Executive Summary / Key Takeaways

• ReNew Energy Global Plc is cementing its leadership in India's dynamic renewable energy market through strategic vertical integration, disciplined capital allocation, and a focus on high-return complex projects.
• The company's manufacturing segment, particularly its solar cell and module production, has emerged as a significant profit driver, contributing INR 5.3 billion to adjusted EBITDA in Q1 FY26 with over 40% margins, and its FY26 EBITDA guidance has been revised upwards to INR 8-10 billion.
• ReNew maintains a robust project pipeline of over 25 gigawatts (GW) and 3 gigawatt-hours (GWh) of batteries, with a disciplined bidding strategy focused on projects with attractive return profiles, even amidst intense competition.
• Strong financial performance in Q1 FY26, including a 43% year-over-year adjusted EBITDA growth to INR 27.2 billion and a profit after tax of INR 5.1 billion (exceeding full FY25 profit), underscores operational efficiency and cost optimization efforts.
• Key risks include weather variability impacting Plant Load Factors (PLFs), intense competition leading to lower return expectations, and potential delays in land acquisition and transmission infrastructure, though ReNew's proactive strategies aim to mitigate these.

The Dawn of a New Energy Era: ReNew's Strategic Ascent in India

ReNew Energy Global Plc ($RNWWW), founded in 2011, has rapidly ascended to a prominent position in India's burgeoning renewable energy landscape. Operating across wind, solar, hydro, transmission, and manufacturing segments, ReNew is not merely a power generator but a vertically integrated clean energy powerhouse. Its overarching strategy is to be a global leader in clean energy, a vision it pursues through relentless project execution, strategic diversification, and a keen focus on capital discipline. This approach has been instrumental in shaping its current market position, allowing it to thrive amidst India's ambitious renewable energy targets and a supportive regulatory environment.

India's macro environment remains robust, with the government targeting 500 GW of renewable energy capacity by 2030. This translates into an annual auction pipeline of 50 to 70 GW, creating substantial growth opportunities. While global markets have faced flux from geopolitical tensions and inflation, ReNew's business, deeply tied to the Indian economy, continues to strengthen, benefiting from an expected GDP growth rate exceeding 7% this fiscal year. The increasing demand for energy, coupled with renewable sources being the cheapest option, solidifies ReNew's foundational market opportunity.

Technological Edge: The Power of Integrated Manufacturing

A cornerstone of ReNew's strategy and a significant competitive differentiator is its integrated manufacturing capability. The company operates 6.4 GW of solar module manufacturing and 2.5 GW of cell manufacturing capacity. This strategic move was initiated to secure its supply chain, particularly in response to India's policy to restrict solar module imports and the anticipated Approved List of Models and Manufacturers (ALMM) for cells.

ReNew's technological prowess is evident in its production capabilities. The Jaipur module plant, with 4 GW capacity, has been converted to TOPCon modules, representing a significant upgrade in efficiency. Furthermore, the company is constructing a new 4 GW TOPCon cell facility, aiming to align its cell manufacturing capacity with its module capacity and fully secure its supply chain. The existing cell lines, while currently Mono PERC, have achieved an impressive 23.2% cell efficiency, which is among the highest in India. This high efficiency translates into superior energy yield for its projects and enhanced competitiveness for external sales.

The tangible benefits of this technological differentiation are substantial. By having in-house manufacturing, ReNew estimates a cost advantage of $0.015 to $0.02 per watt compared to procuring from the open market. This directly enhances project profitability and reduces exposure to volatile global supply chains. For investors, this vertical integration translates into a stronger competitive moat, improved financial performance through lower costs and higher margins, and a robust market position as a self-reliant, high-quality producer in a market increasingly emphasizing domestic content. While the company is not currently pursuing ingot wafer manufacturing, it remains open to such expansion should government policy provide clear indications and support.

Competitive Dynamics and Strategic Positioning

ReNew operates in a highly competitive landscape, both domestically and against global players. Key competitors include large integrated utilities like NextEra Energy (NEE), diversified energy companies such as Duke Energy (DUK), and specialized contractors like MYR Group Inc. (MYRG).

ReNew's competitive standing is qualitatively strong within the Indian renewable market. It has demonstrated superior execution, commissioning the most renewable energy megawatts in India in the first six months of fiscal year 2025 among its peers. This agility and localized expertise allow ReNew to adapt effectively to diverse project environments, potentially leading to more efficient project deployment for distributed energy solutions. Its end-to-end services for commercial and industrial (C&I) customers, including consultancy and maintenance, further differentiate its offerings.

However, ReNew acknowledges the scale advantage of global giants. NextEra Energy, for instance, benefits from its vast operational scale, access to low-cost capital, and proprietary data for AI-driven asset management. While ReNew's regional focus provides a qualitative edge in market relationships and adaptability in emerging markets, it likely lags NextEra in technological integration and overall financial scale. Similarly, Duke Energy's established utility network and focus on grid resilience offer a different set of strengths, where ReNew's specialized renewable solutions provide greater project-specific efficiency. MYR Group excels in scalable contracting for infrastructure, contrasting with ReNew's integrated asset ownership model.

ReNew's strategy in this environment is characterized by disciplined bidding. The company's win ratio has been "a little bit lower" in recent periods because competition has become "irrational to some extent," with some bidders accepting "much lower return expectations." ReNew maintains a "very disciplined approach" and is willing "to not win any capacity" if its required hurdle rates are not met, a testament to its focus on value over volume. This approach, coupled with its secured connectivity for its extensive pipeline, provides a critical differentiator against peers facing supply chain and interconnection challenges.

Financial Performance: A Trajectory of Profitable Growth

ReNew's financial performance reflects its strategic execution and operational efficiencies. In the first quarter of fiscal year 2026 (ended June 30, 2025), the company delivered an adjusted EBITDA of INR 27.2 billion, representing a robust 43% year-over-year growth. Notably, its profit after tax reached INR 5.1 billion, surpassing the profit for the entire fiscal year 2025. This significant achievement underscores the impact of its strategic investments and cost optimization.

The manufacturing business played a crucial role, contributing INR 5.3 billion to adjusted EBITDA in Q1 FY26, achieving a remarkable margin of over 40%. This elevated contribution was primarily due to a higher proportion of external sales and temporary cost advantages from early procurement. The IPP business also demonstrated strength, with EBITDA margins improving from 80.7% to almost 82%. New projects commissioned over the preceding 12 months added INR 1.8 billion to EBITDA, while higher wind PLFs offset subdued solar PLFs, resulting in a net positive impact of INR 1.4 billion on EBITDA.

For the full fiscal year 2025, ReNew achieved over 14% EBITDA growth despite weaker-than-anticipated wind resources. IPP business EBITDA margins expanded to almost 83%, up from just over 80% in the prior year. The company reported a profit before tax of INR 10 billion, a 23% increase, marking its second consecutive year of profit after tax.

Cost optimization initiatives, including the internalization of O&M and reductions in SG&A, contributed significantly, with approximately INR 60 crore saved from reversing O&M equalization reserves in Q3 FY25. Cash from operating activities also saw a healthy increase, reaching approximately INR 20.1 billion in Q2 FY25, a 10% year-over-year rise.

ReNew's balance sheet management is equally disciplined. Leverage at the operating asset level remains below the 6x threshold, standing at approximately 5.7x EBITDA on a trailing 12-month basis. The growing cash flow from the manufacturing business has meaningfully contributed to reducing leverage. The company's capital recycling program, which involves selling assets at attractive valuations (9x to 9.5x EV/EBITDA or 2x price to book), generated $260 million in the last six months, providing low-cost equity for greenfield projects. Furthermore, ReNew raised approximately $2 billion in debt financing in FY25 and refinanced $600 million of debt, achieving interest cost savings of 40 to 70 basis points. The Reserve Bank of India's rate cuts and benign inflation environment are expected to further reduce borrowing costs, benefiting ReNew's predominantly floating-rate debt portfolio.

Outlook and Strategic Trajectory

ReNew's outlook for fiscal year 2026 is one of continued growth and strategic execution. The company reiterates its guidance to complete the construction of 1.6 to 2.4 GW of capacity. The adjusted EBITDA guidance for FY26 is projected to be at the higher end of the INR 87 billion to INR 93 billion range, contingent on favorable weather patterns and successful asset sales. The manufacturing business's EBITDA contribution for FY26 has been revised upwards to INR 8 billion to INR 10 billion, reflecting strong visibility for third-party sales. ReNew also expects to generate cash flow to equity of INR 14 billion to INR 17 billion.

The company anticipates signing several unsigned PPAs in FY26, which will provide a clearer path beyond its current 18.2 GW committed portfolio. A significant strategic shift is the increasing focus on complex projects, such as solar-plus-battery energy storage systems (BESS) and Round-The-Clock (RTC) projects. Declining battery prices are enabling ReNew to reconfigure these projects with more solar and batteries and less wind, which is expected to improve IRRs and reduce generation variability. The C&I segment is also a growth area, with half of the 1.3 GW under construction expected to be commissioned this year, and the segment projected to contribute up to 15% of total annual capacity additions.

Risks and Considerations for Investors

While ReNew's trajectory is compelling, investors should consider several risks. Weather variability, particularly lower wind PLFs, has historically impacted EBITDA and could continue to do so, as evidenced by the FY25 guidance revision. The competitive bidding environment, characterized by "irrational" pricing from some players, poses a challenge to maintaining high-return thresholds. ReNew's disciplined approach, while prudent, may result in a lower win ratio for new capacity.

Operational risks include potential delays in land acquisition, especially for wind projects, and occasional lags in transmission infrastructure build-out. While ReNew has proactively secured connectivity for its pipeline, these factors can still affect commissioning timelines. Furthermore, discussions within the government regarding the potential cancellation of unsigned Letters of Award (LOAs) beyond 12 months introduce a degree of uncertainty, although the company believes such actions could lead to reputational damage and that earlier bids remain attractive. The non-binding offer to take the company private, currently under review by a special committee, also presents a unique consideration for shareholders.

Conclusion

ReNew Energy Global Plc stands as a compelling investment in India's rapidly expanding renewable energy sector. Its strategic vertical integration, particularly in high-efficiency solar module and cell manufacturing, provides a robust competitive advantage, enhancing cost control and securing its supply chain. This technological leadership, coupled with a disciplined approach to capital allocation and a focus on high-return complex projects, underpins its strong financial performance and positive outlook.

Despite facing a competitive bidding environment and weather-related challenges, ReNew's proactive management of operational risks and its commitment to ESG principles position it for sustained growth. The company's ability to consistently execute large-scale projects, expand its contracted portfolio, and generate significant cash flow, all while maintaining healthy leverage metrics, paints a picture of a resilient and strategically astute player. For discerning investors, ReNew offers a unique opportunity to participate in India's clean energy transition, driven by a clear vision and a proven track record of value creation.