisted public company incorporated on 15 January 2011, founded by Soumitra Mishra, Gaurav Kumar and Kartik Wahi. It operates as a solar-powered water pumping solutions. Claro Energy operates in different states across the country and has installed solar pumps for drinking water, irrigation, purification and aquaculture applications. At present, Claro is growing annually with strong performance and it is planning to start pay-per-use business models in Bihar and Uttar Pradesh soon. Claro Energy has 38 employees as of Aug 25. Backed by IIT engineers, Ivy-League MBAs, and decorated veterans, Claro Energy has delivered 60,000+ solar projects across 18 states since 2011.

ESG Profile

Environmental (E)

Carbon Mitigation: Offsets 274 million kg of GHG emissions annually.

Clean Energy Footprint: Deployed over 485 MW of solar capacity across 18 states, encompassing 1,04,000+ solar projects (including over 96,285 solar pump installations).

Resource Management: Brought 198,000 acres of farmland under solar irrigation, displacing expensive diesel fuel and reducing pressure on the agricultural power grid.

Future Transition: Moving toward an integrated ecosystem with advanced Energy Storage Systems (ESS) and domestic, in-house solar component manufacturing.

Social (S):

Economic Empowerment: Served 135,000+ farmers, generating an average 120% increase in annual farmer income and a ~35% increase in crop yields via reliable daytime watering.

Cost Savings: Switching to PM-KUSUM solar pumps saves individual farmers ₹0.8–1.4 million in lifetime operational costs versus grid or diesel alternatives.

Inclusion & Community: Directly empowered 14,785 women through solar initiatives and solarised rural Anganwadis (childcare centres) to safeguard public health and education during power cuts.

Governance (G)

Regulatory Alignment: Mandates strict compliance with central guidelines like the Approved List of Models and Manufacturers (ALMM) and complex state-level net-metering policies.

High Entry Barriers: Maintain robust financial eligibility, fulfilling strict state tender requirements requiring a net worth and minimum turnover of up to ₹1 crore per MW.

Risk & Compliance Moat: Utilizes a transparent, 8-step execution and revenue realisation funnel tied to government-vetted citizen portals and geo-tagged verification.

Management Pedigree: Led by an experienced board of electrical engineers, procurement experts, and financial strategists trained at top institutions (Stanford Seed, MIT, Northwestern Kellogg, and ICAI).

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Audited - Annual)	FY 25 - 26 (Provisional - Annual)
Operating Revenue	Rs.Crs.	37.73	170.10	370.44
EBITDA	Rs.Crs.	1.22	19.19	50.61
PAT	Rs.Crs.	1.03	14.62	36.41
Tangible Net Worth	Rs.Crs.	20.65	53.77	125.30
Total Debt / Tangible Net Worth	Times	0.33	0.33	0.21
Current Ratio	Times	1.79	2.21	2.20

KEY COVENANTS OF THE FACILITY RATED

BWR has considered the standard key coventas as stipulated in the Bank Sanction Letter.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating  (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	47.59	BWR BBB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	30.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		77.59	(Rupees Seventy Seven Crores and Fifty Nine lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Engineering Procurement and Construction (EPC) Companies
• Approach to Financial Ratios
• Short Term Debt

Analytical Contacts
Padia Shivani Ratings Analyst shivani.p@brickworkratings.com	Mukesh Kumar Verma mukesh.verma@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	State Bank Of India (SBI)	Working Capital Term Loan - Sanctioned	2.59	_	2.59	Simple##
2	State Bank Of India (SBI)	Cash Credit - Sanctioned	13.00	_	13.00	Simple##
3	State Bank Of India (SBI)	Cash Credit - Proposed	32.00	_	32.00	Simple##
4	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	15.00	15.00	Simple##
5	State Bank Of India (SBI)	Bank Guarantee - Proposed	_	15.00	15.00	Simple##
Total			47.59	30.00	77.59
TOTAL (Rupees Seventy Seven Crores and Fifty Nine lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.