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Renew Energy Global PLC (RNW) Q3 2023 Earnings Call Transcript

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ReNew Energy Global Plc (NASDAQ:RNW) Q3 2023 Earnings Conference Call February 17, 2023 8:30 AM ET

Company Participants

Nathan Judge - IR

Sumant Sinha - Founder, Chairman & CEO

Kedar Upadhye - CFO

Conference Call Participants

Morgan Reid - Bank of America

Nikhil Nigania - Sanford C. Bernstein

Justin Clare - ROTH Capital Partners

Amit Bhinde - Morgan Stanley

Puneet Gulati - HSBC

Angie Storozynski - Seaport Research Partners

Operator

Thank you for opinionated by and invited to nan ReNew’s Third Quarter Fiscal Year 2023 Earnings Conference Call. All participants are successful a listen-only mode. There will beryllium a position followed by a question-and-answer session. [Operator Instructions]. I would now for illustration to manus nan convention complete to Nathan Judge of Investor Relations. Please spell ahead.

Nathan Judge

Thank you Jason and bully morning, everyone, and convey you very overmuch for joining us. This greeting nan institution issued a property merchandise announcing results for its fiscal 3rd 4th 2023, ended December 31, 2022. A transcript of nan property merchandise and nan position are disposable connected nan Investor Relations conception of ReNew's website astatine www.renew.com. With maine coming are Sumant Sinha, Founder, Chairman and CEO and Kedar Upadhye, nan CFO. After nan prepared remarks we will unfastened nan telephone for questions.

Please note, our Safe Harbor Statements are contained wrong our property release, position materials, and disposable connected our website. These statements are important and integral to each our remarks. There are risks and uncertainties that could origin our results to disagree materially from those expressed aliases implied by specified forward-looking statements. So we promote you to reappraisal nan property merchandise we furnished successful our Form 6-K and position connected our website for a much complete description. Also contained successful our property release, position materials, and yearly study are definite non-IFRS measures that we reconciled to nan astir comparable IFRS measures, and these reconciliations are besides disposable connected our website successful nan property release, position materials, and yearly report. It is now my pleasance to manus it complete to Sumant.

Sumant Sinha

Yes, convey you Nathan and a bully morning, bully afternoon, aliases bully evening to everybody listening successful connected nan call. Welcome to nan call. Let maine commencement disconnected by saying that nan Indian renewable power marketplace remains incredibly robust and we spot plentifulness of precocious return finance opportunities successful nan horizon, wherever we do judge we person a competitory advantage, specifically successful nan analyzable projects and firm PPA segments. We person developed a level that is differentiated not only successful India but moreover erstwhile compared to peers globally. We person operational expertise crossed renewable energy, technologies pinch starring proprietary integer capabilities that creates optimal and customized merchandise for our customers.

We judge that nan world is shifting, customers are progressively recognizing nan ambiance alteration imperative arsenic an existential consequence and are moving quickly to decarbonize. We are 1 of nan fewer companies globally that tin present that decarbonization solutions for our customers that astir of nan companies are not really focusing connected arsenic much. As these solutions require technological leadership, complexity, and customization we judge that we will beryllium nan decarbonization leader and will beryllium moreover amended positioned to capitalize connected these opportunities much than ever before.

From our position arsenic we look astatine it today, we judge that our EBITDA will turn astatine slightest 50% complete nan existent guidelines arsenic we execute connected our full portfolio successful nan coming 2 years. We expect to furniture further maturation connected apical of this pinch a peculiarly absorbing information of upcoming auctions complete nan adjacent year, fixed nan complexity. In summation to this is nan improvement of opportunities and digitalization and greenish hydrogen that supply our investors unthinkable upside options that galore countries are not focusing connected arsenic overmuch astatine this point.

We judge that nan worth of our shares do not bespeak 1 of nan champion maturation rates successful nan renewable power manufacture mixed pinch equity returns that are among nan highest successful nan world, truthful overmuch truthful that we person already brought astir $60 cardinal of our ain banal which represents complete 15% of nan fees load [ph] successful only nan past 10 months aliases so. We person different $90 cardinal of authorization aliases different 20% of fees load astir and we person each volition to usage that authorization aggressively fixed wherever nan existent stock value is. We judge nan worth of nan institution has been highlighted pinch complete 500 cardinal of plus income complete nan past 18 months astatine valuation multiples that are consistently higher than caller build multiples.

Starting connected Page 4, to talk highlights this quarter. We proceed to study beardown maturation and for nan first 9 months of this fiscal twelvemonth 2023, revenues from contracts pinch customers grew 24% year-on-year. Adjusted EBITDA was 18% higher and rate travel to equity accrued 11% from nan aforesaid play successful nan anterior year. We person commissioned capacities of 7.7 gigawatts operating and nan full capacity nether building presently is 5.4 gigawatts and different 337 megawatts is successful nan process of being acquired, which brings our full portfolio size to 13.4 gigawatts.

So acold this fiscal twelvemonth our halfway operations, what we tin control, are search wrong a smidge of our soul fund provided astatine nan opening of nan fiscal year. With only astir six weeks near successful this fiscal year, we expect that we will extremity nan twelvemonth astir INR 61 cardinal to INR 63 billion. The revision successful guidance is fundamentally for reasons beyond our control. This includes delayed completion of nan acquisition that we had announced earlier this fiscal twelvemonth and which is still nether process. Based connected wherever we are successful nan process, we now expect nan acquisition to adjacent early adjacent year. We had expected that this acquisition would adhd astir INR 3 cardinal aliases truthful this twelvemonth successful our original guidance, which looks to beryllium realized successful FY 2024 and beyond.

Even though nan acquisition has not contributed to EBITDA this year, it is contributing to our equilibrium sheet. The lockbox day was group astatine nan opening of this fiscal year, and we clasp nan economical worth and rate generation, which accrues to our equilibrium sheet. Also, c in installments income of astir INR 1 cardinal that we expected to beryllium realized this fiscal twelvemonth are now apt to gaffe into early adjacent fiscal year, fixed nan backlog of projects that are successful nan process for registration astatine various c exchanges. Also, upwind continues to beryllium a spot of a headwind and whilst we seizure nan mostly of nan antagonistic deed this twelvemonth successful our guidance astatine nan opening of nan year, nan upwind on pinch a assortment of different items, look to extremity up different INR 1 cardinal aliases truthful worthy successful our opening of nan twelvemonth assumptions. We are focused connected nan agelong tally and still judge that ReNew will beryllium delivering adjusted EBITDA of INR 89 cardinal to INR 94 cardinal complete nan adjacent respective years aliases astir 50% higher than this year. Virtually each of this maturation is contracted and highly visible.

As we person reiterated galore times, we are focused connected creating worth and 1 of nan cardinal determinants of creating worth is maximizing returns not only done disciplined bidding and merchandise offerings, but besides done execution. In this way, SECI began granting extended building clip statement which whitethorn coming america an opportunity to heighten nan returns connected these projects nether development. Module prices are besides down 20% aliases truthful successful nan past mates of months, which allows america to streamline building schedules for our 5.4 gigawatts nether improvement and perchance bring successful plants earlier to seizure marketplace sales, which could materially amended nan returns connected our pipeline. We are readying to update nan marketplace successful nan adjacent mates of months but broadly, we do expect that nan adjustments will beryllium moderate, and each nan projects successful our pipeline will beryllium executed arsenic they are each expected to gain return supra our period minimums.

We are making bully advancement connected our accounts receivables and are seeing regular payments from nan liking -- from nan authorities distribution companies that has nan highest magnitude of complete dues. Also during nan quarter, we added different 300 megawatts of firm PPAs, bringing that portfolio to 1.8 gigawatts aliases astir 13% of our full portfolio. Separately, we besides received immoderate beardown ESG ratings from Refinitiv, Sustainalytics, and Carbon Disclosure Project. Refinitiv precocious updated their ESG standing connected ReNew and we are now classed arsenic nan 2nd highest of immoderate electrical inferior aliases IPP globally. Sustainalytics classed america arsenic a apical ESG-rated company. We besides received nan highest standing by nan Carbon Disclosure Project among each Indian renewable companies.

On to signing of caller PPAs connected Page 5, arsenic I said we person signed different 300 megawatts of PPAs this quarter, and we person besides de-risked our maturation arsenic only 1% of our 13.4 gigawatt portfolio arsenic pending PPAs. The firm PPA portfolio has astir tripled from nan aforesaid clip past twelvemonth and arsenic I said, it's now 1.8 gigawatts pinch a increasing backlog. We estimate that we person nan largest marketplace stock by a important measurement successful this market, which show that differentiated advantage successful this business segment. Corporate PPAs connection higher returns than plain renewable power projects, fixed higher barriers to entry, our expertise to partner pinch firm customers and supply them power solutions sooner than our competitors. We proceed to judge that ReNew will person a 4 to 5 gigawatt firm PPA portfolio by 2025.

The measurement of auctions for analyzable projects, specified arsenic information nan timepiece and highest powerfulness continues to beryllium robust. At nan moment, location is astir 12 gigawatts of auctions for these analyzable projects nether process and fixed our differentiated level that provides america costs and gross advantages, we stay bullish that we will beryllium capable to capitalize connected these astatine returns that are supra our minimum return thresholds.

With respect to CAPEX, nan prices of materials, modules which spell into our CAPEX has moved successful our favour since our past net telephone past November, and this is discussed connected Page 6. On this front, we person seen astir a 20% simplification successful prices for modules compared to levels successful November. Falling prices for wafer and compartment prices are apt to besides make nan delivered prices from our captive manufacturing moreover much competitive. From wherever we guidelines today, we are moreover much assured astir delivering returns wrong our targeted 16% to 20% equity IRR scope astatine nan task level. We judge location is further opportunity to amended returns done superior recycling, further implementation of proprietary digitalization, and continued pursuit of operational excellence.

As a reminder, we person locked successful upwind turbine prices truthful location is fundamentally nary worldly vulnerability connected this front. If successful nan arena that immoderate further caller task has an expected IRR beneath our minimum thresholds, arsenic you know, we will not proceed. We will stay disciplined pinch your capital. With that, I would for illustration to move it complete to Kedar to spell complete nan latest quarter’s financials.

Kedar Upadhye

Thank you, Sumant. I'll now move to Slide 8, which provides nan highlights of nan fiscal 3rd 4th of 2023. We added 66 megawatts this 4th to bringing nan full 7.8 gigawatts operating. We signed different 282 megawatts of PPAs, which brings nan full magnitude nether building to 5.4 gigawatts. Our revenues from customers roseate 24% year-on-year successful nan first 9 months of fiscal 2023. EBITDA accrued 18% successful nan 9 months of fiscal 2023 erstwhile compared to nan aforesaid play successful nan anterior year, and our rate travel to equity accrued 11%. While star procreation was amended than past year, nan upwind PLF was astir 200 ground points little than nan anterior year, which was successful keeping pinch nan little accumulation from upwind sites recorded crossed each of India.

Turning to Page 9, which provides a reconciliation of adjusted EBITDA successful Q3, which stands astatine INR 11.628 million. The upwind assets continues to beryllium beneath normal albeit supra nan lows witnessed respective years agone and c waste and acquisition income were beneath past year, though we expect this will travel successful nan adjacent fiscal. EBITDA done nan 9 months ended astir 98% of our soul fund and for our halfway operations excluding nan effect of upwind [indiscernible] and nan timing effect of c related sales, nan afloat twelvemonth looks for illustration it will extremity up astir nan same.

With regards to our rate travel procreation connected a 9 months basis, our rate travel to equity was 11% higher than nan anterior year, though CAP this 4th was impacted by nan timing of liking payments aft refinancing nan greenish bond, that paid nan liking biannually pinch home indebtedness which pays nan liking monthly. Also worthy noting is nan beardown rate procreation from our rate travel statement. Cash travel from operations for nan 3rd 4th of FY 2023, astir doubled to $261 cardinal for nan aforesaid play successful nan anterior twelvemonth arsenic 1 of nan largest affirmative contributors was a $122 cardinal simplification successful our receivables from nan 2nd fiscal of 2023.

Turning connected to Page 10, arsenic we person highlighted galore times complete nan past year, we person been focused connected improving collections connected nan past owed receivables from nan authorities distribution companies, and we are pleased to denote that we person made a sizable progress. The Q3 DSO improved by complete 2 and half months compared to nan extremity of Q3 successful nan anterior fiscal, and that contributed astir $122 [ph] cardinal to our rate position arsenic nan discounts that person been laid connected payments person now been making up payments.

As a reminder, nan AP DISCOM, which represented astir 42% of our existent past owed receivables successful March 31, agreed successful June to salary past dues complete nan adjacent 12 months successful adjacent monthly installments, and has made astir six to 7 payments retired of 12 truthful far. The different states that were precocious person besides been making payments connected past dues. At this point, we are expecting to extremity nan fiscal pinch further betterment successful nan DSOs, which would correspond a merchandise of rate from moving superior of astir INR 6 cardinal aliases much from nan anterior year. We proceed to expect further betterment successful our DSOs complete clip arsenic an expanding percent of our income will beryllium to nan cardinal authorities owned SECI, which pays its bills promptly and connected time. Today, pinch 7.8 gigawatts operating astir 50% of our assets are pinch nan 5 DISCOMs that person precocious DSOs arsenic almost each of our committed projects are pinch SECI aliases pinch firm customers who salary connected time. The vulnerability to these 5 DISCOMs will autumn to astir 32% by nan clip we complete nan accumulation of nan portfolio. This customer operation displacement would correspond an betterment of 55 days successful our wide DSO conscionable by itself. With that, I will move it backmost to Sumant for a remark connected our ESG and guidance.

Sumant Sinha

Yeah, convey you, Kedar. I'm taking up ESG connected behalf of our Sustainability Head, Vaishali. Turning to Page 12, continuing our momentum from past year, we are committed to mounting caller benchmarks successful each fronts of ESG capacity and transparency. Our latest ESG standing scores are testimonials to our endeavor connected this front. As a validation of our ESG committedness and performance, we precocious received a people of 81/100 from Refinitiv, a world supplier of financial marketplace data. This people positions ReNew arsenic number 1 successful India successful nan electrical utilities and IPP class and arsenic I said earlier, number 2 globally successful nan aforesaid category. Furthermore, ReNew has been precocious included successful nan top-rated ESG companies database released by Morningstar Sustainalytics for nan twelvemonth 2022, 2023. We judge this is simply a validation of ReNew's expertise to place and negociate ESG consequence that tin effect our operations.

CDP has rated ReNew arsenic B for ambiance change, which is nan champion standing among nan renewable power companies successful India and higher than nan Asia average, which is simply a C. A B standing from CDP for ReNew reflects that nan institution is taking coordinated actions for ambiance alteration mitigations. To thrust collaborative effect towards a fossil-free future, we proceed to activity pinch our employees, communities, and partners. Towards this end, ReNew has undertaken nan pursuing initiatives. We person pledged to works 1 cardinal trees by 2030 nether World Economy Forum's 1 trillion trees initiative. Our firm agency successful Gurugram successful India has been recognized arsenic 1 of nan champion existing greenish buildings by GRIHA, which stands for greenish standing for integrated residence assessment, India's greenish building standing agency balanced to nan U.S. GBC, United States Green Building Council.

Our yearly programme called Gift Want has benefited 275,000 group crossed 11 states successful India this year. One of our different initiatives, Project Surya, focusing connected occupation training and entrepreneurship improvement of women's brackish cookware workers, was showcased successful COP 27 successful nan India Pavilion and nan G20 Power Inception event.

Turning to Slide 13, we proceed our efforts to execute our ESG targets pinch circumstantial initiatives. Earlier past year, we submitted our science-based GAG simplification targets, which person now reached a validation shape by SBTI. Working towards our target to execute h2o neutrality by 2030, a feasibility study is presently underway, adjacent our tract to place community-based initiatives to offset our h2o footprint from our operations. We also, I should say, person achieved a 12% women practice successful our workforce by nan extremity of Q3, and we are moving connected expanding it substantially to 30% successful nan adjacent 2 years. We would beryllium disclosing advancement crossed our targets successful our forthcoming sustainability reports. I induce you each to prosecute pinch our sustainability study 2021-2022, which was released successful October 2022.

Moving on, pinch respect to our guidance, this is now beyond nan sustainability section. With respect to our guidance outlined connected Slide 16, we are shifting our FY 2023 adjusted EBITDA guidance, arsenic I said earlier, to a scope of INR 61 cardinal to INR 63 billion, which reflects nan absence of nan expected EBITDA publication from our acquisition and nan process; nan deployment of c in installments sales; and immoderate effect of weather, which is deferring immoderate of our EBITDA. Again, we are not revising our portfolio tally complaint EBITDA, which is astir 50% supra expected levels this fiscal twelvemonth and which is fundamentally afloat contracted and should beryllium reached complete nan adjacent mates of years.

On nan buyback front, arsenic I said, we person repurchased astir 25 cardinal shares since we implemented nan program, which still leaves america astir $90 cardinal of authorization remaining. $90 cardinal represents astir 20% of nan rate float astatine today's stock price. We proceed to spot sizeable worth successful our shares. As we person evidenced by galore plus income complete nan past year, RNW trades astatine a meaningful discount to what we tin waste assets for. As our shares are 1 of nan highest return investments of standard that we tin make, we person been actively buying backmost banal erstwhile we judge that it would supply nan highest return opportunity for our shareholders. With that, we will beryllium happy to return immoderate questions. Nathan, backmost to you.

Question-and-Answer Session

Operator

[Operator Instructions]. The first mobility comes from Julien Dumoulin-Smith from Bank of America. Please spell ahead.

Morgan Reid

Hi, acknowledgment for taking nan question. This is really Morgan Reed connected for Julien. Can you first talk astir nan execution connected nan firm PPAs this quarter, it seems for illustration this is intelligibly an progressively applicable information of nan pipeline, we'll beryllium willing to understand what proportionality of nan portfolio you deliberation this tin benignant of go successful nan adjacent year, I deliberation benignant of trying to understand wherever you are focusing your growth, clearly, you've talked astir this opportunity rather a lot?

Sumant Sinha

Yes. In position of -- we signed a batch of our firm PPAs successful nan past six to 9 months and little than that. So a batch of these projects person been nether execution. But I deliberation nan important point to statement is that we signed astir of this 1.8 gigawatts successful nan past 12 months and that gives you a consciousness that nan momentum successful that portion of nan marketplace is beautiful bully and it's picking up. We person besides stated earlier that we expect almost astir 25% of our early PPAs to travel from nan firm market. We person a beautiful patient backlog astatine this constituent successful clip and truthful I fishy that, that is thing that we should beryllium capable to execute successful nan adjacent term.

Morgan Reid

Got it, convey you. And past tin you besides benignant of elaborate connected nan worth that you're associating pinch nan diminution successful module prices, it seems for illustration possibly there's immoderate accelerated improvement opportunities and surely immoderate alteration successful CAPEX. Can you conscionable talk astir really we should deliberation astir that arsenic we're looking astatine nan existent improvement opportunities?

Sumant Sinha

Yes, Kedar, do you want to return that?

Kedar Upadhye

Yes. So I deliberation we said astir nan 20% diminution successful nan module prices from November until now and nan caller POs that we are placing are astatine a level which makes america beautiful comfortable. If we hold for immoderate much time, location mightiness beryllium a small spot of a further diminution arsenic well, though immoderate of these things are not afloat predictable. And yes, I deliberation this allows america to negociate nan CAPEX well, this allows america to get nan IRRs backmost successful style because nan prices, particularly during June to November period, were rather elevated arsenic we know. So we are -- we proceed to way and we proceed to stagger nan orders and deliveries successful a mode successful which we enactment very adjacent to our target scope of nan IRRs.

Morgan Reid

Great, convey you. I will get off. Bye.

Operator

Our adjacent mobility comes from Nikhil Nigania from Bernstein. Please spell ahead.

Nikhil Nigania

Hi, convey you for taking nan question. On nan acquisition front, nan quantum of 528 megawatts past clip we spot is little this time, immoderate logic for that? And besides connected clip lines connected completion of that acquisition, if you could springiness immoderate guidance?

Kedar Upadhye

Yes. So Nikhil, this acquisition was different slumps successful route, which intends you person to alteration nan titles to nan underlying assets, you person to transportation nan PPA, you person to transportation nan lease, you person to transportation nan title of each different assets. And that's a small -- comparatively a small much clip involving process compared to a axenic stock acquisition agreement. And this has fixed america a batch of learning but arsenic we said, nan lockbox day is already agreed from opening of this year. So nan rate travel for those PPAs will get to a equilibrium expanse arsenic a simplification from nan CAPEX. What this has besides done is this has allowed america to bespeak successful position of nan value of nan assets that we are pursuing. And successful nan adjacent fewer months, we will make judgement arsenic to what's nan correct proportionality of these assets that we should beryllium yet acquiring. And possibly we'll extremity up pinch somewhat higher than nan half of what we were targeting earlier. But arsenic I said, please return each these arsenic tentative guidance astatine this constituent of time, we will beryllium announcing astir apt by nan afloat twelvemonth erstwhile we person a clearer image of nan full PPAs that we will return over. And possibly by backmost month, possibly from nan clip we will attack you for nan afloat twelvemonth results, we'll person a overmuch amended thought connected some nan number and nan size of nan assets that we will return complete and nan clip statement for afloat integration.

Sumant Sinha

If I conscionable adhd to that. Yes. Sorry. I was conscionable saying that, look, arsenic you know, astir trends, astir M&A transactions are arsenic Kedar was saying, shares transferred. This 1 was a flimsy waste because of nan circumstantial business progressive here, and that process has conscionable taken a spot longer than anticipated and expected because of nan transportation of truthful galore different things. But I deliberation it's thing that we're now reasonably adjacent to completing, and it is thing that should beryllium vanished by early adjacent year. And that will past besides let america to get backmost to you connected precisely what percent you're going to acquire. But location were 1 aliases 2 assets wrong that, that we said mightiness beryllium thing that we don't really want to spell up pinch aliases are harbored to adjacent because of each these regulatory issues. And that's why we person decided to benignant of alteration nan magnitude that we were acquiring a small bit.

Nikhil Nigania

Appreciate that answer. The 2nd mobility was regarding nan plus waste use, which is going astir about 1.1 gigawatt to imaginable entities for illustration [indiscernible] immoderate views if imaginable to stock connected that, nan rationale and nan conductor?

Sumant Sinha

Kedar, fto maine conscionable a return a stab astatine taking that. So superior recycling arsenic a strategy is thing that we've talked astir rather a spot successful nan past. And I deliberation astir world renewable power companies travel nan aforesaid strategy, and we are doing nan same. I deliberation nan thought really is that we tin build much than we tin needfully clasp aliases want to hold. And truthful therefore, building much than allows america to capitalize connected worth creation aliases create worth successful those assets that we're building and past waste them astatine higher multiples. So I deliberation that's an power sensible strategy for america to pursue. And truthful Nikhil, you've seen successful nan future, surely america looking astatine trading much assets, which is not to opportunity that our portfolio will not grow. It will turn arsenic well. And look, you can't -- there's a batch of news successful nan Indian broadside that you are aware. And truthful we conscionable person to hold for thing circumstantial to beryllium announced by america earlier -- until that point, we really can't comment, arsenic you good know.

Nikhil Nigania

Great, acknowledgment Sumant for nan answer. Sorry, 2 much questions quickly then. One is wherever you deliberation astir that ALM restrictions mightiness get relaxed successful nan adjacent term? If that happens, does it thief deepen clip lines for immoderate projects? And related to that, connected nan RTC project, which is simply a large one, past time, nan guidance was for Q2 FY 2024, does that alteration arsenic it stands coming aliases if that operation has changed?

Sumant Sinha

Yes. So look, arsenic acold arsenic nan constituent is concerned, arsenic you know, we beryllium connected some sides of that equation. We are some a developer and we're besides looking astatine getting into manufacturing. So we are reasonably neutral to nan -- to whichever measurement it pans out. But will it let america to committee projects earlier, not necessarily. And first of all, it hasn't really travel retired arsenic a circumstantial argumentation yet. So we person to hold and spot precisely what happens. So I can't opportunity that it will let america to committee earlier because we'll evidently person to spot wherever we tin bargain nan modules from, what are nan delivering clip lines and truthful on. But to nan grade that we tin committee immoderate of our projects earlier, certainly, we would for illustration to do that because, arsenic I was saying successful my remarks arsenic well, if you're capable to committee projects earlier, you are capable to waste immoderate of that powerfulness into nan merchant market. And I deliberation 1 of nan things that is emerging is for illustration intelligibly it appears is that prices successful that marketplace are going to beryllium comparatively robust. So that opportunity perchance tin unfastened up. But we haven't studied this specifically. So I can't springiness you immoderate benignant of clear trim reply connected that.

Your 2nd mobility connected RTC, Q2 commissioning. Look, nan RTC project, arsenic you know, is comprised of 5 different aliases 4 different projects, 3 upwind and 1 star and then, of course, there's a artillery constituent arsenic well. These targets should beryllium commissioned progressively complete nan people of virtually starting beautiful overmuch now onwards till nan extremity of, I would say, Q2, Q3. So I deliberation that's what's going to happen. The full task -- and truthful whenever nan task is commissioned, revenues tin start, whichever portion of nan process they person commissioned. The full task for america to past benignant of spell to SECI and opportunity nan full task is commissioned mightiness return till Q2 aliases Q3 of this coming financial year, FY 2024. So we are mostly connected way connected nan coagulated execution standpoint.

Nikhil Nigania

Perfect, makes sense. Just coming backmost pinch 1 past question, a mini one. I proceed to find nan reply now. This is conscionable connected nan equilibrium sheet, connected different noncurrent assets, there's a jump of, I think, astir INR 1,000 crores aliases $120 million. Possible to springiness what is nan logic for that?

Kedar Upadhye

Yes, Nikhil, a mates of items which has gone up arsenic you know, we person made an acquisition successful a integer entity. And we are only a 40% liking successful that entity. So portion of that gets recorded successful different assets. We person besides made immoderate advances to institution creditors arsenic portion of nan RTC and various projects. So I deliberation immoderate of these things get benignant of reflected successful nan different assets category.

Nikhil Nigania

Perfect, convey you truthful overmuch Kedar. Thank you Sumant. That’s it for me.

Operator

Your adjacent mobility comes from Justin Clare from ROTH MKM. Please spell ahead.

Justin Clare

Yeah, acknowledgment for taking our questions. So I guess, first off, you had indicated that you expect further betterment successful DSOs by nan extremity of this twelvemonth and past into fiscal 2024. I was wondering if you could conscionable springiness america a consciousness for really overmuch much betterment mightiness beryllium possible? And past conscionable much generally, could you talk astir whether you expect this betterment successful DSOs to beryllium maintained, truthful astatine this point, has location been a lasting structural alteration successful nan marketplace wherever there's going to beryllium peculiarly little consequence of DSOs getting extended successful nan future?

Kedar Upadhye

Yeah, we judge so. I deliberation you must person heard astir respective pronouncements from nan regulators and which is helping us. See, 2 things are happening. One is nan aged deals are getting cleared and nan existent deals are getting powerfully paid connected time. And some these are helping america to get a simplification quarter-by-quarter successful nan DSOs. And 2nd facet which we mentioned is nan operation of off-takers is changing successful favour of those who are paying overmuch earlier. So nan proportionality of firm off-takers, nan proportionality of cardinal authorities for illustration SECI, that is going up. And nan proportionality of DISCOMs is going down from 55 to 32. So some nan LPS woody specifically and nan alteration successful operation of nan off-takers is helping us. And we judge this is structural, and this will proceed for immoderate time. And compared to nan December DSO, we do expect astir 15 to 20 days further simplification arsenic of March and likewise going guardant arsenic well.

Justin Clare

Got it. Okay, convey you. And past it looks for illustration nan ALMM was precocious relaxed for a play of 2 years. Then we've besides seen a diminution successful module compartment and wafer pricing. So conscionable fixed nan changes that person happened here, tin you talk done your module sourcing strategy, has location been immoderate change, I deliberation arsenic of now, you're readying to self-supply pinch astir 60% of your projects from your ain manufacturing, has that changed astatine each aliases are you reasoning there, conscionable immoderate update would beryllium helpful?

Sumant Sinha

Yes. So look, astatine this constituent successful time, we -- first of all, nan ALMM has been an announcement by nan curate arsenic benignant of -- but it's not really travel retired arsenic charismatic authorities argumentation yet. So we person to hold for that to hap and to spot if it happens. So I deliberation that's number one. Number 2 is that we haven't yet been capable to make an appraisal of really this alteration mightiness effect us. Keep successful mind that nan customs work of 40% connected modules and 25% connected income is still there. That is not changing, which fundamentally intends that imports from China, for example, are still not going to possible. From 1 aliases 2 different geographies for illustration Southeast Asia, it mightiness be. But it's a mobility of uncovering retired really overmuch readiness location is successful those markets fixed that a batch of nan modules from location are being shipped to nan U.S. and to Europe.

So we'll person to make that assessment, which we person not been capable to do yet because this is evidently still not an charismatic argumentation connected nan portion of nan government. And arsenic acold arsenic our ain supplier is concerned, look our module plants will beryllium up and moving successful nan adjacent fewer months. And erstwhile it's stabilized, past of course, we expect that to proviso to america and for astir of our supplies to travel from there. But again, immoderate of our projects are successful truth grandfather [ph] because we person won them earlier this work and nan constituent sewage announced. And truthful therefore, for those projects, we are capable to import modules from China aliases anyplace other for that matter.

And truthful I deliberation it will dangle connected really astatine what constituent does nan works get stabilized, what are nan circumstantial rules astatine that constituent successful clip and connected ground of that we will return nan astir optimal decision. I deliberation down each of this you person to support successful mind that nan bully news is that module prices and waste prices besides person travel down dramatically. And therefore, whichever measurement we look astatine it, I deliberation our module costs are going to beryllium little than we had perchance benignant of anticipated, and that's going to beryllium bully for us. Now I can't springiness an nonstop consciousness of really overmuch will it travel from our ain proviso versus really overmuch will beryllium imported and from which geographies because that's still a small spot uncertain astatine this constituent successful time, fixed nan uncertainty a small spot astir authorities argumentation and connected proviso sources.

Justin Clare

Okay, admit it. Thank you.

Operator

[Operator Instructions]. Our adjacent mobility comes from Amit Bhinde from Morgan Stanley. Please spell ahead.

Amit Bhinde

Hello Sumant. I had 2 questions, 1 pinch nan upwind PLF business correct now and beryllium reasoning of reassessment, really are we looking astatine nan near-term forecast and immoderate update connected nan reassessment that you are planning?

Sumant Sinha

Yes. Those are some bully questions. So look, arsenic you know, successful nan guidance that we've fixed for nan existent financial year, we had already assumed a little benignant of upwind velocity aliases little upwind forecast for this year. And that is thing that is almost being met arsenic acold arsenic nan upwind velocity of this twelvemonth is concerned, although, of course, it is importantly beneath what you mightiness see to beryllium nan semipermanent mean. The chances are that we transportation connected pinch nan aforesaid benignant of -- nan aforesaid level of forecast into adjacent twelvemonth arsenic well. We are improbable to benignant of alteration that substantially from nan existent level because I deliberation it's still -- it's sensible to beryllium prudent. We've had, arsenic you know, now 3 not bully years of upwind successful a row, and that's a reasonably uncommon event, but it is not that it is chartless to happen. It has happened successful nan past successful different geographies arsenic well. Typically, when, that benignant of point happens, past location is astatine immoderate constituent it bounce back, but it's difficult to opportunity erstwhile that mightiness hap and really overmuch that mightiness be. So I deliberation we will, therefore, from a prudency standpoint, conscionable transportation connected pinch nan very blimpish guidance that we woody that we gave this twelvemonth into adjacent twelvemonth arsenic well.

As acold arsenic nan semipermanent due appraisal is concerned, that is thing that we're moving connected correct now. We are discussing pinch a number of nan upwind forecasting agencies. And I deliberation nan bully news successful immoderate of nan early conversations we've had pinch them is that nan technologies, nan methodologies, and nan subject that we usage to forecast semipermanent upwind successful India is nary different from what they usage anyplace other successful nan world. And truthful therefore, I would consciousness that, arsenic we spell deeper into this work, that we should beryllium capable to get a bully benignant of position connected a batch of these issues. And we should beryllium capable to travel backmost to each of you, I think, very soon connected this matter.

But I deliberation nan different point I should besides opportunity is that because of nan acquisition of upwind successful nan past 2 to 3 years, we've already go very blimpish successful our forecast for upwind successful nan early arsenic well, not conscionable for our existing assets but besides nan assets that we're going to build successful nan future. So a batch of that conservativism we're already building into our early forecast. So I deliberation that you won't really spot immoderate large information from nan existent twelvemonth into adjacent twelvemonth and truthful connected simply because, arsenic I said, we've already reduced our forecast rather substantially. And for our early projects, we are besides being already rather observant astir nan forecast that we're now doing. So I would not expect immoderate further reductions from this level successful position of our guidance. But arsenic I said, we will conscionable cross-check and re-collaborate each of this pinch nan upwind agencies and get backmost to each of you pinch much circumstantial and patient benignant of views from them from these forecasting agencies by nan adjacent clip that we interact pinch you all, hopefully, successful nan adjacent fewer months' time.

Amit Bhinde

Just anecdotally connected this 1 now, nan authorities is readying an 8-gigawatt auction connected wind. So first point that they besides person this criteria that it should not beryllium concentrated successful immoderate states. So it would beryllium diversified crossed states wherever nan upwind variability could beryllium more. So really do you spot approximate tariff effect erstwhile you look astatine 2 aspects; one, upwind PLS already -- velocity is already impacted and different you would person to diversify into a different authorities wherever nan upwind velocity whitethorn not beryllium very optimal for nan auction, truthful really do you spot that?

Sumant Sinha

I don't deliberation -- yes. So look, I don't deliberation that will person immoderate impact, frankly, simply because we are, for example, arsenic a institution already operating successful astir of these states, and truthful we person already bully acquisition successful position of upwind forecasting successful each of those states. And look, eventually, moreover if nan upwind value is lesser successful 1 authorities compared to another, that gets reflected successful nan tariff that group bid because nan tariffs extremity up being higher successful nan states that person normal upwind speed. What nan authorities intends to do is to bundle each nan upwind bids, each nan upwind projects together from crossed various states and connection a azygous excavation tariff to nan extremity buyers of nan power. So it really doesn't matter astatine which authorities you put up nan capacity in.

Amit Bhinde

Okay, perfect. And different mobility that I had was connected this home manufacturing of modules. Now that nan module prices waste and module prices are declining, if we look astatine nan financial facet of it, really overmuch would beryllium nan differential, for illustration really overmuch would beryllium nan output -- value of nan output from our ain manufacturing versus, say, imports positive civilization duty, for example, for illustration say, astir $0.20, $0.25 for imported module pinch nan civilization work and maybe, I mean, immoderate is nan value for nan home one, really overmuch would beryllium nan differential betwixt nan two?

Sumant Sinha

Yes, truthful I can't springiness you an nonstop reply astatine this point, nor do I want to beryllium very circumstantial connected this rumor correct now. I deliberation nan only point is, arsenic you know, that import duties are 40% and -- connected modules and 25% connected sales. And immoderate modules that we make successful India ourselves that we make successful India are going to beryllium importantly little than nan protection of nan work -- that nan work provides. So I deliberation that yet nan comparison really, successful immoderate ways, is not done imports because those will ever beryllium much costly pinch nan duties. But successful immoderate ways, nan comparable ratio really beryllium pinch what is being manufactured successful India different by different companies. And I deliberation successful that respect, we will beryllium very, very competitory simply because of our standard and besides because of nan truth that we person overmuch much modern plants pinch nan latest technology.

Amit Bhinde

Alright. That ballpark, it would beryllium astir $0.25 aliases something, nan home manufacturing output, I cognize I mean, arsenic you said…?

Sumant Sinha

No, I dislike to generalize because it really depends on, for example, nan input costs of either cells aliases wafers depending connected what you're buying. And that value is moving astir a small bit. So therefore, it's difficult to springiness america a fixed number connected that astatine this point.

Amit Bhinde

Alright, sewage that. Those are my questions, convey you.

Operator

Our adjacent mobility comes from Puneet Gulati from HSBC. Please spell ahead.

Puneet Gulati

Hi, convey you truthful overmuch and champion wishes. My first mobility is, you haven't been very, very actively participating successful nan inferior standard auctions. Is location a differentiated strategy that you are allowed to adopt focusing much connected firm than connected inferior scale?

Sumant Sinha

So Puneet, arsenic you know, location haven't been that galore auctions. A batch of nan auctions that person happened person either been authorities level bids aliases bids wherever first -- which person been [indiscernible] upwind aliases solar. Those ones, arsenic we person stated successful nan past, we don't intend to participate successful because we don't really want to return a batch of nonstop authorities vulnerability aliases we don't want to participate successful -- auctions, very frankly speaking, because we consciousness that our competitory separator lies successful nan much analyzable auctions. So I deliberation we are focusing connected nan much analyzable bids. And arsenic we person stated, we expect a batch of those to travel down. And truthful therefore, location will beryllium capable for america to bid for. Also, nan firm PPA market, arsenic we've mentioned galore times, is very active. And truthful betwixt nan RTC/grid powerfulness bids, connected nan 1 hand, and nan firm PPA market, frankly, we person our hands full, and that is why we are choosing not to participate successful nan preliminary [ph] auction aliases nan authorities level actions.

Puneet Gulati

Understood. And did I perceive it right, you said that you will not beryllium revising estimates connected relationship of weather, and your EBITDA guidance is already prudently capturing that?

Sumant Sinha

That is correct Puneet. Yes, that's what we've said.

Puneet Gulati

Okay. Understood. And past past one, erstwhile I look astatine your CAPEX guidance this 4th versus last, nan manufacturing nexus had been somewhat slower successful FY 2023 and now much move towards FY 2024. Why would that beryllium nan case, and past what are nan clip lines for completion now for your module and compartment manufacturing capacities?

Sumant Sinha

Yes. So look, our module works is moving astir a mates of months down schedule. It was expected to beryllium commissioned by extremity of Q1. It will astir apt conscionable spill complete into early Q2 -- early Q1 of adjacent financial year. So there's not a important hold there, frankly. The 7 module plants are beautiful overmuch moving arsenic they were expected to tally successful Dholera, wherever we're putting them up. So location should not beryllium a important quality successful CAPEX, actually, location whitethorn conscionable beryllium immoderate costs aliases phasing rumor much than thing else.

Puneet Gulati

Alright, yes. And connected nan c credits, tin you explicate what really happened there, you've reduced your guidance connected relationship of c credits arsenic well, is that imperishable complaint aliases is it much short word and what portion of your EBITDA astatine portfolio level guidance is attributable to c credits?

Sumant Sinha

Kedar, do you want to return that.

Kedar Upadhye

Yes, yes. So Puneet, these are fundamentally RE credits now. Going forward, we dream to person much voluntary credits, nature-based solutions and things for illustration that. But arsenic of now, these RE credits. What we understand is nan world agencies, which benignant of registered nan projects arsenic eligible for c credit, location is simply a batch of backlog. So actually, immoderate of this is beyond our control. Just a timing deferral from 4th 4 of this twelvemonth to astir apt first half of adjacent year. And nan magnitude is astir a small little than INR 1 billion. But arsenic I said, chiefly existent creation of our credits is RE successful nature. And going forward, nan thought is to get to a small much higher proportionality of nan measurement breakages.

Puneet Gulati

And astatine nan portfolio level EBITDA, what benignant of publication person you assumed, successful your 92 cardinal to 94 cardinal EBITDA?

Kedar Upadhye

Yes, yes. So it won't beryllium -- it would beryllium successful mid to precocious azygous digits, not much than that.

Puneet Gulati

Mid to precocious single-digits, okay.

Sumant Sinha

In truth Puneet, successful general, that c credits connected our existing portfolio is successful immoderate ways, really benignant of winding down because of nan measurement information protocol has been phased out. And truthful really location isn't a batch of c credits that we are assuming will beryllium disposable successful nan future. There are immoderate markets that are processing wherever those c credits whitethorn still person immoderate worth for illustration successful nan Middle East and truthful on, but we don't cognize really those markets are going to create complete time. So astatine this point, we've been very blimpish connected making immoderate presumption astir immoderate revenues coming successful from c in installments successful nan early from nan renewable power part. As Kedar said, there's a full abstracted watercourse of activity that we are doing correct now connected processing c in installments based connected quality based solution, but that's a full different point altogether. That's not really -- successful immoderate ways, that's not portion of this $89 cardinal to $94 cardinal guidance that we gave, which is really revenues based connected aliases EBITDA based connected our 13.4 gigawatt portfolio.

Puneet Gulati

Okay. And erstwhile you opportunity quality based solution, basically, nan FOREX that you whitethorn building those will beryllium yet contributing to nan credits, that benignant of stuff?

Sumant Sinha

I mean -- yes, location are 2 abstracted things, of course. I mean, nan fees and each that we are planting are really from an ESG standpoint, not for profit successful a sense. But location are different projects that are emerging that are astatine very early stages, things that we are conscionable testing retired correct now. So it's not thing that we tin really talk astir successful detail. But should location beryllium immoderate of those, and that's going to beryllium additive to immoderate of these things.

Puneet Gulati

That's fair. So lastly, since you there, what are your thoughts of going retired of India and do renewable projects location aliases are you apt to attraction successful India only?

Sumant Sinha

That's a very absorbing question, Puneet. Look, it's thing that we've debated astatine length. We judge that, arsenic a company, we person immoderate beautiful important spot that tin beryllium leveraged successful different countries arsenic well. Obviously, entree to equipment, entree to low-cost execution, mindset, engineering and execution capabilities, each of those are things that we do judge will person worth successful different geographies from an execution standpoint arsenic well. And successful addition, of course, we already person important scale, fixed that we are astatine slightest globally besides ex-China among nan 10, 12 largest companies successful nan world. Having said that, I don't deliberation that we've taken a circumstantial determination astatine this constituent that we want to spell overseas aliases not. It is thing that I deliberation we will evaluate. And if it makes sense, then, of course, we will travel backmost and talk it pinch everybody, and I deliberation astir it astatine immoderate constituent successful nan future. But it is not thing that is instantly connected nan cards.

Having said that, arsenic you each know, we're besides looking astatine greenish hydrogen projects. Those are each astatine very, very early stages I would hasten to adhd correct now. And truthful successful that sense, for immoderate of those kinds of projects, yes, we are looking astatine improvement opportunities extracurricular India. But again, I must adhd that those are successful very early stages. And earlier we make immoderate investments, obviously, a batch of activity needs to hap down those.

Puneet Gulati

Understood. That’s each from my side. Thank you truthful overmuch and each nan best.

Operator

Our adjacent mobility comes from Angie Storozynski from Seaport. Please spell ahead.

Angie Storozynski

Thank you. I conscionable wanted to inquire a bigger image question. So fixed each of nan scrutiny situation Adani Green and their financing, I understand that there's very small comparison betwixt your banal and theirs moreover earlier nan waste retired arsenic acold arsenic multiples are concerned. But I'm conscionable wondering is location immoderate alteration to nan competitory scenery to questions that you're being asked by early lenders for your renewable powerfulness projects, are you -- do you consciousness for illustration this turmoil surrounding Adani Green is giving you an separator and bidding for immoderate assets and again, immoderate lessons learned from really you tin amended your disclosures going forward?

Sumant Sinha

Yes. So Angie, look I think, frankly speaking, arsenic you said successful your ain question, we are a very different institution from Adani successful position of a full assortment of different factors. I would opportunity that successful position of our operating situation, thing really has changed arsenic such. I deliberation that we were already considered I deliberation a very precocious value institution successful position of ESG issues and that continues to beryllium nan case. It is besides reflected successful each nan ratings that we person got. There haven’t really been immoderate bids that person happened station this full business that 1 tin constituent to and truthful opportunity that this is really nan business mightiness change. But I deliberation what will hap is that location will beryllium an appreciation for high-quality, well-driven companies that are genuinely pursuing nan full ESG methodology successful everything that they do. And truthful successful that sense, I would beryllium hopeful that group will look astatine america pinch slightly, what should I say, a precocious grade of attraction perhaps. But fto maine time off it astatine that because I don't cognize really nan -- what effect it mightiness person connected nan Adani Group successful position of really that business evolves. It's thing that I don't cognize and I'm not alert of. And it's really excessively early to beryllium capable to remark connected whether we've seen them alteration their behaviour successful nan marketplace and truthful on. So fto maine conscionable time off it astatine that. Kedar, I don't cognize if there's thing that you'd for illustration to add.

Kedar Upadhye

No, I would conscionable opportunity that since we are listed connected U.S., we do travel very extended 6-K and 20-F disclosures, which are some for financial and operational information and guidance commentary, beautiful extended successful nature. And we will proceed to heighten those disclosures. Thanks.

Angie Storozynski

Okay. And past an unrelated question, if I may. So you mentioned that nan SECI is granting extensions to CODs for immoderate of nan assets. And I don't deliberation I afloat understood what you were trying to say. You were suggesting that you really mightiness bring projects early connected to seizure merchant's net and conscionable usage this truth that location could beryllium an allowed hold successful charismatic COD aliases is it astir conscionable nan truth that nan constituent prices are falling and truthful nan economics of nan projects mightiness get improved if you were to hold them?

Sumant Sinha

Actually Angie, it's both. And truthful each lawsuit mightiness beryllium different. Wherever it is allowed for america to postpone, and we consciousness that successful nan postponement, we tin get little prices that will let america to perchance postpone nan task and little nan CAPEX and still meet SECI's commissioning requirements. So that is 1 imaginable strategy that we could follow.

The 2nd imaginable strategy is that we could perchance committee projects earlier and waste them successful nan merchant marketplace and past benignant of laic them disconnected to SECI based connected nan SECI commissioning hold that we've got. So nan constituent is that it gives america a batch much elasticity to optimize pinch nan task costs aliases revenues. And truthful we afloat intend to usage nan elasticity that we've been fixed to maximize connected nan returns of our projects. So it will let america to summation nan returns either by utilizing either 1 of these 2 strategies.

Angie Storozynski

And past lastly, successful your prepared remarks, you talked astir projects that exceeds nan minimum return threshold, but you do person a range. So are we talking astir projects that are astatine slightest 16% successful nan IRR or…?

[Multiple Speakers]

Sumant Sinha

Yes, yes, yes. That's right. That's what I'm saying that each nan projects, therefore, are wrong our period rate. And now that we person this other small spot of elasticity that conscionable gives america precocious grade of assurance and comfortableness of being capable to meet those period requirements. And of course, for early projects, we proceed to beryllium disciplined, arsenic you know, and we will not bid for projects wherever we consciousness that we are not apt to make requirements [ph].

Angie Storozynski

Awesome, convey you.

Operator

That does reason our convention for today. Thank you for participating. You whitethorn now disconnect.

Editor: Naga



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