ReNew Energy plc(RNW) - 2022 Q3 - Quarterly Report

Executive Summary ReNew achieved substantial growth in its portfolio and commissioned capacity, alongside strong revenue increases and a significant reduction in net loss for both Q3 and the first nine months of FY23 Operating Highlights Summary ReNew reported significant growth in its portfolio and commissioned capacity, with a 30.2% year-on-year increase in total portfolio to 13.4 GWs as of December 31, 2022. The company also commissioned 198 MWs of projects during the first nine months of FY23 - Total portfolio: 13,449 MWs (13.4 GWs), a 30.2% increase year-on-year. Commissioned capacity: 7,764 MWs (7.8 GWs), with 5,685 MWs (5.6 GWs) committed[5][9] - Commissioned 198 MWs of projects (141 MWs wind, 57 MWs solar) during nine months of FY23, and 66 MWs (34 MWs wind, 32 MWs solar) during Q3 FY23[5][25] - Total electricity sold for nine months of FY23 was 13,254 million kWh, an increase of 26.5% over nine months of FY22. Total electricity sold in Q3 FY23 was 3,312 million kWh, an increase of 13.6% over Q3 FY22[6] Financial Highlights Summary ReNew demonstrated strong revenue growth for both Q3 FY23 and the first nine months of FY23, with total income increasing by 19.4% and 23.1% respectively. The company also significantly reduced its net loss year-on-year for both periods, while improving Days Sales Outstanding (DSO) by 78 days Key Financial Highlights (INR millions) | Metric | Q3 FY23 | Q3 FY22 | YoY Change | 9M FY23 | 9M FY22 | YoY Change | | :----- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Total Income | 16,077 | 13,462 | +19.4% | 63,493 | 51,581 | +23.1% | | Adjusted EBITDA | 11,628 | 10,554 | +10.2% | 49,994 | 42,456 | +17.8% | | Net Loss | (4,013) | (6,384) | -37.1% | (5,103) | (12,573) | -59.4% | | Cash Flow to Equity (CFe) | 2,682 | 5,085 | -47.3% | 19,810 | 17,904 | +10.6% | - Days Sales Outstanding (DSO) improved by 78 days year-on-year, ending Q3 FY23 at 178 days, with further substantial improvement expected due to clear arrangements for future payment schedules with State Discoms[9][28] Operational Review ReNew's operational performance in FY23 saw significant portfolio and commissioned capacity growth, with increased electricity sales driven by solar assets, despite mixed Plant Load Factor trends Key Operating Metrics As of December 31, 2022, ReNew's total portfolio reached 13,449 MWs, with 7,764 MWs commissioned. The company added 198 MWs of new capacity during the first nine months of FY23, primarily from wind and solar assets Operating Capacity as of December 31, 2022 | Metric | Capacity (MWs) | | :----- | :------------- | | Total Portfolio | 13,449 | | Commissioned Capacity | 7,764 | | - Wind | 3,921 | | - Solar | 3,744 | | - Hydro | 99 | | Committed Capacity | 5,685 | - Commissioned 141 MWs of wind assets and 57 MWs of solar assets during nine months of FY23, and 34 MWs of wind assets and 32 MWs of solar assets during Q3 FY23[5] - Approximately 0.3 GW of Purchase Power Agreements (PPAs) were signed in Q3 FY23, with only ~1% of the total portfolio awaiting PPAs/contracts[9] Electricity Sold Total electricity sold increased significantly for both Q3 FY23 and the first nine months of FY23, driven primarily by a substantial increase in solar electricity generation, which offset a decrease in wind and hydro generation in Q3 FY23 Electricity Sold (million kWh) | Period | Total | YoY Change | Wind | YoY Change | Solar | YoY Change | Hydro | YoY Change | | :----- | :---- | :--------- | :--- | :--------- | :---- | :--------- | :---- | :--------- | | 9M FY23 | 13,254 | +26.5% | 6,939 | +3.9% | 5,932 | +64.0% | 383 | N/A | | Q3 FY23 | 3,312 | +13.6% | 1,265 | -7.9% | 1,957 | +36.6% | 90 | -18.7% | - Hydro assets were acquired in August 2021, impacting YoY comparisons for the nine-month period[7] Plant Load Factor (PLF) ReNew experienced mixed performance in Plant Load Factor (PLF), with solar assets showing improvement for both Q3 and nine months of FY23, while wind assets saw a slight decrease in PLF for both periods Weighted Average Plant Load Factor (PLF) | Period | Wind PLF | YoY Change | Solar PLF | YoY Change | | :----- | :------- | :--------- | :-------- | :--------- | | 9M FY23 | 27.3% | -0.7 pp | 24.3% | +2.3 pp | | 9M FY22 | 28.0% | - | 22.0% | - | | Q3 FY23 | 14.7% | -2.0 pp | 23.8% | +2.8 pp | | Q3 FY22 | 16.7% | - | 21.0% | - | Financial Review ReNew's financial performance for FY23 saw robust total income growth and a significant reduction in net loss, despite increased finance costs driven by higher borrowing and capacity expansion Total Income Total income for ReNew increased significantly, driven by higher operating capacity and late payment surcharges from customers. This growth was partially offset by lower income from carbon credits and compensation for revenue loss, as well as lower wind resources in Q3 FY23 Total Income (INR millions) | Period | Total Income | YoY Change | | :----- | :----------- | :--------- | | 9M FY23 | 63,493 | +23.1% | | Q3 FY23 | 16,077 | +19.4% | - The increase in total income for 9M FY23 was primarily due to an increase in operating capacity and late payment surcharge from customers, offset by lower income from carbon credit and compensation for loss of revenue[11] - The increase in total income for Q3 FY23 was primarily due to an increase in operating capacity, late payment surcharge from customers, and an insurance claim, partially offset by lower wind resource[12] Expenses Overall expenses showed mixed trends, with employee benefits decreasing for the nine-month period due to the absence of listing-related bonuses, while other expenses and finance costs increased, primarily driven by higher operating capacity and increased borrowing Employee Benefit Expenses Employee benefit expenses decreased for the nine-month period due to the absence of listing-related bonus expenses from the prior year Employee Benefit Expenses (INR millions) | Period | Amount | YoY Change | | :----- | :----- | :--------- | | 9M FY23 | 3,235 | -5.5% | | Q3 FY23 | 1,243 | +8.9% | - The decrease in 9M FY23 was primarily due to the absence of listing-related bonus expenses in FY23[13] Other Expenses Other expenses increased for both Q3 and nine months of FY23, largely driven by the expansion in operating capacity Other Expenses (INR millions) | Period | Amount | YoY Change | | :----- | :----- | :--------- | | 9M FY23 | 8,345 | +28.5% | | Q3 FY23 | 2,741 | +25.8% | - The increase was largely driven by the increase in operating capacity[14] Finance Costs and Fair Value Change in Derivative Instruments Finance costs significantly increased for the nine-month period, primarily due to higher borrowing, non-cash adjustments, and a one-time debt premium expense related to USD bond refinancing Finance Costs and Fair Value Change in Derivative Instruments (INR millions) | Period | Amount | YoY Change | | :----- | :----- | :--------- | | 9M FY23 | 41,757 | +44.5% | | Q3 FY23 | 11,599 | +0.1% | - The significant increase in 9M FY23 finance costs was primarily due to higher borrowing in line with an increase in capacity, non-cash mark-to-market adjustments, discounting cost of late payment surcharge income, and a one-time debt premium expense and reclassification of a hedge loss (INR 2,531 million) for the refinancing of USD bonds[15] Net Profit/ Loss ReNew significantly reduced its net loss for both Q3 FY23 and the first nine months of FY23. The improvement in Q3 was mainly due to higher total income, while the nine-month improvement was due to the absence of one-time listing expenses from the prior year, despite higher finance costs in the current year Net Loss (INR millions) | Period | Net Loss | YoY Change | | :----- | :------- | :--------- | | 9M FY23 | (5,103) | -59.4% | | 9M FY22 | (12,573) | - | | Q3 FY23 | (4,013) | -37.1% | | Q3 FY22 | (6,384) | - | - The net loss in nine months of FY22 included a one-time listing and related expense of INR 10,512 million (US$ 127 million)[17] - The improvement in Q3 FY23 net loss was mostly due to higher total income[18] Adjusted EBITDA (2) Adjusted EBITDA for ReNew showed healthy growth for both Q3 FY23 and the first nine months of FY23, reflecting improved operational profitability Adjusted EBITDA (INR millions) | Period | Adjusted EBITDA | YoY Change | | :----- | :-------------- | :--------- | | 9M FY23 | 49,994 | +17.8% | | Q3 FY23 | 11,628 | +10.2% | Cash Flow, Capital & Liquidity ReNew demonstrated strong operating cash flow growth driven by improved collections, while investing activities decreased and financing activities shifted to a net outflow due to share buybacks and debt management Cash Flow Activities ReNew experienced a significant increase in cash generated from operating activities due to higher income and improved collections. Cash used in investing activities decreased for the nine-month period, while financing activities shifted from generating cash to using cash, primarily due to share buybacks and interest payments Cash Flow Activities (INR millions) | Activity | Q3 FY23 | Q3 FY22 | YoY Change | 9M FY23 | 9M FY22 | YoY Change | | :------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Operating | 22,503 | 11,730 | +91.8% | 49,531 | 22,717 | +118.0% | | Investing | (40,980) | (28,306) | +44.8% | (56,979) | (104,364) | -45.4% | | Financing | 392 | 5,081 | -92.3% | (13,486) | 75,840 | -117.8% | - The increase in cash flow from operating activities was primarily on account of higher total income and lower working capital due to improved collections[22] - Cash used in investing activities was primarily towards capital expenditures on organic growth[23] - Cash used in financing activities was primarily for the buyback of shares and interest payments, offset by proceeds from borrowings (net of repayment) and shares and compulsory convertible debentures[24] Capital Expenditure During the first nine months of FY23, ReNew incurred INR 13,902 million (US$ 168 million) in capital expenditure for commissioning 198 MWs of projects Capital Expenditure (9M FY23) | Metric | Amount (INR millions) | Amount (US$ millions) | | :----- | :-------------------- | :-------------------- | | Capex | 13,902 | 168 | | Commissioned Projects | 198 MWs | N/A | Liquidity and Debt Position As of December 31, 2022, ReNew maintained a liquidity position of INR 52,781 million (US$ 638 million) in cash and bank balances, with gross debt standing at INR 484,793 million (US$ 5,861 million) Liquidity and Debt as of December 31, 2022 | Metric | Amount (INR millions) | Amount (US$ millions) | | :----- | :-------------------- | :-------------------- | | Cash and Bank Balances | 52,781 | 638 | | - Cash and Cash Equivalents | 7,550 | 91 | | - Other Bank Balances | 45,231 | 547 | | Gross Debt | 484,793 | 5,861 | Receivables Total receivables as of December 31, 2022, were INR 38,377 million (US$ 464 million), with a significant improvement in Days Sales Outstanding (DSO) by 78 days year-on-year, indicating better collection efficiency Receivables as of December 31, 2022 | Metric | Amount (INR millions) | Amount (US$ millions) | | :----- | :-------------------- | :-------------------- | | Total Receivables | 38,377 | 464 | | - Unbilled and Others | 4,197 | 51 | | - Andhra Pradesh Discom | 14,892 | 180 | - Days Sales Outstanding (DSO) improved by 78 days year-on-year, ending Q3 FY23 at 178 days, with expectations for substantial further improvement over the remainder of the year[9][28] FY23 Guidance ReNew provides its FY23 financial guidance for Adjusted EBITDA and Cash Flow to Equity, subject to normal weather conditions for the remainder of the year FY23 Financial Guidance | Metric | Range (INR millions) | Per Share (INR) | | :----- | :------------------- | :-------------- | | Adjusted EBITDA | 61,000 – 63,000 | 148 – 152 | | Cash Flow to Equity | 15,000 – 17,000 | 36 – 41 | - The Company's Adjusted EBITDA and Cash Flow to Equity guidance for FY23 is subject to normal weather for the remainder of the year[20] Use of Non-IFRS Financial Measures This section clarifies the definitions, utility, and limitations of non-IFRS financial measures, Adjusted EBITDA and Cash Flow to Equity, used by ReNew to assess performance Adjusted EBITDA Adjusted EBITDA is a non-IFRS measure used by ReNew to assess ongoing financial performance and provide improved comparability by excluding items not indicative of operational profitability. It is not a substitute for IFRS measures and has specific limitations - Defined as Profit/(loss) for the period plus (a) current and deferred tax, (b) finance costs and FV changes on derivative instruments, (c) change in fair value of warrants (if recorded as expense) (d) depreciation and amortisation, (e) listing expenses, (f) share based payment and other expense related to listing less (g) share in profit/(loss) of jointly controlled entities (h) finance income and FV change in derivative instruments, (i) change in fair value of warrants (if recorded as income)[30] - Useful for investors in assessing ongoing financial performance and provides improved comparability by excluding certain items not indicative of operational profitability[30][31] - Limitations include not reflecting cash expenditures, working capital changes, significant interest expense, income taxes, or cash requirements for asset replacements[32][35] Cash Flow to Equity (CFe) CFe is a non-IFRS measure that supplements IFRS results, providing insight into the cash generation from ReNew's operating assets, particularly given the long-term capital-intensive nature of its business. It is defined as Adjusted EBITDA adjusted for non-cash expenses, finance income, interest paid, tax paid, and normalized loan repayments - Defined as Adjusted EBITDA add non-cash expense and finance income and fair value change in derivative, less interest expense paid, tax paid/(refund) and normalized loan repayments. Excludes changes in net working capital and investing activities[34] - Believed to provide better visibility into the performance and prospects of the operating business as a result of the long-term capital-intensive nature, non-cash depreciation, cash used for debt servicing, and investments/costs related to business growth[36][37] - Used by external consumers (investors, research analysts) to assess performance and as an indicator of success in generating attractive risk-adjusted total return, but should be used as a supplemental measure and not in lieu of IFRS results[37][38] Corporate Information This section provides an overview of ReNew as a leading decarbonisation solutions company, outlines its forward-looking statements, and details webcast and conference call information Company Overview ReNew Energy Global Plc is a leading decarbonisation solutions company listed on Nasdaq, with one of the largest clean energy portfolios globally, totaling approximately 13.4 GWs as of December 31, 2022. It provides end-to-end solutions in clean energy, green hydrogen, digitalized energy offerings, storage, and carbon markets - ReNew is the leading decarbonisation solutions company listed on Nasdaq (Nasdaq: RNW, RNWWW)[43] - ReNew's clean energy portfolio of ~13.4 GWs on a gross basis as of December 31, 2022, is one of the largest globally[43] - Provides end-to-end solutions in clean energy, green hydrogen, value-added energy offerings through digitalization, storage, and carbon markets[43] Forward Looking Statements This section contains forward-looking statements regarding future financial and operating guidance, subject to various risks and uncertainties such as financing availability, changes in prices, tariffs, policies, raw material availability, and meteorological conditions. The company assumes no obligation to update these statements - The press release contains forward-looking statements regarding future financial and operating guidance, operational and financial results[41] - Risks and uncertainties include availability of additional financing, changes in prices/tariffs/policies, availability of raw materials, limited operating history, debt covenants, meteorological conditions, COVID-19, supply disruptions, and solar power curtailments[41] - The company assumes no obligation to update these forward-looking statements[41] Webcast and Conference Call Information A conference call was scheduled for February 17, 2023, to discuss the earnings results, accessible via live webcast or phone, with an audio replay available on the investor relations website - A conference call was scheduled to discuss the earnings results at 8:30 AM ET (7:00 PM IST) on February 17, 2023[39] - The conference call could be accessed live via webcast or by phone using various international dial-in numbers[39] - An audio replay would be available following the call on the investor relations website[39] Consolidated Financial Statements This section presents ReNew's interim condensed consolidated financial statements, including the statement of financial position, profit or loss, cash flows, and reconciliation of non-IFRS metrics Interim Condensed Consolidated Statement of Financial Position The balance sheet as of December 31, 2022, shows an increase in total assets, primarily driven by property, plant, and equipment. Total equity decreased, while total liabilities increased, mainly due to higher interest-bearing loans and borrowings Key Financial Position Data (INR millions) | Metric | As at Dec 31, 2022 | As at Mar 31, 2022 | Change | | :----- | :----------------- | :----------------- | :----- | | Total Assets | 681,047 | 641,343 | +39,704 | | Total Equity | 117,528 | 126,373 | -8,845 | | Total Liabilities | 563,519 | 514,970 | +48,549 | | Interest-bearing loans and borrowings (Non-current) | 425,084 | 373,729 | +51,355 | | Interest-bearing loans and borrowings (Current) | 30,326 | 14,485 | +15,841 | Interim Condensed Consolidated Statement of Profit or Loss The income statement reflects strong revenue growth for both Q3 and nine months of FY23, leading to a significant reduction in net loss compared to the prior year, despite increased finance costs. Loss per share also improved substantially Key Profit or Loss Data (INR millions, except EPS) | Metric | Q3 FY23 | Q3 FY22 | 9M FY23 | 9M FY22 | | :----- | :------ | :------ | :------ | :------ | | Revenue | 13,170 | 11,896 | 54,904 | 44,403 | | Total Income | 16,077 | 13,462 | 63,493 | 51,581 | | Total Expenses | 19,665 | 18,057 | 65,242 | 59,972 | | Loss before tax | (3,588) | (4,595) | (1,749) | (8,391) | | Loss for the period | (4,013) | (6,384) | (5,103) | (12,573) | | Basic and Diluted Loss per share (INR) | (12.12) | (15.10) | (12.38) | (32.36) | Interim Condensed Consolidated Statements of Cash Flows Cash flow from operating activities more than doubled for both Q3 and nine months of FY23, driven by improved collections. Investing activities saw a decrease in cash usage for the nine-month period, while financing activities shifted to a net cash outflow for the nine-month period, primarily due to share buybacks and debt repayments Key Cash Flow Data (INR millions) | Activity | Q3 FY23 | Q3 FY22 | 9M FY23 | 9M FY22 | | :------- | :------ | :------ | :------ | :------ | | Net cash generated from operating activities | 22,503 | 11,730 | 49,531 | 22,717 | | Net cash used in investing activities | (40,980) | (28,306) | (56,979) | (104,364) | | Net cash generated from / (used in) financing activities | 392 | 5,081 | (13,486) | 75,840 | | Net decrease in cash and cash equivalents | (18,085) | (11,495) | (20,934) | (5,807) | | Cash and cash equivalents at end of period | 7,550 | 14,872 | 7,550 | 14,872 | Unaudited Non-IFRS Metrics Reconciliation This section provides the reconciliation of Net Loss to Adjusted EBITDA and the calculation of Cash Flow to Equity (CFe) for both the three and nine months ended December 31, 2022, highlighting the adjustments made from IFRS measures Reconciliation of Net Loss to Adjusted EBITDA (INR millions) | Metric | Q3 FY23 | Q3 FY22 | 9M FY23 | 9M FY22 | | :----- | :------ | :------ | :------ | :------ | | Loss for the period | (4,013) | (6,384) | (5,103) | (12,573) | | Less: Finance income and fair value change in derivative instruments | (687) | (428) | (2,005) | (1,235) | | Add: Depreciation and amortisation | 4,075 | 3,582 | 11,859 | 10,031 | | Add: Finance costs and fair value change in derivative instruments | 11,599 | 11,584 | 41,757 | 28,892 | | Add / (less): Change in fair value of warrants | (394) | (428) | (1,456) | 427 | | Add: Listing and related expenses | - | - | - | 10,512 | | Add: Income tax expense | 425 | 1,789 | 3,354 | 4,182 | | Add: Share based payment expense and others related to listing | 623 | 840 | 1,588 | 2,220 | | Adjusted EBITDA | 11,628 | 10,554 | 49,994 | 42,456 | Cash Flow to Equity (CFe) Calculation (INR millions) | Metric | Q3 FY23 | Q3 FY22 | 9M FY23 | 9M FY22 | | :----- | :------ | :------ | :------ | :------ | | Adjusted EBITDA | 11,628 | 10,554 | 49,994 | 42,456 | | Add: Finance income and fair value change in derivative instruments | 687 | 428 | 2,005 | 1,235 | | Less: Interest paid in cash | (6,634) | (4,359) | (25,190) | (21,138) | | Less: Tax paid | (271) | (261) | (639) | (677) | | Less: Normalised loan repayment | (2,248) | (1,221) | (6,270) | (3,392) | | Less: Share based payments expense (cash-settled) and others | - | - | - | (940) | | Less: Other non-cash items | (480) | (56) | (90) | 359 | | Total CFe | 2,682 | 5,085 | 19,810 | 17,904 |