Thank you for standing by, and welcome to the ReNew Third Quarter Fiscal Year 2024 Earnings Report. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Nathan Judge, Investor Relations. Please go ahead.

Thank you, Betsy, and good morning everyone and thank you for joining us. This morning, the company issued a press release announcing results for its fiscal 2024 third quarter ended December 31, 2023. A copy of the press release and the presentation are available on the Investor Relations section on ReNew's website at www.renew.com. With me this morning are Sumant Sinha, Founder, Chairman, and CEO; Kailash Vaswani, our CFO, and Vaishali Nigam Sinha, Co-Founder and Chairperson of Sustainability. After the prepared remarks, we will open the call for questions. Please note, 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 implied 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 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 is now my pleasure to hand it over to Sumant.

Yes, hi. Thank you, Nathan. Good morning and good evening to everybody on this call. I'm glad to have you on our third quarter fiscal year ended 2024 earnings call. The calendar year 2023 marked a significant milestone for the Indian renewable energy sector as well as for us. India, now the world's most populous nation, has experienced a surge in power demand, necessitating the need for more power. In April of 2023, the Ministry of New and Renewable Energy ramped up the auction calendar significantly in a bid to achieve the country's 500 gigawatt target for renewable energy installations. The government's commitment has now transpired into action and a record number of auctions have been conducted so far during the year. So far in fiscal 2024, we have seen more than 40 gigawatts of auctions being conducted, which is a significant increase over last year when about 12 gigawatts of capacity was auctioned. Not only this, we are also tracking another 70 gigawatts of central and state tenders expected to be auctioned over the next few months. As India intensifies its Made in India initiatives to become a global manufacturing hub more broadly, the imperative for securing reliable power becomes even more pronounced. This expansion of the addressable renewable energy market has provided developers such as us the most favorable environment in the renewable energy sector that we have seen yet. As the number of auctions has increased significantly, competition has tailed off a little bit, leading to the discovery of higher tariffs. The subscription rate for new auctions has declined significantly this fiscal year and were the lowest on record this past quarter, often less than 100% of the capacity being auctioned for complex projects, resulting in auctions clearing pretty much at the initial bid offer. Year-to-date, we…

Thank you, Sumant. Turning to Page 9, interest from domestic lenders for our project continues to be strong. Recently we were able to refinance a $325 million bond in the domestic markets with an interest rate that was around 200 basis points lower than the landed interest rate on that bond. Through the refinancing, we were once again able to demonstrate how we have been able to provide long-term finance to our projects with interest rates at sub 9%. In India, the yield spreads were Indian RE debt have compressed significantly as the sector has matured. While we stay focused on domestic debt markets given their low cost versus U.S. dollar green bond market, we have seen yields on our own U.S. dollar bond improve by about 200 basis points in little over the last four months. It is also worth noting that the average spread on our bonds are about the same level as it was at the beginning of the Fed tightening cycle back in 2022. Turning to Page 10, our asset recycling program continues to see strong interest from international investors as well as domestic players. Last month, we signed an agreement for the sale of a 300 megawatt solar asset and expect to about $82 million of net proceeds by the year end, which is the fiscal year end. The proceeds from this asset sale are expected to be reinvested in projects that in the current strong bidding market where project cost to run rate EBITDA are in the range of 6.5 to 7.5 times EBITDA should have even higher returns than the one just sold. Subject to the rate at which we can raise growth capital from asset recycling, we should be able to grow 1 to 1.5 gigawatt net of asset recycling without having…

Turning to Page 13, our balance sheet continues to expand and improve. Our cash balance stood at over $1.1 billion excluding the $325 million which was repaid in January of this year and our project level net debt was about U.S. $5.4 billion. During January of this year we refinanced our $325 million bond maturing in April '24, saving 200 basis points and extending the maturity to 15 years. Based on the current level of interest rates, we will continue to evaluate opportunities wherein we are able to refinance debt at lower interest rate than the coupon on that debt. This year, in addition to the $8 billion MoU that we signed with PFC and REC, we have signed an additional MoU of ADB for about $5.3 billion of debt financing, bringing the total amount of access of capital to over $13 billion. These MoUs enable us in creating multiple avenues through which we can access debt at competitive rates and reduce the interest rate burden on our profit and loss account. With that, I would like to turn it over to Vaishali to talk about our ESG initiatives.

We were also recognized as one of the top performing companies by Sustainalytics, both as regional and industry leaders. We continue to maintain our CDP climate change rating to B which is the management band, which is higher than the Asia regional average of C and same as the renewable power generation sector average of B. In S&P CSA our score has increased to 53 from 41. We received multiple awards including the prestigious Terra Carta Seal for actively leading the charge to create a climate and nature positive future. We also received the World Economic Forum Lighthouse for the second time for our leadership in fourth industrial revolution technologies and highest category of recognition which is resilient by CII Climate Action Program which is CAP 2.0. Social responsibility continues to remain integral to our business. Since 2014 we have influenced lives of over a million people across 500 villages across India, spanning over ten states. On the right hand side of the deck are some of the key programs which also include employee participation. Under Lighting Lives program the electrification of 60 schools is under progress in partnership with HSBC. The climate curriculum was rolled out to 9000 students. Project Surya, which is implemented in partnership with UNEP, nearly 210 women have completed their training as renewable energy technicians who earlier used to work in the very hard solar salt farming area in Gujarat. The 9th Edition of Gift Warmth Campaign 2023 has benefited around 200,000 people. Back to you. Thank you.

Yes, thank you, Vaishali. Turning to our annual guidance, we are raising the bottom end of our FY '24 guidance range by 2% and now expect FY '24 adjusted EBITDA of INR 63 billion to INR 66 billion. As we said earlier, this excludes gains on sale of assets. On construction, we expect that about 1.75 gigawatts to 1.95 gigawatts will be generating revenue by the end of the year. As some of our projects have received COD extensions, this presents an opportunity to sell power on the exchange at prices often substantially higher than the PPA tariff. With regards to our FY '25 guidance, we anticipate sharing our outlook with investors during our fourth quarter FY '24 earnings call. We would remind investors that we sold 400 megawatts of assets this year that would have otherwise contributed around INR 2 billion in FY '25, although the EBITDA contribution from the asset sale proceeds will be even greater in future years as the capital is redeployed. Lastly, we also anticipate being conservative on our weather assumptions in our FY '25 guidance. Whilst the weather trends have been better this year versus the prior several years, we are also focused on delivering on our promises to investors. With that, we will be happy to answer any questions. Thank you.

Thank you. [Operator Instructions] The first question comes from Nikhil Nigania with Bernstein. Please go ahead.

Yes, hi, thank you for taking my question and good set of numbers. My first question is on the competitive intensity. Good to see it come down, but I would be keen to understand what is driving it. Is it the sheer quantum of auctions or is there some other reason why the competitive intensity has come down in the auctions?

Yes Nikhil, hi. So look, I think you kind of posed the answer in the question itself. See, last year, as we said, about 12 gigawatts of auctions happened. This year that number is 40 gigawatts. And so I would say that most of our competitors have pretty full pipelines right now, as do we. And because there are so many auctions happening, you can always win the next one. And so I think for all of those reasons, the competitive intensity on any given project, on any given auction, has come down quite markedly.

Got it, Sumant. The second point then I had is on the module price crash, which would benefit us. So I wanted to understand how much of the pipeline is the module price locked and for how much of the balance part we'll be able to gain from these low module prices?

So you should assume that everything that we've been buying in the last three months and beyond will be benefiting from these lower prices. And therefore, actually, if I were to take a step back, our decision to postpone execution of projects in the last financial year was actually because module prices that time were $0.26 to $0.28, was actually quite on the money, because over the course of the last twelve months, module prices have fallen so much. And so we are able to now commission these solar projects at tariffs, at costs that are significantly lower, 20% to 30% lower in some cases, compared to what they would have been had we done them earlier. So yes, from this point, from the last, I would say three to four months in fact even, all the modules that we are buying now are with lower module prices.

So would it be fair to assume most of the capacity coming up in FY '25 should benefit from this?

Yes, absolutely.

Got it. But then Sumant there's a related point then. So the ReNew's own module manufacturing plant then, how is that faring and how is that being able to compete against this $0.11 or what peak module prices?

Because, as you know, there is first of all a 40% import duty, so that takes that $0.11 up to whatever, close to 15.5 cents [ph] and that is not very dissimilar to what the cost is if you import modules, pay the 25% BCD on a much lower number. The imported price of modules of cells is about close to about 5.5 cents. So 25% on that is maybe 1.5 so a little bit less than that. So it gets you the cells at about 7 cents here in India and then the conversion price takes you up to about 15 to 16 cents. So you're pretty much at the same level as you would be if you were buying modules from China. Now also keep in mind the fact that ALMM was supposed to come in from this year, 1st April. So any projects that were not grandfathered will have to buy domestic modules going forward.

Understood. Are you also looking to buy for China or important modules will not be there? Got it. So are you also looking to export some modules like some peers are?

Our first priority is to supply modules to ourselves. So we will look at first doing that and secondly, to the extent that we have any overflow modules which we probably will have some amount this year, we will certainly look at selling that in whichever market gives us the best returns. Now keep in mind one more thing that we'll also have our cell plant getting commissioned fairly soon, and that allows us to sell into the domestic DCR market where also the tariffs are higher because those require cells made in India as well. And so therefore we could do either of the two, we could sell projects with cells made in India into the DCR market at a higher tariff, or we could sell overseas. Now, we haven’t -- to be honest with you, we are not sort of giving any sort of guidance on that right now, because obviously we want to prioritize our own requirement sources.

Understood, Sumant. One last question from my side is then on the pipeline side, I saw some delay in the RTC project. Good to see part of it commissioned, but I wanted to understand what is the reason? And B, is transmission incrementally becoming a bottleneck, as you seem to be hinting in the presentation, for commissioning of future renewable capacity in India?

So, yes. I think one of the things that has happened this year is that because the amount of renewables is now crossing certain levels, the grid manager, which is really the Central Electricity Authority, has decided to really become a lot more careful about giving connectivity approvals and commissioning approvals to new renewable energy projects. So these processes of commissioning therefore are taking longer than they were taking earlier. And that is why you'll perhaps see that the amount of commissioning this year in the RE sector is at this point of the year lower than what would have been expected for the industry as a whole, largely because of these new connectivity and commissioning requirements that are sought to be now kept as a higher standard by the grid managers. And I think that's fair, it's a perfectly legitimate thing for them to do. But what that has meant is that the earlier process where once the project was ready, we could turn it on and get it connected to the grid within a matter of two to three days. That process now is taking a lot longer. It's taking as long as four to six weeks now. And that, in some ways, is delaying the commissioning of new projects for everybody, not just for us. The second thing that is happening is that the connectivity approvals into the grid, and I may be getting a little technical here, are also taking a lot longer than they used to take earlier, because now, especially for these complex projects, which are getting commissioned for the first time or getting connected to the grid for the first time, the grid managers want us to do meet very high standards, which require very extensive modeling of how the whole plant would actually operate under very many different circumstances and situations. And that, by the way, is also a very big learning for us, because we have now gone through this process, both for RTC and for Peak Power, and therefore, we are the only company that has gone through this process of what does this connectivity process actually imply and entail. And so chalk that up to another sort of strength that we now have on these complex projects. We've gone through that and frankly, it's taken us almost three to four months to get some of these connectivity approvals, which used to take literally a month earlier, so all of that has actually caused some delays in connections to the grids and that is why you see that we are now, over the next month or so, going to be connecting a lot of projects into the grid.

Thank you, Sumant.

Yes, Sumant. You may also want to talk a little bit about the opportunity to pre-sell some of the power while we're waiting for those CODs.

Yes. So what's happening is one of the things that is happening is that because now this commissioning timeline has got extended, what we are being allowed to do is to sell, the moment the plant is ready, we can sell the power into the merchant market while we await commissioning, the final commissioning approvals. And because that process can be up to a couple of months long, for those couple of months we are able to therefore get the merchant tariff rather than the PPA tariff and that, as you know, in a number of cases is almost double the PPA tariffs. So for the new projects that we are commissioning, we are actually able to realize, given this new process that has now been imposed, as I said, for good reasons, but that is also therefore allowing us to generate higher profitability for a certain period of time by selling into the merchant market.

Understood, very clear. Thank you so much for answering the questions.

The next question comes from Justin Clare with ROTH MKM. Please go ahead.

Yes. Hi, thanks for taking our questions. So, first off here, you indicated that you expect to sign the PPAs for the 5.9 gigawatts of capacity that you've won at auction year-to-date in fiscal 2024, in fiscal 2025, and then the commissioning for those projects is expected in, I think, FY 2026 to 2029. I was wondering if you could give us just a little bit better sense as to when those projects might be completed. Can we expect it to be even over those years, or is it likely to be more of the capacity in fiscal 2026 and 2027? And then how should we think about the timelines for projects after you sign a PPA? And is there more time available if it's a complex project?

Yes. Justin, hello. So, first of all, on your first question of when should these projects be commissioned? It partly depends on when the PPAs are signed and because, as you know, the clock starts ticking from that point on. And typically for complex projects, we have two years in which to execute projects. But it also, to some extent, depends on when the transmission substations will get ready, because obviously, we assume that based on the availability that is provided to us by the transmission operator that certain substations will come up at certain points in time. So we make those assumptions and we can get connectivity into those substations. Now, substations don't always necessarily come up on the time specified. Some of them do get delayed and some of them, in fact, are going to be getting ready beyond the two-year time period that we are given to commission the project, in which case the timeline for us does get extended to be aligned with the commissioning timeline of the transmission substation. So it's a little bit variable, therefore, and I hesitate to give you an answer on this. What we will do, however, Justin, is over the next few months we will, as we think through this a little bit more, and as we get more clarity on the PPA signing dates, we will be able to get a firmer estimate and we will try to share that with you, perhaps in the next earnings call a few months down the road.

Yes. Just remember Justin that those are not in our guidance or projections, right? So, as Sumant rightly mentioned, as we sign those PPAs, then we'll have more confidence in the delivery schedules, et cetera, and we'll provide more granularity around that.

Right. Okay, thanks. And then so, I guess just given the increase in the auctions that we've seen significantly more volume here, how are you thinking about your annual capacity to build? I think in the past you've talked about 2.5 gigawatts to 3 gigawatts a year. Is that the number that we should be thinking about today or is it possible that you would look to increase that number given the opportunity?

Yes. The amount of megawatts that we can execute in a year is dependent on a few different factors. Of course, the availability of PPAs is one of those, but it also depends, as you know, on capital availability and funding capability, upon execution capability and so on. So I would say that 2.5 gigawatts to 3 gigawatts is still a fair number to assume. And of course, in a given year, it may be more than that or a little bit less than that depending on transmission. When is transmission coming up? What are the CODs like for different projects and so on? So there will be some variability around that, but that is a fair assumption to make. I think also what will happen, Justin, is that as we see the number of bids continue to stay at a high level and the attractiveness of those bids continue to be fairly good, we will try to see how we can ramp up our execution capability over time. But that is something that, as I said, we'll have to really do some work on. I think for the time being, making that assumption that the numbers that you talked about, I think is a fair assumption to make.

Okay, got it. I appreciate it. Thank you.

The next question comes from Puneet Gulati with HSBC. Please go ahead.

Yes, thank you so much for the opportunity, and congrats on good performance. My first question is on your CapEx guidance. Given the fall in module prices, are you inclined to lower your CapEx guidance or should we assume this is still a realistic number?

Kailash, would you want to take that?

Sure Sumant. Yes, Puneet, so while we are likely to see some benefits accruing from that, we haven't factored that into the guidance yet, because we would like to actually realize those benefits before we bake it in.

Okay. And any indication of how much could that benefit be?

So that benefit, depending on where the prices stay while we are executing on these projects, could vary in a range and we can work it out and we can share with you basis certain assumptions.

Okay. Has the CapEx for the entire balance remaining capacity tied up or will that also be tied up over a period of time?

So, for the large part of the capacity which is currently in execution, which is the peak part, the RTC project, and the pipeline that we are executing of solar and wind projects on B2B and SECI projects, that is largely tied up, which will be a total of somewhere in the range of around 10.5 gigawatts to 11 gigawatts. For capacity beyond that, it's yet to be tied up.

Sorry? 10.5 gigawatts, you mean 2 gigawatt additional over the 8.5 right, that's what you meant?

Yes. Whatever we are currently constructing is tied up. Whatever is to be constructed in FY 2025, for that we are in the process of tying it up right now.

Okay. And did I hear it right that this quarter alone you might be commissioning more than a gigawatt?

Yes, because I think as Sumant mentioned earlier, all the capacity is fully erected and ready for commissioning. It's just waiting for some approvals and once we get that, then it will be commissioned. So of the 1.9, 800 is already commissioned and another gigawatt is ready for commissioning. It will be commissioned in the next few weeks.

Yes just Puneet as a reminder, about 1.9 gigawatts will actually be generating revenue by year end fiscal year 2024.

Yes, understood. And secondly, you won 5.9 gigawatt of additional projects year till date. Of these, how much PPAs have been signed so far?

Right now, Puneet 400 megawatt PPA is signed. That is a project with GUVNL and the rest of it is currently under discussion, yes.

Understood. And this is the total capacity or is it the contracted capacity?

This will be the RE portion of the capacity in some cases where it is RTC-2 for example, or hybrid type projects, then the contracted capacity would be lesser to that extent.

Understood. That's helpful. And lastly, if you can give some color on what's happening on the ALMM front, and the ministry has put it on abeyance, what does it mean for you?

So Puneet. Hi, yes, so look, I think the government is still sort of thinking through exactly what the ALMM strategy needs to be. We had come out with an original circular which said basically that there were going to be certain exceptions, but we have now taken it back and they're still sort of mulling around what exactly they would like to have because there are obviously competing interests here. So I think, look, we just have to be patient and wait for them to finally decide what they want to do. So I can't give you any guidance unfortunately on it, but as of now, ALMM is supposed to come in from 1st April.

Okay. So in case no further announcement comes from the ministry, ALMM will get effective from 1st April?

That's right, but the reality is that there will be something that will come out soon, so I think we just have to wait for it. But look, obviously, as both a developer and as a manufacturer, we are closely in touch with the government on this whole issue. Now, if they allow some relaxation of ALMM to that extent our ITP business will gain and to the extent that they don't allow that relaxation, to that extent our manufacturing side will gain. So I think we are pretty hedged on this situation at this point in time.

Okay. And lastly, if I may, the solar PLF this quarter is a little lower versus the last year, the same period. Is there an issue on the irradiation side this time?

No, Puneet, I don't think we can make, come to the conclusions from just one quarter. I think we have to look at the whole year before we can come to any point of view. So I think one quarter you have these variations, frankly.

Okay, fair enough. That's all from my side. Thank you so much.

Yes.

[Operator Instructions] The next question comes from Maheep Mandloi with Mizuho. Please go ahead.

Hey, good evening and good morning [indiscernible]. Thanks for the questions. Just quick housekeeping on the guidance for FY 2024. Just confirm that's mainly due to the merchant fail before final commissioning you talked about, right or is there anything else on the guidance increase here?

On the guidance increase? Yes, I’m good. Yes. So on the guidance increase, really, as we're getting closer to the end of the fiscal year, obviously there's more visibility on what we are tracking against and given the experience that we are having on the resource side and on the expense side both, which is helping us revise the guidance as close to the reality which will actually pan out. So that is what's driven the increase in the guidance. Not really anything to do with merchant sales as of now.

Any idea how to think about the incremental EBITDA generation from selling power in the merchant markets next year?

I'm sorry, can you say that again? The line was a bit not very clear. Hello?

Any hi, the line is not…

Yes, go ahead, Maheep.

Sorry, yes, any guidance on how to think about merchant or the incremental EBITDA from selling power in the merchant markets next year?

So, guidance on merchant market next year, is that the question Maheep?

Yes, there's incremental EBITDA generation. You kind of talked about the opportunity to selling in the merchant markets. Right? So just trying to think through how does that impact the operations in Q4 or next year?

Yes, so look, I think that to the extent that, so first of all, as you know, we keep our exposure to merchant somewhat within the 10% to 15% level of our total portfolio. Now, what's happening is that some of these opportunities where we are able to intermittently sort of, or initially for two or three months sell power into the merchant market before we sell it into the PPA, those are opportunities that we are trying to capitalize on wherever they occur. But since we haven't yet given you guidance for what the base case would be for next year, it's very hard to sort of give you a sense of what the extra revenue might be out of merchant for next year. I think we'll just put all that together and then give you guys some sense of all of that as we've said in the June call when we do the full year results.

And Maheep, to add a little bit to that as well, one thing that we obviously are flagging is that as we give guidance, we will want to start the year with conservative expectations. Right? So what we are saying is that there is a very -- that could be a significant opportunity, but we will likely take a more conservative view with our initial guidance there.

Got it. I appreciate it. Thank you. [Indiscernible]

That does conclude our Q&A session and will conclude our conference for today. Thank you for participating. You may now disconnect.