ReNew Energy Global Plc Q2 FY2025 earnings call

Key Points - Sumant highlighted that ReNew is on track to deliver megawatts and accretive growth for FY2025, with 860 megawatts commissioned so far and a portfolio growing to 16.3 gigawatts including 900 megawatt hours of battery storage. - Manufacturing was a strategic move to secure the supply chain, with cell and module facilities ramping up, and the company being listed as a Bloomberg Tier 1 supplier. - Kailash discussed financials, noting a 31% increase in profit after tax, cash from operating activities at INR20.1 billion, and net debt to EBITDA leverage below 6x. - Vaishali spoke about ESG efforts, including achieving carbon neutrality for the fourth consecutive year, 10% reduction in Scope 1 and 2, and various CSR initiatives like Women for Climate and employee-driven programs.

In the segment performance, ReNew reported a 14% growth in adjusted EBITDA this quarter driven by cost optimization. Profit after tax increased by 31% primarily due to lower G&A and finance costs. The 6.4 gigawatt solar module manufacturing facilities are fully operational, and the cell facility in Gujarat has started trial production. The external order book for the manufacturing business stands at over 900 megawatts. In terms of revenue contribution, the manufacturing segment is becoming a significant part of the overall portfolio growth, with the solar and wind power segments also contributing to the overall financial performance.

ReNew is reaffirming its megawatts and adjusted EBITDA guidance. The contracted portfolio is updated to 16.3 gigawatts. Seasonally, Q3 numbers are normally lower than Q2 due to weather patterns. The company is on track with its commissioning plans, with around 860 megawatts commissioned YTD and expectations to meet megawatt targets for the year.

• Extreme weather changes globally pose challenges to clean energy delivery. - Risks related to government policies, such as proposed restrictions on cell imports starting April 2026. - Potential slowdown in PPA conversion and challenges with legacy PPAs that have lower tariffs compared to current levels. - Weather-related variability affecting wind power plant load factors (PLFs).

Q: Could you provide more detail on the RTC project and its transmission readiness?

A: The RTC project will be ready in the second half of FY2025, with no expected delay in transmission or interconnection. Some parts of the project can be sold in the merchant market if commissioned ahead of final completion.

Q: How does the new proposed restriction for cell manufacturing affect your manufacturing plan?

A: The government is considering an ALMM for cells starting April 2026, giving 18 months to plan. ReNew is actively considering expanding cell capacity to meet internal requirements.

Q: What drove cost optimization and how to think about medium-term cost cuts?

A: Cost optimization was driven by canceling discretionary spends, renegotiating O&M contracts, and writing back provisions. Medium-term cost cuts are expected through operating leverage and continued efficiency efforts.

Q: Are there signs of a slowdown in tendering activity or PPA signing in India?

A: No slowdown in bidding yet, but there is a gap in PPA conversion with about 40 gigawatts of PPAs not signed off from auctions. Legacy PPAs with lower tariffs are under discussion with regulatory authorities.

Q: Why did finance costs remain stable despite a 19% increase in gross debt?

A: Finance costs stabilized due to firm hedges on rupee-dollar exchange rate exposure and refinancing of high-cost debt, resulting in a 200 basis point saving in finance costs.