Prepared remarks
Thank you for your patience, and welcome to the ReNew First Quarter FY '26 Earnings Report. I will now turn the conference over to Mr. Anunay Shahi. Please continue.
Thank you. Good morning, everyone, and thank you for joining us. We put out a press release announcing results for the fiscal 2026 first quarter ended June 30, 2025, last night, and a copy of the press release and the earnings presentation is available in the Investor Relations section on ReNew's website at www.renew.com. With me today are Sumant Sinha, our Founder, Chairman and CEO; Kailash Vaswani, our CFO; and Vaishali Nigam Sinha, Co-Founder and Chairperson, Sustainability. After the prepared remarks, which we expect will take about 30 minutes, we will open the call 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 furnished or implied, I apologize, by such forward-looking statements.
So we encourage you to review the press release we furnished in our Form 6-K and the presentation on our website for a more complete description. Also contained in our press release, presentation materials, and 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. It's now my pleasure to hand it over to our CEO, Sumant Sinha.
Thank you, Anunay. Good morning, good afternoon, good evening, everyone, and I'm glad to have you all on our earnings call for the first quarter of fiscal 2026. We continue to strive for excellence, with a vision to be a global leader in clean energy. We recently filed our 20-F and our second integrated report, which highlights our strong commitment to transparency and sustainability. As we look ahead this year, we are determined to outperform past results. While certain factors may remain outside our control, our focus on improving margins and maintaining capital discipline will help us enhance shareholder value. Our investments over the past few years, particularly in manufacturing, are beginning to yield positive results. In terms of quarterly highlights, since July last year, we have added approximately 2.2 gigawatts of renewable energy capacity, reflecting a 23% growth in our portfolio after accounting for asset sales.
We are also expanding our committed portfolio, having signed power purchase agreements for 3.7 gigawatts of installed renewable energy capacity for projects that are expected to yield returns at the higher end of our targeted internal rate of return range, if not better. We reaffirm our fiscal year 2026 megawatt guidance, aiming to complete the construction of 1.6 to 2.4 gigawatts of capacity in that year. We also anticipate signing several outstanding power purchase agreements in fiscal 2026, which will clarify our future plans beyond the current 18.2 gigawatts of committed portfolio. We will maintain a disciplined and selective approach in pursuing future growth, focusing on securing projects with lower risk and higher returns. Regarding our financial performance, we delivered robust results this quarter, achieving an adjusted EBITDA of INR 27.2 billion, which represents a 43% year-over-year growth.
In the first quarter of fiscal 2026, our profit after tax reached INR 5.1 billion, exceeding the profit for the entirety of fiscal 2025. We have also significantly improved our leverage metrics for operational projects and reaffirmed our fiscal year 2026 guidance. Our manufacturing business, with an operational capacity of 6.4 gigawatts of modules and 2.5 gigawatts of cells, has stabilized and produced 900 megawatts of modules and 400 megawatts of cells this quarter. Manufacturing contributed INR 5.3 billion to adjusted EBITDA for this quarter, prompting us to revise our fiscal year 2026 adjusted EBITDA guidance for the manufacturing segment upwards to between INR 8 billion and INR 10 billion. We remain committed to our ESG goals, as demonstrated in our integrated report. This year, we successfully reduced our Scope 1 and Scope 2 emissions by 18.2% from the fiscal year 2022 baseline, exceeding our target of 12.6%, and saved 540,372 cubic meters of water, achieving a 51% improvement.
Execution remains our top priority and differentiator. Over the past 12 months, we have commissioned more than 2.2 gigawatts of capacity and continue to expect to complete construction of 1.6 to 2.4 gigawatts in fiscal 2026. Year-to-date, we have commissioned over 700 megawatts, which includes more than 650 megawatts of solar capacity and around 50 megawatts of wind. Additionally, we have completed the commissioning of over 500 megawatts of wind and approximately 300 megawatts of solar, ensuring we are on track to meet our construction targets this year. We are optimistic about finalizing power purchase agreements from our current pipeline during this fiscal year. Our solar manufacturing facilities are fully operational, producing over 10 megawatts of modules and 5 megawatts of cells daily. In the first quarter, we produced more than 900 megawatts of modules while operating at high efficiency levels.
We have third-party orders for around 800 megawatts more this fiscal year, with nearly 1.9 gigawatts already delivered. Earlier this year, in May, we finalized a significant investment from British International Investments amounting to over USD 100 million for a roughly 10% stake in the solar manufacturing division, with the transaction expected to close by the end of the second quarter of fiscal 2026. Construction of our new 4-gigawatt TOPCon cell facility is also progressing well, with land acquisition complete and civil works underway. Our manufacturing division has started to make significant contributions to the consolidated profit and loss statement, delivering an adjusted EBITDA of INR 5.3 billion this quarter at a margin exceeding 40%. The EBITDA contribution this quarter was somewhat higher than usual since a significant portion of production was dedicated to external sales, which may decrease in the coming quarters. Furthermore, the margins were slightly elevated due to cost advantages and timely procurement, which may normalize somewhat moving forward.
Thanks, Sumant. Turning to Page 12. We continue to deliver consistent growth across all our performance indicators. Since the same time last year, we have constructed over 2.2 gigawatts of projects, a 23% increase in operating capacity after adjusting for the 600 megawatts sold during the trailing 12 months. Our cost optimization initiatives continue to help us with EBITDA margins in the IPP business improving from 80.7% to almost 82%. Our profit after tax stands at 13x compared to Q1 FY '25, largely driven by an increase in megawatts, higher PLF that we got quarter year-on-year, meaningful contributions from the manufacturing business, as well as our cost optimization measures. Turning to Page 13 and the EBITDA walk. While we saw subdued solar PLFs this quarter due to lower irradiation from the early onset of monsoons, higher wind PLFs made up for the loss from solar, resulting in a net positive impact of INR 1.4 billion on EBITDA year-over-year.
The new projects that we commissioned over the last 12 months contributed INR 1.8 billion to our EBITDA, while the manufacturing business came in at INR 5.3 billion. Over the past year, we have sold over 600 megawatts of solar assets as well as the transmission line due to which we have lost close to INR 300 million of EBITDA for this quarter. Leverage at the operating asset level continues to be well below the 6x threshold that we have set. On a trailing 12-month basis, the leverage was around 5.7x EBITDA, excluding our under construction portfolio and the convertible debt contribution from our JV partners. The cash flow from our manufacturing business has also contributed meaningfully towards the reduction in our leverage levels. As we continue to grow our portfolio, the proportion of under construction projects as a percentage of our overall portfolio should come down and will improve the ratios in addition to our efforts to be disciplined in our approach towards capital deployment.
Just to update on the offer from the consortium, we announced ReNew had received a final revised nonbinding offer at USD 8 on 3rd of July. Discussions between the consortium and the special committee are ongoing, and the special committee has indicated that an update will be provided to the shareholders no later than 30th September 2025.
Thank you, Kailash. Now turning to Page 15. I'm delighted that we released ReNew's second annual integrated report for fiscal year '25. This affirms our commitment to transparency, accountability, and leadership in ESG reporting. Building on the strong foundation of our inaugural edition, the FY '25 report set new benchmarks in our ESG vision, performance, and disclosures. The report has been crafted in alignment with IIRC, GRI, SASB, IFRS S2, UNGC, among other global reporting frameworks. There are significant enhancements over the previous year's report, including the integration of the business responsibility and sustainability report, referred to as the BRSR framework, to align with Indian regulatory requirements, strengthened interlinkages between financial and non-financial indicators, and a deeper articulation of the interplay amongst the six capitals, namely financial, manufacturing, natural, social relationship, and intellectual capital.
There is an innovative introduction of an AI chatbot for seamless navigation and learning more about the integrated report, positioning the fiscal year '25 report as a first-of-its-kind smart report. The financial and the non-financial parameters for FY '24 and '25 have been externally assured by SR Batliboy & Company LLP and E&Y, respectively. Renew's FY '25 ESG performance highlights: In FY '24 and '25, ReNew has made significant strides in its ESG efforts, showcasing a strong commitment to safety, sustainability, and social responsibility. Environment: We successfully reduced our Scope 1 and 2 emissions by 18.2% from the FY '22 baseline, surpassing our target of 12.6%, and saved 540,372 cubic meters of water, marking a 51% improvement. Our operations saw 76% of electricity from green sources, exceeding our '25 target of 50%, and we achieved carbon neutrality for Scope 1 and 2 emissions for the fifth consecutive year.
On the social front, through our socioeconomic program, we have positively impacted over 1.7 million lives with a CSR spend of INR 320 million this year. Our workforce today reflects a 16% gender diversity rate, with women now representing 12% of STEM roles approximately. We achieved a lost time injury frequency rate (LTIFR) of 0.21, a 5% reduction from the previous year and for the second consecutive year as well. 100% of our critical suppliers were assessed against ESG criteria, which is a significant step towards our supply chain commitment. Governance: Our Board composition reflects our commitment to diversity and independence, with women marking up 40% and independent directors comprising 60% of the Board. On Page 16, we highlight the key value additions we have made with this year's annual integrated report. Our key value addition this year is our voluntary alignment with BRSR. As I mentioned, it is India's sustainability reporting framework, underscoring our dedication to enhancing ESG transparency in line with national and global expectations.
For the first time, we have also mapped material ESG issues to our ERM, which is the enterprise risk management framework, marking a significant step towards embedding sustainability into our enterprise-wide risk strategy. We have also included a detailed progress showcase against our firm-wide sustainability targets, reinforcing accountability and our commitment to delivery. Additionally, we have expanded our decarbonization strategy to cover manufacturing operations and continued our alignment with the EU taxonomy. Now turning to Page 17 to review the progress made across our ESG targets. We remain committed to our overall sustainability targets. We completed the LCA, which is the life cycle assessment of our manufacturing solar module in Jaipur and published a verified EPD, which is the environmental product declaration under the International EPD system. Additionally, two of our sites are now certified as water positive for operational water as per Niti Aayog’s Water Neutrality Standard for Indian industry.
Social responsibility is core to our mission. We've already impacted over 1.7 million lives, aiming for 2.5 million by 2030, so we are on track. We have partnered with IIT and ISM Dhanbad to upskill coal mine workers in green technologies. Our CDP A rating for supplier engagement reflects our leadership in value chain sustainability. As we move forward, we remain dedicated to embedding resilience, responsibility, and impact into everything we do.
Thank you, Vaishali. Turning to the guidance for fiscal year ended March 31, 2026. We reiterate our guidance provided earlier. We expect to be at the higher end of the adjusted EBITDA range of INR 87 billion to INR 93 billion if the weather stays on track for the rest of the year and the asset sales fructify in line with our expectations. We also continue to expect to construct 1.6 to 2.4 gigawatts of projects during the year and generate cash flow to equity of INR 14 billion to INR 17 billion. During the year so far, while we saw a positive impact versus last year in Q1 as far as weather is concerned, we have subsequently seen a slight underperformance, both on wind and solar, taking away most of our weather upside during the first quarter. We have increased the range of EBITDA contribution from our manufacturing business to INR 8 million to INR 10 million, given the performance in the first quarter. With that, we'll be happy to take any questions.
Questions and answers
Our first question will come from Justin Clare with ROTH Capital Partners.
I first wanted to just start out on the manufacturing business here. So you had indicated in your prepared remarks that the production volume went primarily to external sales in fiscal Q1, and it sounds like we could see a decline in the volumes in the coming quarters. So just wondering actually if you could share how many megawatts were delivered in fiscal Q1? And then if you could share how many megawatts you plan to deliver in the remaining quarters in fiscal 2026. I know you have an 800-megawatt backlog, but also wondering if you anticipate booking additional volumes with expected delivery in fiscal '26.
Justin, thanks for your question. So just to answer it, in Q1 FY '26, we sold almost close to 700 megawatts of modules to third parties. The balance was basically used for our internal consumption. Largely, the profit and the margins come from our cell business, which is predominantly third-party focused. In that, we sold almost 1.2 megawatts of direct sales of cells to third parties. So there was some upside, which was related to that.
Got it. Okay. And could you talk about expectations through the back half of the year? Do you think you could sell or book more for this year for delivery? Or have you essentially reached your capacity for the year? How should we think about that?
So the reason for us revising our guidance on the EBITDA contribution from the manufacturing business is that we continue to see contribution of third-party sales through the remaining part of the year as well. Just how much to the extent that will happen is something that we will get to know as we progress through the course of the year. But right now, we have reasonable visibility to the guidance that we've given.
Got it. Got it. Okay. And then just one more. Just wondering if you could update us on the attractiveness of the bidding environment that you see currently. How is that evolving? Are there any particular areas that you see as being particularly attractive right now? And then just how active do you plan to be in fiscal '26 through the balance of the year when you're looking at new projects here?
Yes. I would say that the bidding environment is continuing on a steady basis. The government has this target to get up to 500 gigawatts by 2030. So they are looking to auction out 50 to 70 gigawatts every year. In line with whatever projects are being auctioned, we do participate in them. I would say that our win ratio has been a little bit lower compared to, say, fiscal '24 and part of '25 because the competition has become a little bit, I would say, irrational to some extent. We are seeing people really going with much lower return expectations. We have a very disciplined approach when it comes to bidding, as we have demonstrated over the last many years. And so unless we make our required rate of return, which is our hurdle rate, we are happy to not win any capacity. But I would say that we have also a very good pipeline that we are sitting on. So there is no urgency for us to really add capacity at lower returns.
And the next question will come from Nikhil Nigania with Bernstein.
Good to see the numbers and the strategy focusing on manufacturing and battery rather than pump storage. My first question is about renewable execution. The numbers have been positive, but I would like to understand the key issues that others and possibly the sector are experiencing, including grid availability, right-of-way issues, and transformer shortages. How is that landscape shaping up?
Go ahead Sumant.
I believe that the addition of capacity is generally progressing at a reasonable pace. There are occasional delays in some of the transmission infrastructure, which sometimes falls behind the generation capacities that are being installed. However, these delays are typically just a few months and not more significant than that. Regarding transformer shortages, if you plan ahead with your orders, which we usually do, it is manageable. Therefore, I don't think this is significantly hindering our execution. The main challenges to execution tend to be the usual issues related to land acquisition and such, more than anything else.
Understood. And I remember your earlier statement, I think a couple of calls back, specifically on wind, you said you'll be surprised to see India do more than 5 gigawatts of wind a year given the challenges that come along with land or evacuation. Would you still hold the same views? Or do you see that front improving as well?
Even if we do more than 5, it may be a little bit more. I don't see that number being exceeded this year, by the way. Maybe in future years, if there are more people doing wind projects, maybe the number goes up by a little bit. But I don't see it getting to 10 gigawatts or a number of that nature. So maybe 5 will go to 6 or something. But last year, for example, we saw only about 4 gigawatts getting done. Maybe this year, it will be 5, maybe in future years, it will be around the same is my sense.
Got it, Sumant. My second question then is on the solar manufacturing business, which seems to be doing very well. I was surprised to see a 0.8 gigawatt TOPCon facility. I thought the entire 2.4 was Mono PERC. So if you could give some color on that and if there are plans to convert the entire facility to TOPCon going forward?
No, Nikhil, the 2.4 is actually Mono PERC. If we gave the impression that it was 800 megawatts of TOPCon, that is not correct. The entire tunnel facility is Mono PERC. However, the new facility we are establishing, which is a total of 4 gigawatts, will be a TOPCon facility. Regarding the modules, the entire Jaipur plant has been converted to TOPCon modules.
Got it. Understood. I think I did it wrong. Appreciate that. And any plans on Ingot Wafer as some of your peers are doing or...
I think we are going to follow government lead in that matter. As you know, the government policy has been really the one that has been driving the implementation of manufacturing capacities. And at this point, we'll have to wait and see whether they come up with an equivalent of ALM for wafers or not or they start giving us that indication. So at this point, those conversations haven't yet got to a point where we can be comfortable to set up anything on the wafer side. But should that come into place, then yes, for sure, we'll think about wafers as well.
Got it. I understand that. And one last question I had was on the recent ammonia tenders, which happened. If you could share some color, did ReNew participate or were the bids just too aggressive for it to make sense for ReNew?
Yes. No, we did not participate for the reason that we felt that those contracts were not appropriately structured. First of all, there are only 10-year PPAs or green ammonia purchase contracts. So we felt that was just too short. So what happens to your entire plant after 10 years was not something that was clear. And the second thing is there are some structural other issues with those contracts, like there is no change in law pass-through, for example, and so on. So therefore, we decided not to participate in that tender, actually. Because again, as Kailash said earlier, we are not sitting in a situation where we need to participate in any new bids desperately. We can be very selective about the quality of the bids that we win and the returns that we win them at. So our view was that the green ammonia tender was just not structured appropriately. That's why we did not participate. And secondly, if you see some of the tariffs that people have won, those also seem quite low, especially given all the risks involved and the informative of the contracting involved in that case.
There are no further questions at this time. I would like to conclude the question-and-answer session as well as our conference call for today. Thank you for your participation, and you may now disconnect.