ReNew Energy plc(RNW) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 500 basis points improvement in margins due to cost optimization initiatives and lower provisioning compared to the previous quarter [19] - Adjusted EBITDA rose by 11% year-on-year, although impacted by weaker than expected wind performance [31] - The company revised its FY25 EBITDA guidance to INR 74 million to INR 78 million, and cash flow to equity guidance to INR 11 billion to INR 13 billion due to lower wind PLFs [19][34] Business Line Data and Key Metrics Changes - The operational portfolio increased by 26% year-on-year, now standing at 10.8 gigawatts, with 2.6 gigawatts commissioned in the last 12 months [12][22] - The total committed portfolio grew by 27% year-on-year to 17.4 gigawatts, with an additional 1.1 gigawatts secured since the last earnings call [13][22] - The manufacturing facility is producing about 10 megawatts per day of modules, with an aggregate order book of about 2 gigawatts [16][28] Market Data and Key Metrics Changes - The renewable energy environment in India remains robust, with over 50 gigawatts of renewable energy capacity auctioned during the year [10] - Wind PLFs for the portfolio stood at 13.5%, a decline from 17% over the previous year, impacting revenue [35] - The company has secured 3.9 gigawatts of renewable energy capacity and 600 megawatt hours of battery energy storage systems (BESS) through auctions this fiscal year [13][23] Company Strategy and Development Direction - The company is adopting a disciplined approach to bidding, focusing on auctions that offer attractive return profiles [14] - There is a strategic shift towards more complex projects, with a focus on solar plus battery energy storage systems [14][24] - The company aims to meet its targeted megawatt installations by the end of the year, including 600 megawatts subject to regulatory approvals [15][46] Management's Comments on Operating Environment and Future Outlook - Management noted that while the US equity markets for renewable energy companies remain challenging, the fundamentals in India are strong [10] - The company anticipates further reductions in borrowing costs due to recent rate cuts by the RBI, which should benefit infrastructure companies [8][9] - Management expressed confidence in meeting targeted installations and highlighted the importance of battery solutions for future growth [24][60] Other Important Information - The company was recognized as India's highest-rated pure play renewable energy company by S&P [17][38] - The manufacturing facility achieved an industry-leading efficiency of 23.2% for its cells [30] - A consortium has made a non-binding offer to acquire the company, which is under evaluation by a special committee of independent directors [20][21] Q&A Session Summary Question: What caused the lower wind PLF in Q3? - Management indicated that the reduction was entirely due to significantly lower wind speeds in Q3, with expectations for Q4 to trend closer to normal [50][51] Question: What is the outlook for project finance rates? - Management noted that while some benefits from lower rates are being seen, significant reductions have not yet been fully realized across the portfolio [53][54] Question: How do battery plus solar solutions compare in returns to traditional solar projects? - Management stated that battery plus solar solutions are expected to yield attractive returns, especially as battery prices continue to decline [58][60] Question: What is the current production rate for solar cells and modules? - The company is producing between 10 and 11 megawatts per day of modules and 3.5% to 4 megawatts per day of cells [63][64] Question: Are there concerns regarding patent issues with solar technology? - Management indicated that there are no expected impacts from patent issues as the company does not export to the US market [69] Question: What is the status of the 300 megawatt asset sale? - Management confirmed that the sale is in line with past capital recycling initiatives [71] Question: How is the company addressing land and transmission challenges? - Management stated that connectivity issues are minimal for their projects, and while land remains a challenge for wind projects, they have secured sufficient connectivity for their pipeline [77][81] Question: What is the company's approach to O&M costs? - Management explained that they are increasingly internalizing O&M for solar projects and renegotiating contracts for wind projects to reduce costs [128][130]