ReNew Energy Global Plc (RNW) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with significant revenue and profit growth, a reduction in debt, and strategic portfolio shifts towards solar and BESS projects. The Q&A section reveals positive analyst sentiment, with strong margins in cell manufacturing and improved IRRs for solar projects. Although there are uncertainties regarding the take-private strategy and transmission issues, the overall outlook remains optimistic, driven by strong financial metrics and strategic focus on high-growth areas. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
Key Financial Performance
Adjusted EBITDA Increased by 31% to INR 74.8 billion for the 9 months ending December 31, 2026. This growth was driven by gains from asset sales, scaling up of the manufacturing business, and an increase in operating megawatts.
Profit After Tax Increased over sixfold year-over-year. The reasons for this significant growth were not explicitly detailed in the transcript.
Revenue Increased by 48% for the first 9 months of fiscal 2026 compared to the previous year. This was due to an increase in megawatts and a meaningful contribution from the manufacturing business.
Debt-to-EBITDA Ratio Reduced from 8.2x in December 2024 to 7x at present, and further to 6.7x excluding contributions from JV partners. This reduction was achieved through asset recycling, cost optimization, and reduction in corporate debt.
Bond Issuance Raised $600 million at a coupon of 6.5%, replacing an earlier bond at 7.95%. This resulted in annual interest savings of $9 million and withholding tax savings.
Manufacturing Business Adjusted EBITDA Contributed INR 10.8 billion for the first 9 months of fiscal 2026. This was supported by external orders and internal operations.
Operating Capacity Increased by 19% year-over-year to 11.8 gigawatts, after adjusting for the sale of 900 megawatts. This growth was driven by commissioning new wind and solar projects.
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Operating Highlights
Operating capacity: Increased from 10.7 GW to 11.8 GW, reflecting a 19% growth after adjusting for 900 MW sold.
Portfolio composition: Shifted focus from wind to battery energy storage systems (BESS) and solar capacity, reducing wind capacity from 2.5 GW to 850 MW.
Manufacturing business: Contributed INR 10.8 billion to adjusted EBITDA in the first 9 months. External order book of 900 MW and under-construction 4 GW cell facility progressing well.
C&I business expansion: Expanded portfolio by 30% over the past year, partnering with global tech giants like Amazon, Microsoft, and Google.
Trade deal impact: India-U.S. trade deal expected to benefit Indian exporters and the economy.
Financial performance: Adjusted EBITDA increased by 31% to INR 74.8 billion for the 9 months ending December 31, 2026. Profit after tax increased sixfold.
Bond issuance: Raised $600 million through a bond offering, reducing interest rate from 7.95% to 6.5%, saving $9 million annually.
Capital recycling: Sold 300 MW of solar assets this quarter, raising $275 million through asset sales this year.
Leverage reduction: Reduced leverage from 8.2x in December 2024 to 6.7x debt/EBITDA, with plans to further reduce it below 5.5x.
ESG initiatives: Achieved A grade ratings from LSEG and CDP Climate Change and Water assessments. Certified two sites as water positive.
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Risk or Challenges
Execution Risk in Complex Projects: The company has decided to replace part of its wind projects with battery energy storage systems (BESS) and solar capacity to lower execution risk, CapEx, and improve cash flow predictability. This indicates challenges in executing complex wind projects.
Leverage and Debt Levels: The company has a high leverage ratio of 6.7x debt/EBITDA, which, while declining, remains a significant financial risk. Efforts to reduce leverage through asset recycling and cost optimization are ongoing.
Dependence on Asset Recycling: The company relies heavily on asset recycling to fund growth and reduce leverage. This dependence could pose risks if market conditions for asset sales deteriorate.
Volatility in Weather Patterns: The company has reduced reliance on wind projects due to weather pattern volatility, which impacts revenue predictability.
Regulatory and Financing Risks: While the company successfully raised $600 million through a bond offering, reliance on external financing and regulatory compliance in different markets could pose risks.
Supply Chain and Manufacturing Challenges: The company’s manufacturing business, while performing well, is dependent on timely completion of its under-construction 4-gigawatt cell facility. Delays or cost overruns could impact financial performance.
Economic and Market Conditions: The company’s performance is tied to macroeconomic conditions, including interest rates and currency fluctuations, which could impact profitability.
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Guidance & Outlook
Adjusted EBITDA: The company has increased the lower end of its adjusted EBITDA guidance range by 3% and now expects it to be between INR 90 billion to INR 93 billion for the fiscal year ending March 31, 2026.
Project Construction: The company expects to construct between 1.8 and 2.4 gigawatts of projects during the fiscal year ending March 31, 2026, up from the previous lower-end guidance of 1.6 gigawatts.
Manufacturing Business Contribution: The adjusted EBITDA contribution from the manufacturing business is expected to be between INR 11 billion to INR 13 billion.
Cash Flow to Equity: The company expects to generate cash flow to equity of INR 14 billion to INR 17 billion for the fiscal year ending March 31, 2026.
Portfolio Growth: The company plans to reach a portfolio of 19.2 gigawatts, inclusive of battery energy storage systems (BESS), without raising external capital. This includes selling about 1.6 gigawatts of assets over a period.
Leverage Reduction: The company aims to reduce headline leverage, including under-construction projects, from the current 6.7x levels to under 5.5x. Additional asset recycling or farm-downs will be used to further reduce leverage and corporate debt.
Renewable Energy Mix: The company is pivoting to include more battery energy storage systems (BESS) and solar capacity in its portfolio, reducing reliance on wind projects. This is expected to lower CapEx, reduce execution risk, and improve predictability of future cash flows.
Manufacturing Expansion: The under-construction 4-gigawatt cell facility is progressing well and is expected to deliver its first cells in the next fiscal year.
C&I Business Growth: The C&I business portfolio has expanded by approximately 30% over the past year, with strong partnerships with global tech giants like Amazon, Microsoft, and Google. The business is well-positioned to tap into opportunities such as energy management services and renewable energy supply to data centers.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What drove the decision to focus more on solar and BESS projects and reduce wind in the portfolio?
A:The decision was driven by three main factors: 1) Prices for BESS and solar have decreased significantly, making solar plus BESS configurations more attractive to customers. 2) Wind variability has been higher than expected over the past 5-7 years, leading to less predictable performance. 3) Solar projects are easier to execute due to better land availability in Rajasthan compared to wind projects in agricultural areas of Central India. As a result, the company has reconfigured its portfolio to include more solar plus BESS, reducing wind capacity from 2.5 GW to 1 GW.
Q:Are there plans to manufacture BESS domestically?
A:No, there are no active plans to manufacture BESS domestically. The reasons include: 1) No restrictions on importing cheaper batteries or cells from China. 2) Rapid technological advancements in batteries require expertise that the company currently lacks. 3) The EV industry drives most cell manufacturing, which is not a target market for the company.
Q:What is the update on the take-private strategy?
A:The management declined to comment on the take-private strategy, stating that any necessary disclosures will be made at the appropriate time.
Q:Are there improvements in addressing transmission project delays and curtailment issues?
A:The government is actively working on these issues. For transmission delays, there is increased focus and various measures being implemented to improve execution. For curtailment, a joint committee has been established to address systemic losses and explore ways to distribute these losses across stakeholders. However, the timeline and final outcomes are uncertain.
Q:Is compensation provided for curtailment under GNA agreements?
A:Yes, under GNA agreements, the company is compensated for curtailment based on scheduled power rather than actual power supplied. Approximately 30-35% of losses from curtailment are compensated under GNA agreements.
Q:Are margins in cell manufacturing holding strong?
A:Yes, margins in cell manufacturing have held strong. There was a temporary dip during the monsoon season due to inventory buildup, but margins have improved in the current quarter, and demand remains stable.
Q:Are IRRs better for solar plus BESS compared to wind?
A:Historically, solar has provided higher IRRs than wind due to capital expenditure reductions over time. While recent aggressive bidding and price increases have affected returns, solar projects generally offer more predictable and steady risk-adjusted returns compared to wind.
Q:What is the current status of T-GNA capacity and curtailment?
A:As of the last quarter, approximately 400-500 MW of capacity is under T-GNA, down from 1 GW earlier. Curtailment under T-GNA is not total and typically ranges from 10-20%, depending on demand and other factors.
Q:What is the target leverage ratio, and when is it expected to be achieved?
A:The target leverage ratio is 5.5x, down from the current 6.6x. The company aims to achieve this by 2028-2030 to increase shareholder accruals and reduce debt.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer to the question about the take-private strategy, stating that they cannot comment on the topic and will disclose information if necessary in the future.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
BESS
CDP
CI
Chairperson Sustainability
Change Water
Climate Change
ESG rating
INR month
India
Kailash
LSEG
Page
bond
capacity
capital recycling
cash flow
cell
demand
energy
grade
interest
level
leverage
manufacturing
megawatt
pillar
portfolio gigawatts
press release
release presentation
scale
score
sector
utility
water
RNW Transcript
ReNew Energy Global Plc (RNW) Q3 2026 Earnings Call Transcript
Positive2-16
The earnings call highlights strong financial performance with significant revenue and profit growth, a reduction in debt, and strategic portfolio shifts towards solar and BESS projects. The Q&A section reveals positive analyst sentiment, with strong margins in cell manufacturing and improved IRRs for solar projects. Although there are uncertainties regarding the take-private strategy and transmission issues, the overall outlook remains optimistic, driven by strong financial metrics and strategic focus on high-growth areas. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction.
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The earnings call presents a mixed picture: positive cash position and AMG revenue growth, but challenges in IMG revenue and market stagnation. Q&A reveals management's cautious approach to growth and AI acquisitions, with unclear details on restructuring savings. The focus on stock buybacks and acquisitions, alongside a slight dividend increase, suggests stability rather than growth. Market cap indicates moderate sensitivity, leading to a neutral prediction.
ReNew Energy Global Plc (RNW) Q2 2026 Earnings Call Transcript
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The earnings call presents a mixed outlook: strong commissioning performance and positive project updates are offset by declining margins and uncertainties in PPA conversions. The Q&A reveals potential risks in project timelines, transmission issues, and curtailment impacts. While optimistic guidance exists, concerns about margin normalization and refinancing add caution. With a market cap of approximately $2.36 billion, the stock is likely to experience neutral movement, reflecting balanced positive and negative factors.
ReNew Energy Global Plc (RNW) Q1 2026 Earnings Call Transcript
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The earnings call summary reflects a mix of positive financial performance, with a 43% YoY growth in adjusted EBITDA and improved margins, but also highlights risks such as regulatory hurdles and strategic execution challenges. The Q&A section reveals concerns about competition, land acquisition, and management's unclear responses on sales projections. While strong financials and optimistic guidance are present, uncertainties and strategic risks balance the sentiment, leading to a neutral prediction for stock price movement.
RNW Report
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