Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ReNew Energy Global PLC (RNW, Financial) has successfully commissioned almost 500 megawatts of capacity this financial year and is well advanced on many other construction projects.
- The company has secured 2.2 gigawatts of PPAs during Q1 FY25 and expects to sign the majority of the PPAs from its current pipeline within the fiscal year.
- ReNew Energy Global PLC (RNW) has a robust pipeline with lower module prices and supply chain security, which is expected to generate better returns than previous projects.
- The company has achieved a five-star safety rating from the British Safety Council for one of its projects, highlighting its commitment to safety.
- ReNew Energy Global PLC (RNW) has made significant strides in its ESG efforts, including avoiding 16 million tonnes of GHG emissions and achieving carbon neutrality for Scope 1 and Scope 2 emissions for the fourth consecutive year.
Negative Points
- The company's adjusted EBITDA increased by only about INR400 million despite a significant increase in revenue due to higher megawatts, impacted by factors such as lower PLFs and the absence of late payment surcharges.
- There was a slight increase in DSOs this quarter, attributed to quarterly distribution and seasonality, which could indicate potential cash flow management issues.
- The company experienced lower PLFs for wind projects due to weather variations, impacting revenues by about INR1.3 billion.
- ReNew Energy Global PLC (RNW) has not yet provided detailed financial metrics for its external module sales, leaving some uncertainty about the potential revenue and margin profile.
- The company is still in the process of stabilizing its solar cell manufacturing, with full operational capacity expected only by the end of the financial year, which may delay potential revenue contributions from this segment.
Q & A Highlights
Q: You indicated that you've contracted 600 megawatts of external module sales. Can you talk about the potential revenue and margin profile for those sales, the anticipated timing of recognition, and whether the customer is within India or outside?
A: These are customers within India. We are not disclosing specific details on pricing, but these sales are accretive in terms of overall margins and will add to the company's EBITDA as we go forward. (Kailash Vaswani, CFO)
Q: You have commissioned portions of the RTC and peak power project. Can you update us on the performance of these commissioned portions and your confidence in meeting the PPA requirements?
A: We have commissioned parts of the project and are currently selling power through the merchant market, seeing attractive realizations better than our base case. (Kailash Vaswani, CFO)
Q: How are you thinking about asset recycling this year? Are there particular projects you are looking to monetize?
A: We want to be opportunistic. We have a few discussions ongoing, and asset recycling is offering us the lowest cost capital. We will be disciplined and may monetize some assets as needed. (Kailash Vaswani, CFO)
Q: Could you talk about the timing of the 600 megawatts of module sales? Will it be this fiscal year or next?
A: Most of it will be back-ended towards the end of this financial year, with some slipping into the next financial year. We prioritize meeting our IPP solar business requirements and will look to sell surplus modules opportunistically. (Kailash Vaswani, CFO)
Q: Are you seeing interest from markets outside of India for your modules?
A: Yes, we are seeing interest. Once our cell plant is commissioned and stabilized, we will be in a position to start supplying cells to both domestic and export markets, likely from next financial year onwards. (Sumant Sinha, CEO)
Q: The DSO increased this quarter. Is this due to Telangana or other factors?
A: It's mostly a quarterly distribution issue. The first quarter revenues were lower compared to receivables, causing the ratio to appear higher. There is no significant impact or delays from offtakers. (Kailash Vaswani, CFO)
Q: The wind PLFs were weak. Is this due to weather variations or equipment issues?
A: It's just weather. There are no wind turbine performance issues. Our turbines are performing as expected across all regions and models. (Sumant Sinha, CEO)
Q: Have you adjusted your long-term assumptions for wind PLFs given recent underperformance?
A: Yes, we have significantly changed our methodology to give more weight to recent years, making our future forecasts more conservative. We are being more conservative than third-party wind forecasting agencies. (Sumant Sinha, CEO)
Q: Can you provide an update on the solar cell capacity and its commissioning timeline?
A: We are close to starting initial trial production, expected in the next few months. Full stabilization and ramp-up should be completed by the end of this financial year, with full capacity delivery expected from next financial year. (Sumant Sinha, CEO)
Q: How is the transmission tie-up for the 1.5 to 2 gigawatts you are looking to commission?
A: All our transmission and connectivity for the entire capacity, including future projects, is fully tied up. We have been proactive in securing connectivity in the best substations, which will drive higher profitability. (Sumant Sinha, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
