ReNew Energy plc(RNW) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 31% to INR 74.8 billion for the nine months ending December 31, 2026, with a more than sixfold increase in profit after tax [7][18] - Revenue increased by 48% for the first nine months of the fiscal year compared to the previous year, driven by an increase in megawatts and contributions from the manufacturing business [18] - Headline leverage decreased from 8.2x in December 2024 to 7x debt to EBITDA currently, with a trailing twelve-month leverage of approximately 5.6x for the operating portfolio [19][27] Business Line Data and Key Metrics Changes - Operating capacity increased from 10.7 gigawatts to 11.8 gigawatts, a 19% increase after adjusting for the sale of 900 megawatts [5][17] - The manufacturing business contributed INR 10.8 billion to Adjusted EBITDA for the first nine months, with an external order book of 900 MW [9][15] - The company sold another 300 MW of solar assets this quarter, raising a total of $275 million through capital recycling this year [20] Market Data and Key Metrics Changes - The electricity demand in India has shown recovery, with expectations for power demand to return to normal levels in fiscal 2027 [5] - The financing environment remains favorable, with interest rates on a downward trend, benefiting the overall economic outlook [4] Company Strategy and Development Direction - The company is shifting its focus from wind projects to more battery energy storage systems (BESS) and solar capacity to lower capital expenditure and execution risk [6][13] - The strategic path forward includes optimizing the portfolio for lower execution risk and more predictable cash flows, with a focus on balance sheet strength and reducing leverage [13][27] - The company aims to construct between 1.8 and 2.4 GW in the fiscal year ending March 31, 2026, with increased guidance for Adjusted EBITDA [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment, citing a recent trade deal between India and the U.S. that is expected to benefit the economy [4] - The company is committed to ESG initiatives, having received high ratings from LSEG and CDP, and aims to maintain leadership in sustainability within the sector [10][24] Other Important Information - The company has achieved water positive certification for two sites and continues to focus on reducing emissions and enhancing sustainability practices [10][25] - The company has been consistently growing its EBITDA at approximately 17% per year since its listing, relying on capital recycling without issuing new equity [12] Q&A Session Summary Question: Can you elaborate on the revised strategy towards more solar and BESS projects? - Management explained that the decision to decrease wind capacity was driven by lower costs for BESS and solar, improved execution capabilities, and historical performance issues with wind [30][33] Question: What is the update on transmission project delays and curtailment? - Management acknowledged these issues and noted that the government is actively working on solutions to improve transmission execution and address curtailment losses [40][41] Question: Are margins in cell manufacturing compressing? - Management indicated that margins have held up well, with a temporary lull during monsoons, but demand remains reasonable [44]