ReNew Energy Global Plc Q2 FY2027 earnings call

• Financial Performance & Growth:

  • Delivered strong profitable growth with Q2 FY27 adjusted EBITDA of INR 33.6 billion (up 28% YoY) and Profit After Tax (PAT) of INR 6.4 billion (up 37.3% YoY).
  • First-half adjusted EBITDA reached INR 64 billion (up ~20% YoY), and PAT was INR 12.4 billion (up 26.2%).
  • Generated robust cash flow, with INR 10.2 billion in Q2 and over INR 23 billion in the first half.
  • Improved credit profile: Moody’s revised outlook to positive; CARE upgraded outlook to positive.

• Operational Execution & Portfolio:

  • Operating portfolio stands at 13.8 GW (up 23% YoY net of asset sales). Commissioned 1.3 GW in FY27 YTD, including 628 MW in Q2.
  • Total committed pipeline is 20.5 GW (including 1.7 GW BESS), with a total pipeline of ~27 GW.
  • Lowest-ever Receivable Days (DSO) of 63 days for IPP, aided by improved collections from central government counterparties.
  • Strong wind performance in Q2 offset some solar curtailment impacts.

• Capital Recycling & Asset Sales:

  • Closed sale of 100 MW solar asset in Tamil Nadu.
  • Signed definitive agreements for sale of >1 GW assets (expected US$190 million cash inflow) and controlling stake in 3E (US$84 million).
  • Total expected proceeds from these transactions are ~US$300 million, used to reduce leverage.

• Manufacturing Expansion:

  • 4 GW cell expansion nearing completion, with commercial operations expected in Q4 FY27.
  • 6.5 GW ingot-wafer facility announced, funded via internal accruals and external fundraise, targeting H1 FY28.
  • External order book stands at ~3.3 GW.

• Take-Private Transaction:

  • Consortium led by Jera and Platinum Cactus proposed a cash offer of US$7.02 per share.
  • Independent directors recommend the scheme as fair and reasonable.
  • Scheme expected to become effective in Q1 CY2027, subject to regulatory approvals and shareholder vote.

• Integrated Power Projects (IPP) & Other: Revenue was INR 46.5 billion in Q2 FY27, up 28% year-on-year. Adjusted EBITDA margin for IPP (excluding 3E) stood at 82.9%. The segment contributed significantly to the consolidated revenue growth driven by strong wind PLFs and project execution.
• Manufacturing Business: Generated INR 12 billion in external sales revenue in Q2 FY27 with an adjusted EBITDA of INR 4.1 billion, representing a margin of approximately 33%. This business unit has been profitable and is expanding capacity with new cell and ingot-wafer facilities.

• Consolidated Adjusted EBITDA: Raised lower end from INR 103 billion to INR 105 billion. New guidance range is INR 105–109 billion for FY27.
• Manufacturing EBITDA: Updated annual guidance upward from INR 10–12 billion to INR 12–14 billion due to strong performance and margins.
• Asset Sale Gains: Expects INR 1–2 billion from asset sales gains included in the consolidated guidance.
• Capex/Execution: Continues to expect construction of 1.6–2.4 GW during FY27.
• Cash Flow to Equity: Guidance remains unchanged at INR 18–22 billion for FY27.
• Run Rate Metrics: For the full committed RE portfolio (20.5 GW), expects run-rate adjusted EBITDA of INR 134–140 billion and cash flow to equity of INR 32–36 billion (assuming normal weather, excluding manufacturing).

• Solar Curtailment: Grid-related curtailment impacted solar projects, costing approximately USD 9–10 million in Q2 and USD 18–19 million in the first half of FY27. Discussions with the Government of India are ongoing for potential relief.
• Debt Maturities: Significant debt maturities totaling nearly USD 1.7 billion are upcoming. While USD 1.25 billion is already secured, refinancing the remaining balance is required closer to maturity dates.
• Margin Moderation: Expectations of moderation in manufacturing margins in the second half of the year as more cell capacity comes online and competition increases.
• Weather Dependency: Wind performance is weather-dependent; while Q2 was strong, future periods could vary based on monsoon and wind patterns.

Q: What is the quantified impact of solar curtailment this year, how did the monsoon affect operations, and how will upcoming debt maturities be funded?

A: Management stated that solar curtailment impacted Q2 earnings by approximately USD 9–10 million (via TGMA) and USD 18–19 million for the first half of the year, noting ongoing discussions with the Indian government for relief. Regarding the monsoon, although it was weaker than usual, wind PLFs were significantly better than last year, mitigating negative impacts. On liquidity, CFO Kailash Vaswani clarified that while total near-term debt maturities amount to nearly USD 1.7 billion, the company has secured commitments for USD 1.25 billion. The remaining balance, due mid-next year, will be refinanced closer to the date using available lines of credit and capital recycling proceeds.

Q: How does management view the outlook for the Indian manufacturing sector next year, particularly regarding margins and capacity?

A: In response to a question about the manufacturing sector's trajectory, management highlighted that their current module and cell capacities are generating strong margins, especially in cells, despite overall industry margin compression on modules. They noted that while they expect some moderation in margins as more cell capacity comes online globally, their specific operational efficiency and cost structure have allowed them to maintain profitability. The updated guidance for manufacturing EBITDA (INR 12–14 billion) reflects this resilience, though they cautioned that increased competition and capacity additions may pressure margins in the second half of the fiscal year.

Q: Can you provide details on the take-private transaction timeline and the strategic rationale behind the recent asset sales?

A: Management confirmed that the special committee of independent directors recommends the take-private scheme, which offers shareholders USD 7.02 per share or a rollover option. With key shareholders like Jera and Platinum Cactus having voted in favor, the scheme is expected to close in Q1 CY2027 pending regulatory approvals. Strategically, the recent asset sales (including >1 GW of renewable assets and the 3E platform stake) are part of a disciplined capital recycling strategy. These transactions are expected to generate ~USD 300 million in cash, which management intends to use primarily to reduce net debt and improve the leverage profile, thereby strengthening the balance sheet ahead of the private listing.