ReNew Shifts to Solar and BESS as Wind Capacity Cuts

Date of Call: Feb 16, 2026

Financials Results

• Revenue: Increased by 48% for the first 9 months of fiscal 2026 compared to the prior year.

Guidance:

• Adjusted EBITDA for fiscal year ending March 31, 2026, expected to be between INR 90 billion to INR 93 billion, with lower end increased by 3%.
• Expect to construct between 1.8 and 2.4 gigawatts of projects during the year (lower end raised from 1.6 gigawatts).
• Cash flow to equity expected to be between INR 14 billion to INR 17 billion.
• Adjusted EBITDA contribution from manufacturing business expected to be between INR 11 billion to INR 13 billion.

Business Commentary:

Capacity and Portfolio Optimization:

• ReNew Energy's operating capacity increased from 10.7 gigawatts to 11.8 gigawatts since December of the previous year, with the portfolio expanding by 19% or 2 gigawatts over the last 12 months.
• The company reduced its wind capacity in the committed portfolio from 2.5 gigawatts to 850 megawatts, replacing it with more battery energy storage systems (BESS) and solar capacity.
• This shift was driven by the desire to lower capital expenditure (CapEx), reduce execution risk, and achieve more predictable cash flows due to less weather volatility.

Financial Performance and Guidance:

• ReNew's adjusted EBITDA for the first 9 months increased by 31% to INR 74.8 billion, with an over sixfold increase in profit after tax.
• The company successfully refinanced a bond, reducing the interest rate from 7.95% to 6.5%, saving approximately $9 million in annual interest expense.
• ReNew raised $600 million through a bond offering and increased its guidance for adjusted EBITDA to between INR 90 billion to INR 93 billion.

Manufacturing and Asset Sales:

• The manufacturing business contributed INR 10.8 billion to adjusted EBITDA for the first 9 months, with an external order book of 900 megawatts.
• ReNew sold another 300 megawatts of solar assets, bringing the total asset sales for the year to 600 megawatts, raising $275 million through capital recycling.
• The company's strategy of capital recycling and asset sales aims to improve returns and reduce leverage further.

ESG and Sustainability Achievements:

• ReNew received an A grade rating from LSEG with a score of 90.41 out of 100, placing it in the top quartile globally.
• The company achieved an A rating in the CDP Climate Change Assessment and an A- rating in Water Security, ranking in the top 4% globally.
• These achievements reflect ReNew's commitment to sustainability, including being carbon neutral and initiatives like Project Surya for skill development.

Sentiment Analysis:

Overall Tone: Positive

• "2026 has kicked off with good news on the macro front." "We have derisked our product execution and improved predictability of future cash flows." "Our adjusted EBITDA increased by 31% to INR 74.8 billion for the 9 months." "We have increased the lower end of the guidance range for both our adjusted EBITDA and megawatts for the year." "We have received an A grade rating from LSEG and a score of 90.41 out of 100, effectively placing us in the top quartile globally."

Q&A:

• Question from Maheep Mandloi (Mizuho Securities USA LLC): Could you talk more in detail about the revised strategy towards more solar and BESS projects, and any plans to manufacture BESS internally?
  Response: The shift from wind to solar plus BESS is driven by lower BESS/solar prices enabling better risk-adjusted returns, higher execution risk and variability in wind, and easier land acquisition for solar. Manufacturing BESS is not a current focus due to cheaper Chinese imports and rapid technological change.

• Question from Maheep Mandloi (Mizuho Securities USA LLC): Can you provide an update on the privatization path forward?
  Response: Management declined to comment on specific topics, stating the company will make appropriate disclosures if necessary.

• Question from Nikhil Nigania (Bernstein Institutional Services LLC): Are there any directional improvements in transmission project delays and curtailment issues?
  Response: There is increased government focus on improving transmission execution and addressing curtailment losses, with efforts to socialize the loss among stakeholders, but the timeline for resolution is uncertain.

• Question from Nikhil Nigania (Bernstein Institutional Services LLC): For projects with GNA versus T-GNA, is compensation for curtailment received from DISCOM?
  Response: Yes, for projects with a permanent GNA (like 30-35% of ReNew's portfolio), compensation is received based on schedule; projects with T-GNA bear the curtailment loss.

• Question from Nikhil Nigania (Bernstein Institutional Services LLC): Are margins in cell manufacturing holding strong or facing compression?
  Response: Margins have held up, with a temporary lull during monsoons but a recent pickup in the current quarter, supported by reasonable demand.

• Question from Puneet Gulati (HSBC Global Investment Research): Are the risk-adjusted IRRs for the new BESS/solar configuration better than for wind?
  Response: Historically, solar has offered higher risk-adjusted returns than wind due to CapEx reductions, though recent aggressive bidding has increased prices. The current shift is driven by configuration optimization, lower BESS prices, and reduced execution risks.

• Question from Puneet Gulati (HSBC Global Investment Research): How much of your capacity is under T-GNA, and what curtailment was faced in Q3?
  Response: T-GNA capacity is around 400-500 megawatts currently, down from ~1 gigawatt earlier, as some projects moved to permanent GNA. Curtailment for T-GNA projects is typically 10-20%, varying by demand and day.

• Question from Puneet Gulati (HSBC Global Investment Research): What is the target leverage ratio and timeline for reducing leverage?
  Response: The target is to reduce headline leverage from ~6.7x to 5.5x over time, aiming to achieve this between fiscal years 2028 to 2030, to increase free cash flows to shareholders.

Contradiction Point 1

Strategic Focus on Battery Storage Tenders

Contradiction on ReNew's level of interest and activity in aggressive battery storage tenders.

How do you evaluate the company's Q3 earnings performance? - Maheep Mandloi (Mizuho Securities USA LLC)

2026Q3: The shift is driven by three main factors... Regarding BESS manufacturing, the company has not actively pursued it due to... - Sumant Sinha(CEO)

What factors led to the shift toward solar and BESS projects over wind, and are there plans to manufacture BESS internally? - Nikhil Nigania (Sanford C. Bernstein)

2026Q2: ...does ReNew find the bids too aggressive, which is why it has been less active?... Yes, ReNew’s actions reflect its belief that current battery bids are aggressive. The company is not actively pursuing these tenders due to perceived price pressure. - Sumant Sinha(CEO)

Contradiction Point 2

Assessment of Manufacturing Industry Margins

Contradiction on the trend and stability of EBITDA margins in the solar manufacturing segment.

What is Nikhil Nigania's question from Bernstein Institutional Services LLC? - Nikhil Nigania (Bernstein Institutional Services LLC)

2026Q3: Margins have held up. There was a temporary lull... but margins picked up in the current quarter, with demand appearing reasonably okay. - Sumant Sinha(CEO)

Is there any margin compression in cell manufacturing? - Justin Clare (ROTH Capital Partners)

2026Q2: Why did the solar manufacturing EBITDA margin decline to 33% in Q2 from 40% in Q1... Q2 had leaner sales and production occurred simultaneously with sales, impacting margins. - Kailash Vaswani(CFO)

Contradiction Point 3

Project Capacity under Temporary GNA

Contradiction in reported figures for capacity still under Transmission GNA (T-GNA).

What was Puneet Gulati's question from HSBC Global Investment Research during the earnings call? - Puneet Gulati (HSBC Global Investment Research)

2026Q3: It is currently around 400–500 MW, down from ~1 GW previously... leaving ~400 MW or less on T-GNA currently. - Sumant Sinha(CEO)

What is your total capacity under T-GNA and what curtailment did you experience in Q3? - Nikhil Nigania (Sanford C. Bernstein)

2026Q2: Approximately 600+ MW moved from T-GNA to permanent GNA in the last quarter... - Anunay Shahi(Head of Investor Relations)

Contradiction Point 4

The Performance and Outlook for Wind Projects

Wind performance is cited as a key factor in strategic pivot, contradicting previous statements on project reliability.

What are your thoughts on the company's recent performance? - Maheep Mandloi (Mizuho Securities USA LLC)

2026Q3: The shift is driven by three main factors:... 2. Wind performance (PLS) has been lower than expected in recent years, with higher variability. - Sumant Sinha(CEO)

What drove the decision to prioritize solar and BESS over wind, and are there plans to manufacture BESS internally? - Agnieszka Storozynski (Seaport)

2025Q1: Underperformance is due to weather, not equipment issues. Wind turbine performance has been as expected across regions and suppliers. No systemic issues have been observed. - Sumant Sinha(CEO)

Contradiction Point 5

The Strategy and Economics of BESS and Solar Projects

Contradiction on the historical return profile of solar versus wind projects.

What is Puneet Gulati's question from HSBC Global Investment Research? - Puneet Gulati (HSBC Global Investment Research)

2026Q3: Solar has historically offered higher returns due to steeper-than-expected CapEx reductions. - Sumant Sinha(CEO)

Are the IRRs of the new BESS-solar combination unadjusted for risk higher than those of wind projects? - Puneet Gulati (HSBC)

2025Q1: At the time of bidding, IRRs were not necessarily higher for solar than wind. - Sumant Sinha(CEO)