ReNew Energy Global plc

Thank you for standing by and welcome to Renu's third quarter FY26 earnings report. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over for opening remarks. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today. We have put out a press release announcing results for our fiscal 2026 third quarter ended December 31, 2025. A copy of the press release and the earnings presentation are available on the Invested Relations section of our website at www.renew.com. With me today are Suman Sinha, our Founder, Chairman, and CEO, Kailash Vaswani, our CFO, and Vaishali Nigamsina, our co-founder at Persons Sustainability. After the prepared remarks, which we expect will take about 30 minutes, we will open the call for questions. Please note that our Safe Harbor statements are contained within our press release presentation materials and materials 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 and the presentation on our website for a more complete description. Also contained in our press release, presentation materials, and annual report are certain non-IFRS measures that we reconciled to the most comparable IFRS measures. And these reconciliations are also available on our website in the press release, presentation materials, and our annual report. With that being said, it's now my pleasure to hand it over to Sumant.

Yes, hi. Thank you, Ananay. Good morning, everybody. and good evening, depending on your time zones. I'm glad to have you all on our earnings call for the third quarter and the first nine months of fiscal 2026. The year 2026 has kicked off with good news on the macro front. As you all would be knowing, a few days ago, India and the U.S. agreed on a trade deal. Apart from reducing the general overhang and uncertainty, This is likely to also open up the U.S. market again for Indian exporters and benefit the economy overall. This has also benefited the rupee in recovering some value versus the dollar. Additionally, the financing environment remains benign with interest rates on a downward curve. All this has enabled India's growth projections to stay above 7% in fiscal 2026 with roughly the same growth rate forecast by the government of India for fiscal 2027 as well. Coming to our sector, we have also seen some recovery in electricity demand as growth rebounded sharply in November 2026 with slightly better numbers in January 2026 as well. Power demand is expected to rebound to normal levels in fiscal 2027. In today's call, while I will cover the updates for the quarter, I will also briefly cover the strategic path forward for us as a company. Turning to our highlights. Since December of last year, our operating capacity has increased from 10.7 gigawatts to 11.8 gigawatts. Given that we have also sold 900 megawatts during this period and adjusting for this, our portfolio actually increased by 19% or 2 gigawatts over the last 12 months. We continue to focus on optimizing our portfolio for lower execution risk, capex, and more predictable cash flows. And hence, for our complex projects, we have decided to replace part of our wind of those projects with more battery energy storage systems or BES and solar capacity. We have reduced, therefore, the wind capacity in our committed portfolio from 2.5 gigawatts to approximately 850 megawatts, effectively taking up now to 19.2 gigawatts, which is inclusive of approximately 1.5 gigawatts of batteries. This pivot enables us to lower CAPEX reduce execution risk, as well as more accurately forecast our future cash flows going to less volatility in the weather patterns. Coming to our financial highlights. Our adjusted EBITDA increased by 31% to INR 74.8 billion for the nine months ending December 31, 2026, accompanied by an over six-fold increase in profit after tax. We also successfully raised $600 million to a bond offering and successfully refinanced our previous bond due in July 2026. The offering received demand in excess of $2 billion, and we were able to reduce the interest rate from the earlier 7.95% to 6.5%, thereby saving approximately $9 billion in annual interest expense. This was also the bond issued through Gift City. We also continued our capital recycling engine and sold another 300 megawatts of solar assets this quarter. Our manufacturing business contributed INR 10.8 billion to our adjusted EBITDA for the first nine months. As a result, we have increased the lower end of the guidance range for both our adjusted EBITDA and megawatts for the year. We now expect to deliver INR 90 to 93 billion of adjusted EBITDA, of which our manufacturing business should contribute between INR 11 billion to INR 13 billion. We have also narrowed the range for our project guidance and expect to construct between 1.8 and 2.4 gigawatts in the fiscal year ending March 31, 2026. Lastly, and most importantly, ESG is at the core of everything we do. I am happy to report that we continue to outperform on our ESG commitments. We have received an A grade rating from LSEG and a score of 90.41 out of 100, effectively placing us in the top quartile globally. We have also received an A grade rating from CDP Climate Change and Water Assessments for effective water management at our plants. Not only this, but we have also been able to get water positive certification for two of our sites. Turning to pages eight and nine, I wanted to highlight that this year marks a significant milestone for us as we mark 15 years of our operations. We now have three mature businesses, comprising a utility scale IPP business, a CLI business, as well as our manufacturing business. Turning to page 10, it is important to note the crucial strides Renew has continued to take against the backdrop of a transaction. We have commissioned approximately 1.9 gigawatts, ramped up our manufacturing capacity, and also raised $100 million from BII, British International Investments, to finance the cell expansion of our manufacturing business. Our CNI business is among the market leaders in the segment. and our portfolio has expanded by approximately 30% over the past year through contracts with marquee customers. Leverage also continues to trend downwards meaningfully, and we are already at approximately 5.5 levels for our operating portfolio, which is debt to EBITDA. Moving to page 11, I wanted to spend some time highlighting our key strengths. While everyone knows the size and scale of our portfolio, both in utility scale and CNI, over the years we have developed in-house O&M and EPC capabilities. We have also secured connectivity for our entire portfolio including for our letter of awards with five to six gigawatts of spare connectivity on hand. This is an important differentiator as timely connectivity continues to be a key metric in the sector that we operate in. Moving to page 12. It is important to note that we have been consistently growing our EBITDA at approximately 17% per year since our listing. We have managed to do this without issuing any new equity and relying on capital recycling, which has been more attractive for us. On page 14, I would like to add some new elements that will be pivotal for both growth, predictability, and profitability. We have de-risked our product execution and improved predictability of future cash flows by increasing more death and solar in our portfolio and reducing the reliance on wind. This will enable faster execution and more predictable revenues, given that we already have a 25-year PPA backing these tariffs. Our capital needs will continue to be fueled by a mix of internal cash generation and capital recycling, enabling us to improve returns. Lastly, and most importantly, we will now have increased focus on balance sheet strength and discipline and will actively look to reduce leverage even further. While we are now delivering profitable results, a focus on leverage and cost optimization should further enhance our returns and cash flows. Turning to page 15, we have provided some run rate numbers based on the current configuration gross and net of asset sales. We wanted to demonstrate that by selling about 1.6 gigawatts over a period, we can effectively reach a portfolio of 19.2 gigawatts without having to raise external capital, as well as reducing headline leverage, including under construction projects, from the current 6.7x levels to under 5.5. If we are able to do more asset recycling or farm downs, we plan to use that extra capital to get the leverage and corporate debt down even further. Moving to business updates on page 17, we continue to deliver on operating megawatts and now have an operating portfolio of 11.8 gigawatts, an increase of 19% adjusting for the 900 megawatts of assets during the last 12 months. Our overall portfolio is now 19.2 gigawatts, inclusive of best. In the past nine months, We have commissioned over 600 megawatts of wind projects and over 900 megawatts of solar. Turning to page 18, our manufacturing business continues to perform above expectations and has delivered an adjusted EBITDA of 10.8 billion in the first nine months of the current fiscal. The business has an external order book of 900 megawatts. Our under construction four gigawatt cell facility is progressing well and we should see it deliver its first cells later this fiscal year, later next fiscal year actually. Our module facilities are producing over 12 megawatts per day and have produced 3 gigawatts this year to date. But our cell facility is producing over 5.5 megawatts per day and has produced 1.4 gigawatts this year to date. So far this year, we have sold 2.6 plus gigawatts of modules, of which approximately 1.5 gigawatts have been sold externally, with the rest being used as part of our own operations. Turning to page 19, our CNI segment has done exceedingly well and is one of the largest CNI portfolios in the country. We have developed a strong partnership with global tech giants like Amazon, Microsoft, and Google. as well as expanded our customer base across the country. Overall, 50% of our portfolio is with these tech giants. The business is also well-placed to tap into upcoming business opportunities, such as energy management services and supply of renewable energy to data centers. Now I will hand it over to Kailash to discuss the financial highlights. Kailash, over to you.

Thanks, Samant. Turning to page 21, We continue to deliver consistent profitable growth. Since the same time last year, we have constructed over 1.9 gigawatt of projects, a 19% increase in operating capacity after adjusting for the 900 megawatts sold during the trailing 12 months. This year, so far we have commissioned 1.6 gigawatt of renewable capacity. Our revenue increased by 48% for the first nine months of this fiscal compared to last year due to increase in megawatts and a meaningful contribution by the manufacturing business. Our adjusted EBITDA for the third quarter of this fiscal is also up, largely on account of gain from asset save, scaling up of our manufacturing business, as well as an increase in the operating megawatts. Turning to page 22, our headline leverage continues to decline consistently. we have reduced from 8.2 times in December, 2024 to 7x debt EBITDA at present. And at 6.7x once you exclude the contribution from our JV partners, which are equity. On a trailing 12 month basis, the leverage for our operating portfolio was approximately 5.6x. Do note that our trailing 12 month EBITDA is not reflective of the run rate EBITDA for these assets, as many of these assets have less than one year of operations. We continue to pursue all options that will decrease our leverage ratio at the consolidated levels, such as asset recycling, cost optimization, and a reduction in our corporate debt. Turning to page 23, which covers details of our financing and asset recycling, recently we issued a $600 million bond at a coupon of 6.5%, which replaces the earlier bond, which was at 7.95%. This is the first bond from India's gift city, making it a marquee transaction. This issuance received strong investor interest of greater than $2 billion and has also enabled us to save $9 million in interest costs annually, in addition to withholding tax savings. Additionally, we also concluded sale of a solar 300-megawatt asset, taking our total asset sales for the year to 600 megawatts. through which we have raised a total of $275 million through capital recycling this year, including the $100 million that we raised from BII from our manufacturing business. Let me now hand it over to Vishali for comments on ESG.

Thanks, Kailash. Turning to slide 25, let's look at the advancements in renewed sustainability initiatives and targets. The global landscape for ESG in 2026 demands Mandatory action and demonstrable progress. And we are proud to be leading the way in the renewable energy sector and beyond. Starting with our recent ESG ratings.

For the LSEG ESG ratings, with our speaker. One moment while we reconnect.

Hello? Yes, I can hear you, Michelle.

Yes.

Okay.

So for the LSEG ESG rating, we received a remarkable score of 90.1 out of 100 and A grade placing us in the top quartile globally. We are ranked second amongst 346 companies in our sector, reflecting a strong 7% year-on-year gain and clear industry leadership. We also excelled in the CDP climate change and water assessments. We received an A rating in the climate change assessment featuring us in the prestigious global corporate A-list and retained an A- rating in water security. Overall, we are ranked in the top 4% globally by CDP. Water stewardship is a core pillar of Renew's environmental strategy embedded across our operations. We successfully initiated a water positivity pilot certifying two sites as water-positive. Our solar site in Ashok Nagar, Madhya Pradesh, was certified as water-positive, making it India's first water-positive solar plant. These achievements under new benchmarks for sustainability in the sector. Now turning to slide 26, let's review our advancements across the core pillars of our ESG initiatives and targets. Under the environment pillar, We have achieved our target of being carbon neutral by completing the verification for the fifth consecutive year for fiscal year 2024-2025. We continue to remain aligned to our annual SBT targets, achieving an 18.2% reduction in scope one and two emissions from the baseline in fiscal year 2025. As the country advances towards sustainable economic and inclusive development, our CSR initiatives have also evolved to strengthen the priorities of New India. Our initiatives have positively impacted over 1.7 million lives so far. A major highlight is our Project Surya, which is killing 1,000 solar panel workers as solar technicians, with 720 women trained and over 200 already placed in the sector. significantly boosting gender equality and skilled employment. Under governance, we are making strong progress towards our target to rank amongst the top five global energy and utilities companies by 2030 across leading ESG rating agencies. This is reflected in an S&P Global CSA score of 84 and LSEG score of 90.4. and top-tier CDP ratings of A for climate change and A- for water. These results reflect our continued commitment to responsible and sustainable practices. I will now turn it over to Kailash. Over to you, Kailash.

Thank you, Vaishali. Turning to guidance for the fiscal year ending March 31, 2026, we have increased the lower end of our EBITDA guidance range by 3%. and now expect that our adjusted EBITDA will be between 90 to 93 billion rupees. We now expect to construct 1.8 to 2.4 gigawatts up from 1.6 at the lower end of projects during the year and generate cash flow to equity of INR 14 to 17 billion. We are also increasing the guidance for the adjusted EBITDA contribution from our manufacturing business to 11 to 13 billion rupees.

With that, we'll be happy to take questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you were on a speakerphone, please pick up the handset to ask your question. Your first question comes from Maheep Mendeley with Mizuho. Please go ahead.

Hey, thanks for taking the question, yeah. Hey, just one question on the revised strategy, someone that you talked about having more solar and best on the projects going forward. Could you just talk more in detail about that, what drove that decision, so all the puts and takes there, and on the solar side, you've been manufacturing the modules and cells. Is there any plans to also do something like that on the best side as well? Thanks.

Yeah, thank you, Mahesh. Yeah, look, so the reason we are basically decreasing the amount of wind in the portfolio is because when we did some of these projects, at that time, price levels for BESS were significantly higher than where they are right now, and also for solar. So in general, with prices of BESS coming down substantially, the ability to firm up power through solar plus BESS has actually improved. And therefore, to get to the right solutions that are desired by the customers, we require essentially less wind from an overall new configuration standpoint. So that is one reason that the amount of wind has decreased. The second thing also is that, as you know, we've had experience in wind where PLS have been unfortunately lower than expected over the last seven years, over the last five years. And We don't know exactly when that trend will reverse. It may reverse next year. It may take a little longer. But fundamentally, the variability in wind is a lot higher than it is in the case of solar. And execution also in general, because a lot of the execution in solar is in Rajasthan, where it's easier to get land. And a lot of the execution of wind is in sort of Deccan, central India, which a lot of it is agricultural land. It's usually harder to get. And so therefore, to do a similar amount of capacity is easier in solar than it is in wind. And so for both of those reasons, I'd say all three reasons, which is related to change of price in BESS, change of the issue of wind variability, and the issue of easier execution in solar, we have therefore tried to reduce the amount of wind in our portfolio going forward. And so in the close to about seven gigawatts of now capacity of PPS that we have, we have reconfigured those projects as we are allowed to under the terms of the bid, of the various bids. And we are now therefore trying to go for a higher amount of solar plus base. There is of course still close to a gigawatt of wind, but it's down substantially from two and a half gigawatts that we had earlier. So those are the reasons. As far as manufacturing best is concerned, it's not something that we've actively looked at seriously at this point. And the reasons are actually twofold. One is, or I would use it threefold. One is that there is no restriction at this point on imports of batteries from China or sales from China. And you know that you can import at a much cheaper level than you can manufacture domestically. And so that was one reason. And the second reason was that on the technology front, technology moves a lot faster in the case of batteries. And so it just requires a lot more expertise to be able to get into the understanding of the right cell technologies and so on. And a lot of the cell manufacturing in the country, or in any country for that matter, is really driven by the EV industry and technology. So that's a market that we obviously would not be targeting for our best production. A lot of it would have to go into that segment, which is something that we don't understand as well. And so that's why we haven't looked at cell manufacturing so far, or battery cell manufacturing so far.

I really appreciate that clarity.

And then maybe just on the update on the take private or the course in one of the slides you talked about the path forward here. Is that the strategy going forward or should we expect more in terms of the path forward or more talks on privatization?

So, Maheem, that's not something that we can really comment on, obviously, as you know, because that's a very specific topic and that, you know, it should be something that requires to be commented on and that the company will make an appropriate disclosure at that time.

I'll go back to Nikhil. Thanks.

The next question comes from Nikhil Naganya with Bernstein. Please go ahead.

Thank you for taking my question. I'm good to see the focus on reducing leverage and increasing solar plus basis instead of wind. My first question falls on the industry issues, which are broader, which is transmission project delays and curtailment, both which are outside our control, but are impacting the industry. Are we seeing any directional improvement on those two aspects or they continue to be a hurdle for us?

Yeah, Nikhil, thanks for the question. So you know that obviously these are issues that have got now a lot of visibility because it's impacting the industry as a whole. And therefore there has been a lot of discussion within the ministries, that is MNRE and MOP, on how to deal with this issue. And there's a lot more focus on how to get transmission execution improved. And there are various things that the government is doing, which I can tell you about separately perhaps, or you can also find out what's happening. And the same thing on containment. So essentially, in the case of containment, a joint committee has sort of been established between the secretaries of MNRE and MOP to look at how to deal with this issue and how to essentially look at this loss, which obviously accrues to us, but which should actually get borne by a broader set of stakeholders. So that is something that is under discussion right now. I don't know exactly which direction or where it will finally end up at, or even how long it might take to get to the conclusion. But certainly there is a recognition that this is a loss, that is a systemic loss, and there is no reason for only the developers at the sharp end of the stick to be taking on this loss in our book. So that... Philosophy is accepted. What is the right way of dealing with this is something that the government is thinking through. And on transmission as well, they're working on a lot of different things to see how they can improve the transmission build-out.

Got it. Just to follow up on that, on the curtailment bit, is it fair to assume where we have a GNA and not a TGNA, there we are compensated by the DISCOM in case of curtailment?

Yes, that is the case. So, for example, in our situation, you know, of the total loss we've incurred on account of this combined issue, approximately about 30% or 35% we're getting compensated back because we had GNA, a permanent GNA. So when you have a permanent GNA, you basically get paid based on your schedule rather than on the power that you supply. And in the case where you have a TGNF cost, you have to take the loss on your chin, which is now what the government is trying to figure out how to socialize that loss a little bit more across all stakeholders. But in the case of GNF, you get compensated.

Got it. Appreciate that. And one last question on the manufacturing bit. I mean, good source of cash for us. On the cell manufacturing side of the cell, are we seeing any compression in margins or that continues to hold?

You know, so far it's held up. There was a temporary lull during the monsoons when inventories tend to build up a little bit and execution slows down. But margins have again picked up a little bit in this current quarter. And it looks like the demand is reasonably okay at this point.

Got it.

Thank you. Those are my questions. Thanks a lot for answering them.

As a reminder, if you would like to ask a question, please press star then 1 to join the question queue. The next question comes from Puneet Gulati. Please go ahead.

Thank you so much. My first question is on the change in configuration with more to work with air-con solar. Would it be fair to say that Even unadjusted for risk, the IRRs are better than what you could get out of wind?

I would say not at the time of bidding, but what has worked out historically in solar because of CAPEX reductions has been that people have ended up with higher IRRs in solar because CAPEX has declined to sometimes more steeply than expected. We are seeing a bit of reversal in that right now, as you know, because people have bid very aggressive numbers in recent auctions. And the prices have actually gone up, you know, given what's happening in China and so on. So it's a little time dependent. But in general, I would say that solar has tended to give higher returns than wind on account of reduction in capex over a longish period of time.

So for your projects, if you want to execute it with wind versus solar, you will earn more out of it.

If you do it more with solar than with wind, obviously, look, what happens is that we look to optimize our returns on the configuration at all points in time, right? Now, as I said, there are three reasons of shifting away from wind. One is just configuration optimizations. because of the new capital costs that are now available in the market for this. So that is allowing us to get better returns than what we had assumed at the time we bid. Okay. So that is basically what's happening. But when you tend to execute wind, the risks are higher, not just on the capital cost side, but, and we've seen cost overruns happening in wind more frequently than we've seen happening in solar because of execution problems that I was mentioning. and secondly also once the asset is up and running then also sometimes you see that when performance does not show up as expected and therefore your returns end up going down so uh so i would say that those are things that you um can't necessarily or you don't really model for necessarily but those end up happening in real life okay so and now it doesn't happen in every case but on on balance it can happen and so therefore in general The view is that solar risk-adjusted returns are more steady than wind risk-adjusted returns are.

I was just saying that if you see the presentation on page 15 and then we have the updated configuration on page 41, so basically what has happened is With the fall in best prices and the new configuration, essentially our capex for the build-out is going down by around 60 billion rupees. Okay. Whereas, on the other hand, the EBITDA is only declining by around 6.5 to 6.8 billion. So, effectively... our EV EBITDA for the under construction portfolio is improving a bit, apart from obviously having greater control of execution and more predictable cash flows. Even from a return perspective, because of the way best prices have trended and solar prices have trended, it's better for our returns.

Understood. And secondly, in your overall production or capacity, how much would be under TGNA and what sort of containment would you have based in the current quarter?

In the current quarter?

See, the TGNA is not a fixed number. If you just ask for the last quarter, you know, actually some of our projects actually moved from TGNA to GNA. So I can't give an exact number, but it's probably in the few hundreds of megawatts now. I think it was maybe close to a gigawatt earlier. Now it's perhaps down to 400-500 megawatts, because 500 megawatts or thereabouts move from TGNA to GNA. But as you build new projects, it depends on the substation that you're connecting into. If that substation has not been properly connected at the back end to various other transmission lines to the rest of the national grid, then any project that connects to the substation faces or gets TGNA. And then whenever those back-end transmission lines get built out, then that TGNA converts to GNA. So it could be that a project is on TGNA for a quarter or two quarters, and it's some part of the new project that you're building out. So that is the way it's sort of working. There could be 500, 700 megawatts that are at any given point in time on TGNA.

Okay. And on this TGMA capacity for last quarter, how much would we have faced curtailment?

Anil, do you have those numbers?

Yeah, yeah, yeah. So, Puneet, you know, when we started the last quarter, there was roughly, as Suman said, close to a gigawatt of capacity on TGMA, out of which about 600-odd megawatts moved to permanent GMA. So, currently, there may be somewhere 400 or a little below that, which is on TGMA.

And by the way, when something's on PG&A, it doesn't mean that it's getting fully curtailed. It just means that there is some degree of curtailment, which could be 10%, 20%, something in that range. Yeah, and that also depends on the day and the demand and all of those things.

Got it. And lastly, you talked about your target leverage ratio at 5.5 for fully constructed portfolios. You're already at 5.6 for your operational portfolio. How much more do you want to bring your leverage down? Is there really a need to bring down leverage? Once your portfolio is constructed, you should automatically be there or there is a general need to bring down a large leverage?

So maybe one thing I'll clarify. You know, one thing I'll clarify, Puneet, sorry, but Kailash, before you answer, is Puneet, when we say 5.5x is the headline leverage. So whereas right now it's closer to 6.5, 6.6, the intention would be to bring it down to that level over time. But yeah, Kailash, please.

Yeah, I think, Puneet, you know, that's one clarification. And the other thing is that you know, overall, you know, feedback that we have received. And, you know, we also believe strongly in that is that, you know, we need to have more accruals, you know, coming to shareholders than to debt providers. And in that context, obviously, you know, bringing on leverage is the easiest way to do that because, you know, I think cost reduction, you know, we have managed to achieve as much as we can, but I think it's just the headline that, that number which takes out the free cash flows to the firm, that's the reason why we would like to bring it down.

Understood. 6.7 going down to 5.5 is what one should think about. Any target date in mind or year in mind?

No, so I would say that, you know, basis, you know, whatever number crunching that we've done, I think by between 28 to 30 time, then we'd be able to achieve this. Okay.

Thank you so much and all the best. Thanks.

That does conclude our Q&A session and our conference for today. Thank you for participating and you may now disconnect.