ReNew Energy Global plc (RNW) Q2 2027 Earnings Call Transcript

Thank you for standing by, and welcome to Renew's 2Q FY27 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 1 on your telephone keypad. I would now like to hand the conference over to Anunay Shahi. Please go ahead. Thank you. Good morning, everyone, and thank you for joining us. We have put out a press release announcing results for the second quarter of fiscal 2027 for the period ended September 30th, 2026. A copy of the press release and the earnings presentation are available in the Investor Relations section of Renew's website at www.renew.com. With me today are Suman Sinha, our Founder, Chairman, and CEO, Kailash Vaswani, CFO, and Vashali Nizam Sinha, Co-Founder and Chairperson Sustainability. After the prepared remarks, we will open the call up 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 our annual report are certain non-IFRS measures that we reconcile 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, it's now my pleasure to hand it over to our Founder Chairman and CEO, Sumanth Sinha. Sumanth, over to you.

Yeah, thank you, Anunne. Good morning, good afternoon, and good evening, everybody. I'm glad to have you all on our earnings call for the second quarter and the first half of fiscal year 2027. The first half of this fiscal has been one of the strongest in our history. We have continued to deliver on our promise of profitable growth, with strong growth in EBITDA and profit after tax, our lowest ever receivable days, continued success in project execution, and an improving leverage profile. As we had expected at the start of the year, power demand has also come back strongly, and this continues to support the long-term growth of renewable energy in India. Turning to the highlights for the quarter on page 6, our operating portfolio now stands at 13.8 gigawatts, which is a 23% increase year on year after adjusting for the 400 megawatts of assets that we sold during the last 12 months. We have commissioned over 1.3 gigawatts so far in fiscal 2027, including 628 megawatts in the second quarter, and about 2.7 gigawatts over the trailing 12 months. We have consistently delivered on our project execution over the past few years and expect the momentum to continue. Our committed portfolio is currently 20.5 gigawatts, including 1.7 gigawatts of BESS, and our total pipeline is approximately 27 gigawatts, including LOAs which have not yet been converted into PPAs. This is 2.7 times the size of our portfolio at the time of listing about five years ago. Coming to our financial performance, we continue to deliver profitable growth consistently on a year-on-year basis. In Q2 of fiscal 2027, we delivered adjusted EBITDA of INR $33.6 billion, including INR $4.1 billion from third-party sales from our manufacturing business. This is up 28% year-on-year. Our profit after tax was INR $6.4 billion, up 37.3% year-on-year. For the first half of fiscal 2027, adjusted EBITDA was approximately INR $64 billion, up almost 20% year-on-year, and profit after tax was INR $12.4 billion, up 26.2%. We also generated approximately INR $10.2 billion of cash flow to equity in the second quarter, and more than INR $23 billion in the first half of fiscal 2027. We have also benefited from stronger wind PLS in Q2 of fiscal 2027 compared to last year. However, on the solar side, we have continued to see some impact of grid-related Thank you. And our 4-gigawatt cell expansion is now in advanced stages, with commercial operations expected to begin in the fourth quarter of this fiscal. Work is also underway on our 6.5-gigawatt ingot wafer facility, which we announced following the introduction of the LMM3 for wafers, and which we were fund through a mix of internal accruals and an external fundraise. Capital recycling also continues its momentum. In June, we closed the sale of a 100-megawatt solar asset in Tamil Nadu. In August, we signed definitive documents for the sale of over 1 gigawatt of assets, which is expected to generate around $190 million of cash flow. And in October of this year, we signed definitive documents for the sale of our controlling shareholding in 3E, a European Renewable Energy Asset Performance Management and Analytics platform, which is expected to generate another 84 million US dollars. Together, these transactions are expected to bring in approximately US dollars 300 million and once again demonstrates the quality of our assets and our ability to find buyers at attractive valuations. On the back of this strong performance, particularly from our manufacturing business, we are raising the lower end of our fiscal 2027 adjusted EBITDA guidance Thank you, Sumant.

Turning to page 7, an update on the take private process. As you will recall, on August 11, 2026, the new signed a transaction agreement with the consortium comprising of CPP investments in Sumant. The acquisition will be effected through a UK scheme of arrangement, which is subject to a vote by the non-consortium shareholders. The special committee comprising of independent directors receive Rothschild's opinion that the cash offer is fair from a financial point of view to the holders of cash-out shares. The committee considers the cash offer and the transaction agreement fair and reasonable and intends to unanimously recommend the shareholder vote in favor of the scheme. Jera and Platinum Cactus A, 2019 Trust, an affiliate of ADEA, who approximately holds 51.1% of the voting power of the share subject to the scheme, is evocably undertaken to vote in favor of it. Under the scheme, non-consortium shareholders may receive U.S. dollars 7.02 per share in cash. Alternatively, subject to certain conditions, as will be laid out in the scheme document, they may elect to keep their shares and remain shareholders through a rollover arrangement. On October 28, 2026, the New Endy Consortium signed a side letter. It amends the leaver provisions for certain replacement awards under the new incentive plan. Otherwise, the transaction agreement is unchanged. We continue to work towards the required regulatory approvals. The Schedule 13-E-3 transaction statement, including the preliminary scheme document, has been filed with the SEC, and it was amended on October 28, 2026. Subject to all conditions being satisfied, including regulatory approvals, we expect the scheme to become effective in the first quarter of calendar year 2027. Turning to industry backdrop slide 13, renewables continues to lead capacity addition in India. They made up for more than 85% of all power capacity added in the first half of fiscal In line with recent trends. About 25 gigawatt of renewable energy capacity was added in the first half, including 21 gigawatt of solar, 3 gigawatt of wind, and 0.7 gigawatt of hydro. As of September 30, 2026, installed renewable energy capacity, including large hydro, stood at 299 gigawatt. That includes 171 gigawatt of solar and 59 gigawatt of wind capacity. On the demand side, as we have said at the start of the year, we expect power demand to rise in fiscal 2027, held by El Nino, and a favorable base year. Demand has been higher than last year and every month so far. Demand for the first half of fiscal 27 was up almost 10% year-on-year. Demand in October 26 compared to October 25 was up by 21%. Peak demand has already reached around 271 gigawatt in fiscal 27, which is a new high. Supply is struggling to keep up, especially outside solar hours. On September 9, 2026, the peak demand deficit reached around 8 gigawatt, and the evening deficit averaged 2.5 gigawatt during September. Again, in October, peak demand is up 24% year-on-year. All of this has also been reflected in rising exchange prices. This shows how important round-the-clock and storage-backed renewable energy capacity has become. We believe our growing BESS and RTC FDRE projects puts us in a strong position to meet this need. Turning to project execution on slide 14, our delivery remains de-risk and on track for our annual guidance. Our operating portfolio stands at 13.8 gigawatt, including 100 megawatt or 250 megawatt hour of BESS, up 19% year-on-year, net of the 400 megawatt sold, and up 23% adjusting for asset sales. In fiscal 2027 to date, we have commissioned 1.3 gigawatt comprising of 1.2 gigawatt of solar and 132 megawatt of wind capacity. Looking ahead for solar, around 200 megawatt has been erected and is in advanced stages of commissioning. The majority of modules for the rest of the 327 execution are already at site and the balance is secured to in-house production. For best, 100% of pricing is locked in at attractive rates and we are on track for this year's execution. For wind, around Around 300 megawatt has been erected and is in advanced stages of commissioning, and 100 percent of the wind turbines for the year are locked in within budgeted levels. Land is largely tied up or acquired for the next 12 months. Importantly, more than 75 percent of our 24.5 gigawatt committed capacity is with customers dated A plus or above, and this will continue to become higher with incremental growth largely Coming from central or high-quality CNI offtakers, turning to our CNI business on slide 15, we continue to have one of the largest CNI portfolios in India at 2.9 gigawatt across five states, of which 2.6 gigawatt is commissioned, including 3.38 megawatt that we commissioned so far this year. Our share of big tech and hyperscaler customers keeps increasing, with Amazon, Microsoft, and Google collectively accounting for about half of our contracted off-stake in our CNI business. With around 10.7 gigawatt of data center capacity expected in India by 50, 2031, representing a 20 billion market opportunity and 75 terawatt hour of power demand, we believe we are well-placed to participate in supplying energy to data centers. Turning to our manufacturing business on slide 16, our manufacturing business continued its profitable run in this quarter as well. In Q2 of fiscal 27, revenue from external sales of modules and sales was around 12 billion rupees, and adjusted rebuild-up from external sales was 4.1 billion rupees, compared to 3.3 billion in Q2 of fiscal 26, at a margin of about 33%. For the first half, adjusted EBITDA from external sales was 9.7 billion rupees compared to 8.6 billion rupees in Q2 fiscal 26. We produced 528 megawatt of cells and 890 megawatt of modules during the quarter with best-in-class cell efficiency of around 23.5% and industry-leading utilization rates. Our external order book stands at approximately 3.3 gigawatts. As a result of our continuous strong performance, we've updated the annual EBITDA guidance from our manufacturing business to rupees 12 to 14 billion, from IR10 to 12 billion rupees previously. Please note that we expect around 40 to 60 percent of production to be used captively by our IPP business at arm's length pricing, which does not get reflected in the consolidated We also continue to expect some moderation of margins in the second half of the year. On our top-down expansion of 4-Gigawatt cell plant, civil works and PEB works are completed. The ETP and clean room are almost complete. All tools are on the site, printing lines are installed, and we expect to produce the first cells by Jan 27. On the ingot wafer plant, land and major approvals are in place, civil work has started, and basic Marketing engineering is almost done. We expect commercial operations in the first half of calendar year 28, funded through internal accruals and an external fundraise. Turning to page 18, our Q2 results reflect strong operating execution, continued growth in earnings, and disciplined capital allocation. As of September 30, 2026, our total portfolio was approximately 20.5 gigawatt, including 1.7 gigawatt of BESS, Operating capacity is stored at 13.8 gigawatt, comprising 5.7 gigawatt of wind, 7.9 gigawatt of solar, 99 megawatt of hydro, and 100 megawatt or 250 megawatt hour of BES. We also had 6.6 gigawatt of committed capacity, including 1 gigawatt of wind, 4 gigawatt of solar, and 1.6 gigawatt of BES. Since April 25, we have commissioned about 2.7 gigawatts, comprising mainly of around 2.2 gigawatts of solar, 439 megawatts of wind, and 25 megawatts of beds. On consolidated performance for Q2 of fiscal 27, revenue was up 28 percent on the year. Adjusted EBITDA was up 28 percent, and PAC was up 37 percent. For Q2 fiscal 27, income was 49.6 billion rupees. Revenue was $46.5 billion, adjusted EBITDA was $33.6 billion, or $350 million, and PAC was $9.9 billion, compared to $5.6 billion of PAC in the same quarter last year. For the first half, revenue was up 21%, adjusted EBITDA was up 20%, and PAC was up 26%. Adjusted EBITDA margins for Q2 of fiscal year 27 were 82.9% for IPP, excluding 3E, 33.3% of manufacturing, and 69.3 on a consolidated basis. We remain disciplined in capital allocation, and our net debt to trailing 12 months of adjusted EBITDA for operating projects has come down to almost 5.3x from 5.7 at the end of last quarter. Of our net debt of 711.3 billion, 26.7 billion rupees represents contributions from our JV partners, and approximately 104.7 billion rupees relates to under-construction projects, with debt partially drawn down for about 1.5 gigawatt of renewable energy, including BES. Excluding these projects, which don't contribute to EBITDA, net debt for operational projects stands at 579.9 billion. We remain committed to reducing our overall leverage, and a part of our capital recycling proceeds will be used towards this. The one gigawatt of assets locked in under definitive agreements are expected to result in $190 million of cash flow on closing, and we expect another $84 million from the sale of our controlling shareholding in 3E. The improvement in our credit profile is also being recognized externally with positive output provisions from Moody's and CARE. On working capital, as shown on slide 27, our IPP DSO was 63 days as of September 2026, an improvement of 21 days year-on-year and 31 days over two years, and our lowest ever, held by the rupees 5.7 billion we received from Andra Pradesh in July 2026. Manufacturing DSO was nine days. As central government counterparties became a larger part of our portfolio, more than 75% of our 20-year-old portfolio will be with high-quality offtakers that pay within 30 days. Our balance sheet remains robust. Cash and cash equivalents, bank balances, and investments, including short- and long-term investments, stood at 95.1 billion rupees as of September 3026. I will now hand over the call to Vishali for ESG and Sustainability Update.

Moving to slide 21, as global sustainability transitions from qualitative goals to rigorous operational execution, value chain reporting has become a baseline expectation for transparency and accountability. Driven by these evolving expectations, we continue to strengthen our ESG approach to enhance nature-based disclosures and deeper supply chain engagement. On Nature, Rinku joined the Task Force on Nature-Related Financial Disclosures, TNFT Adopter Community, as the second India-based electric utility to do so. We completed ESG assessments for 100% of our critical suppliers for the third consecutive year with zero suppliers classified as high risk. We also extended our engagement to Tier 2 suppliers through a pilot covering 15 value chain partners, further embedding ESG practices across our broader supply chain. Renew further strengthened its global sustainability credentials by being named among time-most sustainable companies in 2026, the only India-based utility company to receive this recognition. Turning to slide 22, we continue to make steady progress against our ESG targets. Starting with our environment commitments, we remain focused on advancing our net zero agenda. Renewable energy now accounts for nearly 36% of our manufacturing business' electricity consumption. We have also published a transition plan aligned with Renews SBTI validated net A just and inclusive energy transition must create opportunities not only for the planet but also for the people and communities at its heart. Our community initiatives have now positively impacted more than 2 million lives. Under Project Surya, 532 women have been trained as solar technicians with 115 successfully placed. Women currently represent 18.07% of our workforce, while board diversity stands at 22%. Our ESG performance also continues to be reflected in strong external ratings. We are currently awaiting results from ESG ratings for 2026 and will disclose progress across all ratings in our upcoming meetings. I will now turn it over to Kelash to take us through some guidance.

Thank you, Vishali. Turning to guidance on page 24, backed by the strong performance in the first half, including from our manufacturing businesses, we are raising the lower end of our Fiscal 27 Consolidated Adjusted EBITDA guidance from $103 billion to $105 billion, taking the range to $105 to $109 billion. This now includes $12 billion to $14 billion from manufacturing, up from $10 to $12 billion earlier. And rupees 1 billion to 2 billion from asset sales gains. We continue to expect to construct between 1.6 to 2.4 gigawatt during fiscal year 27 and to generate cash flow to equity of 18 to 22 billion rupees. For the total committed RE portfolio of 20.5 gigawatt, including 1.7 of best, we continue to expect run rate adjusted EBITDA of 134 to 140 billion rupees and cash flow equity of 32 to 36 billion rupees, assuming normal weather patterns and excluding contributions from our manufacturing business. Please note that this includes the one gigawatt of projects for which we have signed definite agreements to sell. With that, we will 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 are on a speakerphone, please pick up your handset to ask a question. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Operator, I think if we don't have any questions on the phone, we have one question through the webcast link.

Certainly, sorry.

Should I go ahead?

Yes, you can go ahead.

Yeah, so the question is, and I'll read it out, is can you quantify what the impact of curtailment has been this year, and can you also comment on how the monsoon has been this year, and how do you see this impacting the company, and if you could expand on how you plan to How do you fund the upcoming debt maturities? Maybe I can take the first part of the question and Kailash will handle the rest. So on curtailment, so there has been some impact of curtailment on our solar projects. So this quarter, the impact was close to around $9-10 million on account of TGNA for some of our recently commissioned solar projects and for the full half-year However, it is around $18 million to $19 million. Having said that, it is moving over the course of the year, and as some of you may have read, there are also a few things under discussion with the government of India, and they can provide some relief for it. But that's the quantum of impact this year. With respect to monsoon, while the monsoon has been weaker, having said that, our wind PLFs this year have been significantly better than what they were last year.

Yeah, and of the majorities which are coming up almost around, including some other debt which is not in the form of bonds, the total majorities are almost $1.7 billion. Of that, But currently, we have a full line of sight of $1.25 billion, so that we've already got commitments in place, and the balance is something which is due in the middle of next year, which

we will refinance closer to the date. I think there's one more question from Maheep Manloey of Mizuho. The question is, how do you think about India manufacturing next year? I guess the reference is to how the manufacturing sector as a whole is doing. So, Maheep, you know, as we have also highlighted in our presentation, we currently have module, operating module and cell capacity. So while the margins of the module side of things have reduced significantly, but we We are seeing reasonable margins and strong margins on the cell business this year as well, at least so far, while we do expect some moderation going forward as more cell capacity comes online. But so far, at least, we are seeing strong margins, and that's what's been reflected in our manufacturing results as well, which is where the EBITDA has grown compared to last year.

If there are no further questions, Operator, we can close the call. Certainly, we do not have any questions on the audio bridge at this time.

That does conclude our conference for today. Thank you all for participating. You may now disconnect.