Azure Power Global Limited (AZRE) Q2 2022 Earnings Call Transcript

Azure Power Global Limited (AZRE 6.12%)
Q2 2022 Earnings Call
Dec 13, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, good day, and welcome to Azure Power's second quarter fiscal 2022 earnings conference call. [Operator instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr.

Vikas Bansal, head, investor relations at Azure Power. Thank you, and over to you, Mr. Bansal.

Vikas Bansal -- Investor Relations

Thank you. Good morning, everyone, and thank you for joining us today. On Friday evening, the company issued a press release announcing results for the second quarter of fiscal 2022 ended September 30, 2021. A copy of the press release and the presentation are available on the investors section of Azure Power's website at azurepower.com.

With me today are Ranjit Gupta, CEO; Murali Subramanian, COO; and Pawan Kumar Agrawal, CFO. Ranjit will start the call by going through key highlights and business updates. Murali will then follow up with an update on our projects under construction, operational innovation, and an industry update. Pawan will then provide an update on the quarter, and then we will wrap up the call with Ranjit providing quarter two fiscal year -- quarter three fiscal year 2022 and fiscal year 2022 guidance.

After this, we will open up the call for questions. Please note, our safe harbor statements are contained within our press release, presentation materials and available on our website. These statements are important and integral to all our remarks. There are risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements.

So we encourage you to review the press release we furnished in our Form 6-K and presentation on our website for a more complete description. Also contained in our press release, presentation materials, and annual report are certain non-GAAP measures that we reconcile to the most comparable GAAP measures, and these reconciliations are also available on our website, in the press release, presentation materials, and annual report. It is now my pleasure to hand it over to Ranjit.

Ranjit Gupta -- Chief Executive Officer and Director

Thank you, Vikas, and a very good morning, everyone. I'm happy to report that we have steadily transitioned some work from home to our office desks this quarter, while following COVID-appropriate protocols. Worldwide, we do see disruptions continue due to COVID and its variance, but hope that severity remains contained. On the ESG front, we have taken a number of significant steps this quarter toward improving our ESC standards.

We have been focusing on reducing our Scope 1 emissions and have adopted an electric vehicle policy. As part of this policy, any new vehicle that the company purchases going forward for company used will only be electric vehicle. Further, we have adopted our social accountability policy to enshrine socially acceptable and responsible practices in our workplace. Through our social accountability policy, we have committed compliance to SA 8000 standard requirement for ourselves and our vendors.

We have already conducted internal audits to ascertain compliance to SA 8000 principles, and are planning external audit certification in the month of January 2022. SA 8000 certification will reaffirm our commitment to maintain labor and working conditions as per international standards. We continue to strive hard to improve our ESG performance and keep demonstrating our leadership. Beyond ESG, my most important business update is signing of 600 megawatts of power purchase agreements from the SECI manufacturing capacity of four gigawatts.

We further understand that SECI has signed 7,000 megawatts of PSAs, power sale agreements, with the state of Andhra Pradesh, which will translate to another 2,333 megawatts of PPAs getting signed for Azure very soon. These are happening in significant developments post elongated period of dates on these projects. Tariffs of INR 2.54 for the 600-megawatt PPAs and INR 2.42 for PPAs to be signed under Andhra Pradesh PSAs are significantly value accretive. We expect returns comfortably above the upper end of our threshold target.

Given the work we've already done with land acquisition and securing transformation connectivity, we will strive to complete these projects before time. Apart from the SECI manufacturing PPA, we received Letter of Awards for 120-megawatt wind project and 150-megawatt wind-solar hybrid project with SECI subsequent to quarter end. These are first steps beyond solar for Azure, and we firmly believe that as the industry moves toward providing dispatchable renewable energy to the grid, wind, and storage will be two important technology additions in our portfolio. We have already developed significant organizational capabilities for these in-house, and are looking forward to implementation on the ground with our teams already working on developing large wind sites across the country.

Further, we are actively developing our capabilities in new operating areas for renewable energy, be it energy transition for corporates or new technologies like green hydrogen. The government has already announced the National Hydrogen Mission and proposed policies related to green hydrogen adoption. I firmly believe that energy storage and green hydrogen are going to change India's energy consumption scenario quite dramatically within this decade. Azure aims to be at the forefront of these new businesses, and has taken concrete steps in this direction.

On operational front, while Murali will talk in detail, I'm extremely proud of our procurement and construction teams given the challenges this year. from COVID disruptions in the first quarter followed by volatile supplies and module pricing more recently. We had 31% more megawatts operating in quarter two this year than we did at the same time last year. There has been a 28% year-on-year increase in EBITDA from our operating assets and a 32% increase in cash flow to equity from operating assets during the quarter.

We continue to see steady improvement in these metrics owing to our continuous efforts at project site. I also commend the stellar work done by the capital team in raising the lowest cost green bond and refinancing older projects, driving down our cost of debt by almost 200 basis points in these projects. The government continues to support the renewable energy sector in India. India recently announced 150 gigawatts of installed renewable energy capacity in the country, including hydro.

Honorable prime minister in his address during COP26 meeting in Glasgow, provided five resolves that India has undertaken to contribute toward global fight against climate change. These include: number one, increased non-fossil energy capacity target of 500 gigawatts by 2030; number two, to meet 50% of the country's energy requirement through renewable energy by 2030; number three, to reduce economy's carbon intensity down to 45% by 2030; number four, reduce 1 billion tonnes of carbon emissions from the total projected emissions by 2030; and number five, achieve net zero emissions by 2070. These announcements, along with India's goal of self-reliance in energy by 2047, i.e., 100th year of Indian independence, clearly demonstrate the vast growth opportunity this sector presents for Azure. We are looking at our addressable market size of approximately 40 gigawatts per annum going into this decade, considering India's target of 500 gigawatts by 2030.

Investments in new renewable energy generating assets will top USD 250 billion just within this decade. In consonance with this ambitious target, the government has recently taken a series of very significant reform measures to strengthen operating framework and boost investor confidence in the sector. After the landmark judgment from the Appellate Tribunal for Electricity allowing compensatory tariff for solar power curtailments in the state of Tamil Nadu, Ministry of Power recently brought a notification reinforcing Must Run status for RE power plants and allowing developers to sell unscheduled power due to curtailment because of technical constraints, directly on exchanges. It also specified rules to simplify the process of recovery of costs incurred by developers due to change in law post project bidding.

The rules provide for predefined formula to determine the onetime charges or impact on tariffs due to change in law and lays down fixed-time period for approval. These are big developments that are aptly timed and addresses issues that have been in discussions lately. Government is also actively working on enhancing transmission capacity in the country. Ministry of Power recently notified rooms that paved the way for overhauling of transmission system planning and provides for easier access to transmission network across the country, termed as General Network Access in the ISTS system.

This provides flexibility to the states as well as the generating stations to acquire, hold and transfer transmission capacity as per their requirements. In addition, net zero and RE100 announcements by corporates is driving a resurgence in interest in energy transition through round-the-clock RE contracts. On our organizational update, as you all know, around the end of this quarter, Mr. Alan Rosling joined our board as the new chairman and replaced Mr.

Barney Rush, who served as director on the board for six years, including last two years as chairman. We were privileged to have worked with Barney Rush on the board. We express our gratitude to Barney for his leadership and guidance in strengthening Azure Power. Mr.

Rosling brings an inspiring mix of great leadership and hands-on industry experience himself, and we, at Azure management, are already deeply working with him in taking our company toward greater accomplishments together. We continue to look for suggestions from our investors and stakeholders on how we can further improve our disclosures and make it easier for you to understand and value our business. With that, I would like to turn it over to Murali.

Murali Subramanian -- Chief Operating Officer

Thank you, Ranjit. As we last reported, the second wave of COVID impacted construction activities at our sites. Subsequently, however, both COVID and the supply situation improved significantly. Our construction and procurement teams worked very hard to ensure we adhere to committed time lines on our projects.

We commissioned 158-megawatt AC capacity and 188-megawatt DC capacity during the quarter. As of today, we have completed and commissioned 500 megawatts out of 600 megawatts in our Rajasthan 6 project and balance 100 megawatts to be commissioned in this month. We also commissioned 150 megawatts in our Rajasthan 8 project subsequent to quarter end and are now in advanced stages to commission the balanced capacities in the project in the current quarter. Even though construction work on the 300-megawatt Rajasthan 9 was impacted due to supply related challenges, the team has rallied and we are confident that we will meet the promised time lines.

We have provided some highlights of our ESG accomplishments on Page 6. As Ranjit mentioned earlier, we are extremely proud to adopt our EV policy this quarter, which provides a direction toward reducing our Scope 1 emissions. We have committed to shift 100% EV by 2030 under this policy. Further, to encourage adoption of electric vehicles at a personal level, we are providing interest cost subsidy to our staff.

And I'm happy to report that we have already seen two electric vehicles purchased by the company and one electric vehicle purchased by one of our staff members since adoption of this policy. We are hopeful that this policy will prove to be useful in the expeditious transition of electric vehicles. We also obtained carbon neutrality status through offsetting of carbon emissions in our operations. And together with our path toward electric vehicles, we hope to reduce that requirement in the coming years.

I'm happy to report we have also recently won the Greentech Effective Safety Culture Award for 2021 from the Greentech Foundation and the OHS Award from Grow Care India in these areas, which signifies the efforts we have put in to ensure safety culture, which is now embedded across the project locations and sites. Further, we have also successfully completed the surveillance audits for our ISO 9001 and ISO 14001 certification, signifying our continuous focus and improvement on our quality and environment management systems. Our carbon regeneration has avoided about 0.9 million tons of CO2 equivalent this quarter, bringing the total to 11.5 million tons equivalent since inception. We remain net carbon neutral.

We are in the process of planting 30,000 trees in the immediate vicinity of our 600-megawatt Rajasthan 6 project this year. We have also committed to plant 50 trees for every megawatt we construct. We also remain actively engaged with the communities where we operate and provide proactive support toward medical and health facilities, especially on the pandemic front. We have also constituted a new sustainability committee of the board to continuously strive to implement and monitor best practices to enhance our sustainability efforts.

On the technology front, Azure continues to be an early adopter. We were among the first companies in India to install a large-scale project base on monoperc panels, and we are also constructing now a large-scale project using bifacial tracker technology, where we are expecting yields in excess of 30% for our Rajasthan 9 project. These are industry-leading efforts to ensure our projects are built and operated with the best returns metrics. Further, on the operations side, all our projects are now fully connected with our central monitoring system, which has accessibility through the mobile application as well.

We are gradually phasing out laptops at our sites and have provided tablets to our site engineers who are now always connected with the head office staff and monitor at a granular level, the performance of each of our plants on a real-time basis. This also helps us in predictive monitoring of our plants to tackle any challenge in its infancy. Looking at industry and regulatory updates on Page 8, India's big announcement at COP26 and the fact that we recently reached 150 gigawatts installed renewable energy capacity continues to ensure a solid environment filled with growth opportunities in India. As we discussed during our previous call, we have recently developed organizational capabilities to implement our plans in wind and the hybrid space.

Our recent wins in this regard, the 120-megawatt wind project and the 150-megawatt hybrid project, both with SECI, provides us an opportunity to kick-start this process of diversifying the portfolio and move in line with the industry, which is increasingly looking at dispatchable power as the sustainable way forward in Indian RE. We want to assure you again that we shall only bid for projects at commercially viable tariffs, one which provides returns above our cost of capital. With that, I will turn it over to Pawan to discuss the quarterly results. Thank you.

Pawan Agrawal -- Chief Financial Officer

Thank you, Murali. I'm happy to report that we have exceeded upper end of our revenue guidance for this quarter, with revenues, excluding rooftop at USD 56.9 million, against the guidance range of USD 49 to 51.7 million. We found significant contributions from sale of our carbon credits this quarter amounting to USD 5.5 million. However, even after excluding this contribution, the revenue is at the upper end of the guidance range.

Significant developments during the quarter and in the period subsequent to the quarter end have assured all of us of the tremendous opportunities in the sector that we, at Azure, are well placed to leverage. Ours is a simple business that needs strong and impeccable execution, which we have been focusing at. Our first PPA execution under the four-gigawatt project is one such example for which we have been working hard with SECI and other stakeholders. With these projects in motion, I believe we have widened the road for our stakeholders on value accretion.

Turning to Page 12. As of September 30, 2021, we were operating 2,210 megawatts on a PPA or AC basis, which is 31% higher than what we were operating a year before. Our portfolio was stable at 6,955 megawatts at the end of quarter, which further increased to 7,255 megawatts subsequent to the quarter end with our recent wins. While these portfolio megawatt numbers exclude rooftop portfolio, which is in the process of getting transferred to Radiance, our financial numbers continue to consolidate rooftop, until the transfer process is completed.

On Page 13, after adjusting primarily for stock compensation expense, our EBITDA has been $48.7 million or 29% higher against 25% increase in revenues for the same quarter in the previous year. Turning to G&A. On Page 13, our G&A increased by 6%, in line with our expectation we communicated earlier. On our recent refinancing, both domestic as well as overseas, have resulted in substantial savings and interest costs for us improving our equity returns.

Over 70% of our total project debt at present, including our outstanding bonds, have fixed interest rates for a period of at least two to three years. As we refinance our project debt on completion of new projects this year, we will endeavor to have almost 100% of project debt to be under fixed rates. Refinancing at lower costs and fixed rate reflects strong credit profile of the group, supported by strong sponsors, such as CDPQ and OMERS. Further, we expect that India may not see much impact from global interest rate increase apprehensions in the longer term.

As India progresses economically and with events like India's sovereign debt inclusion in the global bond indices, we expect India to significantly gain from long-term inflows of global capital much larger than previous years, which may be expected to keep the rates in check. Turning to stock compensation expense. For second quarter 2022, our share price decreased from $26.92 as on June 30, 2021 to $22 as on 30th September 2021, resulting in reversal of SAR expenses of $3.3 million. Despite challenges in past few quarters, our DSO have been fairly consistent at around 116 days on an average in the recent quarter.

We believe there will be further improvement in our DSO days in future with commissioning of projects with high creditworthy counter-parties, and also expected improvement in collections due to favorable awards in Karnataka discount. We are also hopeful of a favorable judgment soon in Andhra Pradesh. Moving on to Page 15. You can see that EBITDA from operating assets increased about 28% year on year, and cash flow to equity from operating assets rose about 32%.

Net debt for operating assets was about 1.2 billion and EBITDA for the last 12 months was about $194 million, resulting in a net debt-to-EBITDA ratio for operating assets of 6.2 times as on September 30, 2021. Finally, looking at Page 16, providing balance sheet information, we had about $128.3 million of cash and cash equivalents and our net debt stood at approximately $1.41 billion. As a reminder, the hedging assets of $17.2 million included in other assets on our balance sheet should be netted against our total debt as this is directly linked to the foreign exchange hedges we put in place related to our green bonds. During the current quarter, we have used part of this asset related to our first green bond to reduce the leverage on the green bonds at the kind of refinancing.

Now I pass on to Ranjit to provide some commentary on the guidance.

Ranjit Gupta -- Chief Executive Officer and Director

Thanks, Pawan. We have achieved significant results this quarter despite all the challenges we have been through in this year in terms of physical disruptions. We are happy to report that we have been able to achieve higher revenue compared to our guidance for this quarter. We reiterate here our numbers for the current fiscal, and will keep the market posted in our coming updates.

For the third quarter financial year 2022, we expect the revenue to be between INR 4,100 and INR 4,300 million and the PLF to be between 19.5% to 20.5%. With this, we'd be happy to take questions.

Questions & Answers:

Operator

Thank you very much. [Operator instructions]. The first question is from the line of Justin Clare from ROTH Capital Partners. Please go ahead.

Justin Clare -- ROTH Capital Partners -- Analyst

Hi, everyone. Thanks for taking the question. So first off here. With the progress that's being made with Andhra Pradesh on signing PSAs for 2.3 gigawatts, I believe you have about one gigawatt remaining on the entire four gigawatt manufacturing like tender, in which you would want to sign PPAs if you consider both Andhra Pradesh in the 600 megawatts you've already signed PPAs for.

So just what visibility do you have into the PSAs for that one gigawatt that's remaining? And when could PPAs potentially be signed?

Ranjit Gupta -- Chief Executive Officer and Director

Thank you, Justin, for this question. We have some visibility on 400 megawatts of the first tranche. There are two or three states with which currently [Inaudible] and conversion with. So we expect that the first tranche completion of the remaining 400 megawatts will happen hopefully in the next quarter.

As far as the remaining about 600-odd megawatts of the fourth tranche is concerned, at the moment, SECI I don't think started offering that capacity because that capacity is to be commissioned four to five years hence. So that will probably take a little bit more time. The first target would be to close the 400 megawatts. And then post that, SECI will try to close the remaining 67 megawatts.

Justin Clare -- ROTH Capital Partners -- Analyst

OK. Got it. That's helpful. And then -- so just considering the progress that you've made -- or that has been made in terms of signing the PSAs and the visibility into PPAs here.

Can you just talk through the time line here in which these projects are expected to be commissioned? I think that 600 megawatts, the commissioning date was goal Q3 of 2024. But just wondering, is that your plan to commission that project basically right on schedule there? Is there a potential to commission it a little bit earlier than that time frame? So just maybe some details on the time line here.

Ranjit Gupta -- Chief Executive Officer and Director

So, Justin, you're absolutely right. Though the requirement as per the contract is to commission the 600 megawatts in quarter three fiscal '24, which means November 2023, our endeavor would be to try and compete the 600 megawatts before then. Because of the fact that we already have made significant progress on the land and connectivity. So we will be able to give better visibility on the actual commissioning date and perhaps in the next update at the moment because the PPAs have been signed recently.

We are trying to figure out all the ordering and all the land and the connectivity stuff. And hopefully, we will have some guidance around when we expect to commission soon enough. The remaining 2,300 megawatts will be commissioned 1,000 megawatts, assuming that the PPAs get signed in this month. We'll be then required to commission one year hence, one year hence, and one year hence.

Justin Clare -- ROTH Capital Partners -- Analyst

OK. Got it. And then since the time line here is becoming a little bit more clear in terms of the visibility you have on these projects, how are you thinking about the capital needs for your project pipeline? The sources of capital that you're considering here? And then what could be the timing of when you may need to raise additional capital?

Ranjit Gupta -- Chief Executive Officer and Director

We are in discussion, Justin, with our shareholders. The PPAs have just recently been signed. So therefore, we do have some time on our hands. So we will obviously want to do it earlier than later, so that everyone is comfortable that we have the money available with us.

So we are working on that, though we do have plenty of time on our hands at the moment.

Justin Clare -- ROTH Capital Partners -- Analyst

OK. Great. Thanks for the question. I will pass it on.

Operator

Thank you very much. [Operator instructions]. The next question is from the line of Mr. Puneet Gulati from HSBC.

Please go ahead.

Puneet Gulati -- HSBC -- Analyst

Yes. Thank you so much. So on the 600-megawatt PPA, when are you lucky to place orders for the modules? And what is the pricing that you're expecting?

Ranjit Gupta -- Chief Executive Officer and Director

So I was responding to Justin, that we do need to commission these projects by November of 2023, which means that if we aim to commission the project, then we do need to order the module six to seven months ahead of that. So sometime around March of 2023 is when we do -- when we need to offer these models. However, we are working on a schedule wherein we can try and commission these projects earlier. So obviously, currently, the pricing of modules is high.

So we will have to balance the ordering of models and commissioning of these projects. One, with the readiness. Our readiness is in good shape, I would think. And second is on the cost of model.

So that is where we are. And that's why we do need a few months for making this decision as to when we will commission these projects because it will depend on the trajectory of module pricing as much as it will do on our readiness.

Puneet Gulati -- HSBC -- Analyst

Sir, can I presume you would need to do a financial closure before -- to ordering as well?

Ranjit Gupta -- Chief Executive Officer and Director

Well, as far as the financial closure is concerned, the financial closure -- we do have time for financial closure. And these processes of financial closure and ordering are certainly sort of in parallel. We cannot open LCs without financial closure, obviously. But the discussions with module suppliers will happen as we go out and get our financial closure done.

Puneet Gulati -- HSBC -- Analyst

Understood. My next question is on the Punjab issue, which has risen. So are they paying at all as of now? Or have they stopped paying?

Ranjit Gupta -- Chief Executive Officer and Director

Punjab is being absolutely on time. In fact, there was -- if you recall, there were some pending payments from Punjab for a dispute that they had created in -- at the onset of the pandemic at the beginning of 2020. We -- as an industry, that the award was in our favor. And Panjab has, from what I understand, paid part of that money also.

And they are paying us on schedule. There is no delay from Panjab on the DSO site.

Puneet Gulati -- HSBC -- Analyst

OK. So despite that posturing at least they are paying unlike Andhra Pradesh. Is that the right understanding?

Ranjit Gupta -- Chief Executive Officer and Director

Absolutely. That is the right understanding. They are paying. It is a bill at the moment.

It is not law at the moment. So once it becomes a law -- if it becomes law, then there will be a process of determination of tariff and missing that and others. But there is something that the industry will obviously strongly approach. So I believe that there is still some way to go in this.

Puneet Gulati -- HSBC -- Analyst

Understood. And lastly, on the progress on the time line for sale of rooftop business, then when are you likely to receive cash from that?

Ranjit Gupta -- Chief Executive Officer and Director

Pawan you will have to take that.

Pawan Agrawal -- Chief Financial Officer

Sure, Ranjit. So I believe the rooftop sales progress is progressing fairly satisfactory. They have been in tenders required from various offtakers. We have received a significant majority of those approvals.

Only a few are pending. So hopefully next couple of months, we should have -- this will have all approvals everything in place, and we should be able to conclude transactions definitely during this fiscal year.

Puneet Gulati -- HSBC -- Analyst

Can you expect to receive the funds also during the fiscal year?

Pawan Agrawal -- Chief Financial Officer

Yes. Yes, we expect to receive funds of in the fiscal year. We're also looking at kind of trying to see if you can transfer into two phases, Puneet, because, as I said, large order the tools have received. So there is a possibility that we can for one part for each, everything is in place.

We possibly can try and try and release those pretty soon. And then for remaining, it might take a couple of months. But definitely, we expect to receive a time produced within this fiscal year.

Puneet Gulati -- HSBC -- Analyst

Excellent. That is good to hear. Thank you so much in all of these.

Pawan Agrawal -- Chief Financial Officer

Thanks, Puneet.

Operator

Thank you. [Operator instructions]. The next question is from the line of Maheep from Credit Suisse. Please go ahead.

Maheep Mandloi -- Credit Suisse -- Analyst

Good evening to everyone. Thanks for taking the questions here. Wondering if you can just talk about more on carbon credits as we saw a strong beat in the quarter because of that. Could you just elaborate on that how much carbon credit revenues do you expect going forward? Or is that like a way to understand these revenues in the near future? And just have a separate question on the guidance after that.

Ranjit Gupta -- Chief Executive Officer and Director

Thanks for the question, Maheep. It is a difficult thing to predict what is the revenue that one will gain from carbon credit. As you know, the market has been fairly depressed over the last several years. And though, at Azure, we have been registering our projects under the various mechanisms, one has never been sure as to what would be the revenue that one could get from generating those certificates? Also, because of article fixed time in [Inaudible] there has been some change in the status of India, right? So [Inaudible] are still figuring out how exactly will that impact or the initial understanding is that this does not have an impact from the carbon pricing as far as Indian projects are concerned, but the devil line, the detail as usual.

So given that the world is moving toward extracting a larger carbon price from industry and from other participants, one would expect that carbon pricing will stay from, but it is difficult to predict what exactly the pricing will be.

Maheep Mandloi -- Credit Suisse -- Analyst

Got it. And then just in terms of guidance here, the revenue guidance was flattish. Should we see some upside, just given you have this 5.5 in Q2 and then 6.3 in Q3? Should you see some upside to the revenue guidance based on that?

Ranjit Gupta -- Chief Executive Officer and Director

In the quarter two?

Maheep Mandloi -- Credit Suisse -- Analyst

For the full year. For the full year, because I think you disclosed 6.3 of cash received in Q3 as well, right?

Ranjit Gupta -- Chief Executive Officer and Director

All right. So --

Pawan Agrawal -- Chief Financial Officer

[Inaudible]

Ranjit Gupta -- Chief Executive Officer and Director

Sorry, go ahead, please.

Pawan Agrawal -- Chief Financial Officer

No, there's a clarification. So the revenue that we booked in last quarter that was received in this quarter. So I just want to clarify that it is the same revenue we booked in last quarter, we've sold in the last quarter, and we realized this in subsequent to that.

Ranjit Gupta -- Chief Executive Officer and Director

Is that clear Maheep? Yes. Yes.

Maheep Mandloi -- Credit Suisse -- Analyst

Got you. Yes. doesn't understandable. But still, I think it's still like roughly 6 million of higher revenues, right? So I just wanted to understand if you could see any upside to the revenue guidance here?

Ranjit Gupta -- Chief Executive Officer and Director

It the depends on the -- it depends -- yes, it will be difficult to predict at the moment, Maheep.

Maheep Mandloi -- Credit Suisse -- Analyst

Got it. And then just on the Punjab matter here. Just trying to understand like the total exposure for you guys? Isn't like -- it seems just the Punjab 1 and 2 projects, right, which are exposed to that -- the change in -- potential change in law in the state, right? That -- my calculation is roughly around $6 million of EBITDA impact. Is that a fair statement? Like just trying to understand how to think about the sensors we hear.

Ranjit Gupta -- Chief Executive Officer and Director

So, Maheep, we are very, very strongly of the opinion that there will be no impact of the move that Punjab [Inaudible]. There is absolutely no question that what they are trying is against the contract act, against [Inaudible], against the Indian constitution. And so therefore, this attempt of Punjab [Inaudible] is driven by local issues. There are elections coming up in Punjab in the next two or three months.

So that is perhaps something because of this unfortunate bill has been passed in the state. And we are -- we have taken legal opinions. We have spoken to the Central Ministry, and everyone is super supportive. And there is no doubt in our mind that even if, by any chance, first of all, we believe that this has not become -- then will not become an act.

And the legal advice we have is that even if there is any chance of this will be coming in, it will not stand scrutiny in court. So we are very, very optimistic that this is a century phenomena and nothing will really anything really happen and nothing really come out of this.

Maheep Mandloi -- Credit Suisse -- Analyst

That's helpful as well. And then apart from that, I think like in the past, we talked about potential discussions at the Supreme Court level on some of the other state discussions. Any expectations on like the time line or like when we could finally hear on all these state challenges to renegotiating contracts?

Ranjit Gupta -- Chief Executive Officer and Director

So apart from Andhra Pradesh, which is in the final leg, so to say, by end of December, we are hopeful the next round of hearing and which is expected to be the final ground caring is on 29th and 30th of December on the uncertain matter. At the moment, there is no other -- and this matter unfortunately has been going on for the last couple of years. There is no other state that was tried to run on contracts apart from this recent half-hearted attend by Punjab. So I'm not aware of any other any other outstanding cases.

The government has -- any of the state governments has gone against power purchase agreements?

Maheep Mandloi -- Credit Suisse -- Analyst

Got it. And then just the last one for me here, and then I follow up later on. It's just around the project construction over here, schedule. We have the, call it, roughly three gigawatt, which you have outlined will be completed in the next few quarters here.

But beyond that, as of the end of 2023, the first next projects expected from the first gigawatt branch? Or do you expect any of these hybrid projects or wind projects to start construction before that? I'm just trying to understand the time lines and how to think about the potential financing requirements or equipment procurements for the other projects?

Pawan Agrawal -- Chief Financial Officer

So let me take that. So yes, so as this question was alluded to even before, we are going to see if we can start constructing and commission some capacity before the scheduled commissioning of November, December of 2023. So we'll see how much capacity we can bring up ahead. Exact details will be known in the coming days.

We also have some more capacity coming up on the SECI projects that were mentioned. So part of that also might come up earlier. So this is work in progress. So we don't want to speak specifically about dates, but it's -- there is a reasonable possibility that we will bring some capacity before the scheduled commission.

Maheep Mandloi -- Credit Suisse -- Analyst

Got it. All right. This is really helpful, and thanks for taking my questions.

Operator

Thank you. [Operator instructions]. As there are no further questions, on behalf of Azure Power, that concludes this conference. Thank you for joining us.

You may now disconnect your lines. Thank you.

Ranjit Gupta -- Chief Executive Officer and Director

Thank you very much. Thank you, everyone.

Duration: 46 minutes

Call participants:

Vikas Bansal -- Investor Relations

Ranjit Gupta -- Chief Executive Officer and Director

Murali Subramanian -- Chief Operating Officer

Pawan Agrawal -- Chief Financial Officer

Justin Clare -- ROTH Capital Partners -- Analyst

Puneet Gulati -- HSBC -- Analyst

Maheep Mandloi -- Credit Suisse -- Analyst

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