Q4 2022 Renew Energy Global PLC Earnings Call
Thank you for standing by and welcome to the renewable energy fourth quarter full year 2022 earnings conference call.
All participants are in a listen only mode and there will be a presentation followed there'll be a presentation followed by a question and answer session. If you wish to ask a question you will need to press the star key followed by the number one on your telephone keypad.
I'd now like to hand, the conference over to Mr. Nathan Judge. Please go ahead.
Yeah. Thank you, Jason and good morning, everyone and thank you for joining us.
Last night the company issued a press release announcing our results for fiscal year 2022 as well as the fourth quarter of fiscal year 'twenty 'twenty. Two ended March 31st 2022.
A copy of the press release and the presentation are available on the Investor Relations section of or be news website at www dot renewable power iron.
With me today are some aren't seen huh founder chairman and CEO .
Our new CFO Hadar, our Po de <unk>.
Surely Nagel, our chief sustainability officer and Kyle.
Last for Suwanee President of finance.
Tomorrow, we will start the call by going through an overview of the company and recent key highlights.
Good are then we'll go through results followed by an update on E. S. T from the Sally.
And then we will wrap up the call with some aren't providing guidance for fiscal year 'twenty to 'twenty three.
After this we will open up the call for questions.
Please note our safe Harbor statements are contained within our press release presentation materials and 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 6K and presentation on our website for a more complete description.
Also contained in our press release presentation materials and annual report are certain non I S. R. S materials and measures that we reconcile reconcile excuse me to the most comparable I FRS measures and these reconciliations are also available on our website and the press release presentation materials and our.
In your report.
It is now my pleasure to hand, it over to smart.
Okay.
Yes. Thank you.
Good morning, good afternoon, or good evening, everybody, depending on where you are but.
Hmm.
Let me start off by saying that we.
I mean, you haven't been publicly listed on the NASDAQ.
10 months now and opportunity for growth.
Pulling the gun.
Noting our cost of capital.
And the strength of our company has notably improved over that time period.
We do continue to believe that the new is one of the most compelling investment opportunities in the renewable energy sector today, and we would like to recap the investment proposition on page five.
Venues operations I didn't one of the most exciting.
Renewable energy market globally.
And yes, the electricity demand is expected to double by 2030.
Underpinned by strong economic growth, but also improved access to electricity for the general population.
This demand can be met by renewable energy as it is the cheapest source of new capacity available in India to do it.
Very importantly, it doesn't produce any that's gotta do small cells.
Yes.
The Indian government real estate Youll Booz Allen D to the tea energy independent and you didn't seem to have $50 billion and will build for imported ore.
The robust levels of sunlight.
Alight and build a source can transform India from being a net energy importer to a supplier at all green hydrogen.
They've got any government dog, it's all 500 gigawatts of renewable energy to be installed by 'twenty. Two D. So all in all pretty based off a little more than 100 gigawatts.
To meet this goal renewable energy developer of which we knew was the largest.
We need to lease these up and one installations by a factor of all time from the expected from the current level in a very short period of time.
Even at all.
I'm asking about the other companies.
They did increase in electricity demand in India, what still it can be met by the last one for the renewable energy.
Also the government of India has begun the journey of promoting green hydrogen, which considering the government target.
He needs that acquired the human and the installation by another hundred gigawatt, Banca 500 megawatts by renewable energy.
How do you get a substantial amount of it.
When you build capacity to the grid supposedly the liability question.
[laughter] liability has been our focus has been there has been if you didn't see prolonged electricity I'll give you. This.
Particularly during a time when our daughter entities that frequently hit the 110 degrees Fahrenheit or 42 degrees Celsius or more.
There is a need for more value added and then New York needs to address these concerns.
Instead of just Gotta do you sense that there was around the clock.
Pablo Scouting and dispatch, but he says the new head.
<unk> been leading the development for some time.
That is growing interest by utilities, and yeah like customer and high capacity factor all these products.
These intelligent than it used to be.
You shouldn't require development in our opinion leaves across multiple renewable energy technologies, where we have a leadership position.
We are spending considerable time on digitalization of our portfolio and it did.
We provide the leading suite of value added energy options for customers, but really commercial and industrial customers as well as people focus on green hydrogen.
The new as the largest RV company in India.
By upgrading capacity.
You have to invest in the development of these value added energy product.
In addition, when he was one of only a couple of companies in India.
How has the capability to build these ikea that renewable energy projects on a landscape.
I believe that as we advance our IP in the energy space, who continue development of artificial intelligence and what isn't.
Condition, even expand our competitive advantages over the coming years.
Okay.
We are also focused on capital discipline.
All are what kind of investment must be value accretive regardless would be comfortably above our cost of capital.
Recently, we have taken steps to enhance our returns by pursuing capital recycling and the effect of you been announce more of these transactions in the future.
Turning to recent developments on page six as I just mentioned, we recently announced at 49% minority stake and also didn't have any mega Watt RBC target to me too.
This transaction materially increasing the returns on the project, but we also believe establishes a clear marker for the value of our assets, which is considerably higher than the current valuation of video in the public market.
We also by coupon five gigawatts up you'd be it in the last month.
800 megawatt workload existing letters of award we had in our portfolio and an incremental one six gigawatts of new projects.
In 'twenty five 'twenty eight megawatts with acquisition.
It has brought that go to the golf portfolio to 12.8 gigawatt.
Of this 12.8 gigawatt about 800 megawatts of antibodies.
Yeah.
With the recent electricity prices in India, Rolling blackouts in Saudi spot pricing.
That appears to be more momentum to getting deeper you're fine.
Noble energy bids to help address this issue.
In fact, we just five P. P. S 300 megawatts of US taking nine pardon me yes.
We have also made notable progress towards maybe you'll see a receivable.
Cutwater.
Including an important ruling from the high got them on separate days, maintaining so I didn't know who he is in India.
During the quarter, we entered into a binding agreement with <unk>.
In our company.
N D.
Can you just give me a call green hydrogen I don't see a lot of the largest consumers of hydrogen in India accounting for approximately 8% that we live hydrogen consumption.
Turning to page seven we are pursuing capital recycling as a bakery pieces of gun.
On future growth and establish the value.
The 49% minority sale could be three or.
400 megawatt RBC target.
It was about 300 megawatts of renewable energy capacity.
At $200 million lots about $17 million up you can see created considerable value.
Can be seen on the slide the amount of you picked up $1 or they could eat has increased by almost 25% and you're now expecting that this large project.
The equity value.
20%.
In addition, we bill.
This provided a mockup of the value of our assets.
The transaction was completed at a steady state EBITDA multiple also down nine and a half to 10 times.
Consistently higher than the seven six times, that's the newest data yet.
In fact during the quarter.
Some of the proceeds generated from the sale of our rooftop business.
Oh, Yeah, I didn't mean to EBITDA multiple of about nine five times to reach to repurchase about 4 million shares of hotspot.
There is significant interest in that asset not only from the suite, but also other strategic and financial investors.
Operating expertise is at a premium in India, and we do believe that the level of interest from the quality of investors such as Mitsui validates our competitive advantages.
Every one gigawatt that you sell a minority stake in at a multiple of nine to 10 times EBITDA LIFO based EBITDA per share by 5%.
As I mentioned earlier.
There's been an electricity crisis in India over the recent months as seen on page eight.
Demand, partly driven by a heatwave has risen about 6% to 8% above pre COVID-19 levels.
Supply issues with school hesitant attitude and rolling blackouts.
Average of two to $4 throughout.
Yeah.
This electricity supply disruption has pushed up spot electricity prices on the India. It makes us a change to the negative.
<unk> castle glad to be on about 15 cents per kilowatt hour for many days over the past quarter.
There's been a strong uptick in demand for renewable energy during this electricity prices, particularly from corporate customers.
We are able to offer a clean sustainable powered at a considerable discount to what these customers can buy off the grid.
And it is green and sustainable.
Corporate customers the whole value added energy products, such as the high Pls or RBC option as they pay one fee for access to the transmission line and the more units that come across the line below the per unit costs.
Without leading IP and value added energy product offering.
Have a significant lead in this sector with little competition at the moment.
We recently signed about 500 megawatts of Milky games with corporate customers last month, and our total portfolio of corporate accounts is now about 1.2 gigawatt.
Including more than 900 megawatts with P. P is a big holiday season about a yep yep.
We are currently in discussions with C&I businesses for about one three gigawatts of additional new contracts.
The Gawkers business generally has hired a dozen mainland enough projects and provides us additional confidence in maintaining our secret money per cent equity investment potential targets.
There was also below seasonal activity in the traditional ground Mount auctions in recent months.
At the moment, we see about 21 gigawatts of auctions in process that should come to bid over the next six months or so.
In addition, there is heightened interest in RBC type product and that is the last six to nine gigawatt RBC auction that was expected near them.
In addition, Indian railways, the largest single consumer of electricity in India has announced their interest in contracting for RPC that human energy supply to meet the net zero target by 20%.
The encouraging news about 30, gigawatts of Baseload power, which could represent a significant amount of renewable energy capacity.
Turning to page 10, we are also announcing today that we're increasing our module manufacturing capacity to six gigawatts, which will put us about people two gigawatts all you see all PPA equivalent capacity.
Oscar we can say there'll be additional D. C O what sizing in projects that we do to enhance them.
We expect that this will cost us no more than about seeking help us think about your capex forecast.
And all of the output is what I call you lose it.
Security of supply and enable us to achieve our growth targets are now called business.
Which is a human anything about it.
In fact, having this module manufacturing capacity in place could provide us opportunities to capitalize on higher return development projects as there could be severe constraints in getting more deals in India by a competitor.
The name is further than it has been a push by the Indian government to the imports from China, which currently represents over 90% of all modules used in India solar projects today.
And we announced two connection has actually been 'twenty 'twenty that claims as I mentioned in 'twenty to 'twenty two.
Our basic custom duty of 40% on any important module or 25% on any important itself.
As Ben is establishing a list of approved module that can be used for government projects in India, commonly referred to as elements.
Only India produce modules are understood.
Government I guess imply the need for new solar plant development up about 25 to 35 gigawatts per year.
Got it that is going to be about three gigawatts of E. C. Covenant all commercially viable module capacity in India to do in.
In addition, most new module manufacturing capacity that had been announced wont come online until about 'twenty 'twenty four 'twenty 'twenty five and it appears that a large portion of what is coming on is for self consumption and the remainder could be exported.
The market for the selling price is much higher than in India.
All of this could result in a large supply shortage in India.
The army has to make this relatively small investment, but one that would be critical to achieving our growth targets on our golf business, which is our lead development.
Our cell and module sponsor currently under construction and are on schedule to be operational early next year.
We are still awaiting details for the second tranche of the collection linked incentive manufacturing people sooner.
Countries.
The government has set aside coupons $6 billion to subsidize solar manufacturing in India.
Therefore on competing for the backward integration into full production.
Even some of the allocation as we anticipate that import duties busy implementing them because at some point in the future.
Moving on.
We recently entered into a joint venture with the Indian Oil Corporation, one of India's largest consumers of hydrogen.
And indeed, one of the largest pickup.
It's not the largest in India.
Yeah, I have been to be a leader in the emerging green hydrogen market.
We believe that the JV is a highly differentiated bringing together cognitive demand by Iot leading expertise in the implementation of the last mile off of Green hydrogen plants, I N T and our leading position in providing high P. F E M solutions from renewable energy.
Today, I will see uses about half a million tons per annum of green hydrogen which could be converted into green hydrogen and then he has a national hydrogen mission.
Yeah, Hi, Cynthia announcing clean hydrogen policy.
And it really wasn't a few countries, who have announced such a policy.
This policy includes maybe unintended.
Transmission open access and provisions to bank Pablo.
We believe that the government of India once major indices to commit to green energy and decarbonization and an important step would be a green hydrogen purchase obligation, which is something that the government is contemplating and might introduce at some point in the near future.
India can use the advancement and green hydrogen to lower costs and become not only energy independence, but potentially a supply of green hydrogen globally.
Approximately 70% of the Capex required for the Green hydrogen plant is actually the noble energy.
Do you expect to contribute at expertise of the joint venture.
Very low cost renewable energy electricity in India relative to the rest of the world puts India very strong competitive advantage to further green hydrogen production.
Overall, we think green hydrogen represents about a $60 billion market opportunity by 'twenty, Turkey at about 100 gigawatts by that time.
We expect that there will be numerous bids over the coming years, and we will provide them in a base as events unfold.
With that before I pass it over to Kim to discuss the quarterly results.
I would like to use this opportunity to say a few words about kebab.
Good I joined us about a month ago from supply one of Indias largest publicly traded pharmaceutical companies.
He was president and global CFO .
I see a somewhat simpler he had other global finance and information technology function and worked across multiple geographies, including the U S where he led implementation of several high impact cross functional transformation project.
Before he was vice President and head finance and Investor Relations for the envoy S elicit Doctor Idiots, Nevada.
Yeah. Don has also held leadership roles at Pepsico until next fall back.
We are really really pleased to have him on board are the video team now.
With that well what do you look at all.
Thank you so much.
Good morning, good afternoon, and good evening to everybody on the call and thank you for joining us today.
Looking at page 13, which provides highlights from fiscal year 2022, and the fourth quarter of $2 22, you have seen 1.6, gigawatts operating as off great.
Rich with the fight we did make a right acquisition that is in the final stages of closing would bring us to 8.1 gigawatt we.
We choose that aren't even up to one giga, reaching the end of the last fiscal year.
In addition was particularly commendable given the challenges well, we didn't supply chain disruptions, which replaced.
Our fiscal year 'twenty two revenues on label.
One that I find out that it was 27% year on year, well I know what I, just said EBITDA increased more than 32% and cash will be equity jumped almost 93%.
Turning to page 14, which provides the reconciliation of our adjusted EBITDA, excluding the impact of window what was reported in this.
EBITDA, excluding the impact of the Forex and the loss of EBITDA from the sale of our business was in line with our guidance after considering the ainardi precision or what have you.
Neither improved from last year, although it remains below normal levels and had them honestly I wonder if I'm a little negative impact in this fiscal year.
For the current quarter fourth quarter with 23 wins, so far has been close to normal.
Turning to our accounts receivable Beach, Oh 15, when you look into what constitutes over the past due accounts receivable.
First it does account for the Wassa majority.
Although where he was we believe we can improve our payment cycles at this stage as a bit of history. Many of these contracts, but at this stage before the central Goldman created the solar Energy Corporation of India are sticky at the time, we anticipated payment delays and had building expectations into a higher tariff.
Which allows us to unhealthy returns. Despite these delays however during COVID-19 the payment cycles, George considered I believe which was understandable.
How 'bout electricity demand is at a new high and we mentioned the discounts are being made in a more timely manner.
And so we are taking steps to ensure that our past due bills and prioritize full payment in particular, we have for the first time and we're taking them on customer support for accelerated recovery.
We have made some progress towards improving the DSO.
But you ended up doing in 12 days at the end of fiscal year, then down meaningfully from the peak in second quarter, which was a Tuesday I wanted to.
After the HEICO directed the dysfunction, Karnataka, two cleared all I'm standing dues payable.
It was about $90 million at the beginning of the calendar year.
We have received about 65 million.
Model still has also paid about $7 million back all built since the state electric the regulator the Knicks Interstate distribution company.
To pay it all out shining the samples.
We also received a favorable ruling from the regulator in Madhya Pradesh RMP on a 60 megawatt project and we are submitting petitions for other facilities in the state that spin.
We are also pursuing actions in Telangana, we expedite payments.
Regarding the situation in Andhra Pradesh, which has the largest accounts receivable outstanding at about $30 million on March 15th.
The court ruled unilaterally in our favor.
Swimming in that day, the sanctity of contract in India soon.
Then if he has filed the request to delay payment and they also filed request for appeal of the ruling with the Supreme Court. The Supreme Court isn't reassess until the end of June at which time, we expect they will decide whether or not to hear the case.
In the meantime, the Goldman it'll be if he has returned to ministry of farmer sentiment is shop or requesting alone from UFC and Odyssey, which other lenders illuminate strip wallet to.
To clear deals to the renewable energy generators, we remain confident in the full payment from my view overtime.
While there was improvement in Dsos wanted dwell days, it's still unacceptable to us and we will continue to work to improve payment cycles would disclose the.
The combination of company initiatives legal and regulatory proceedings Goldman support implementing electricity demand for distribution companies and increased exposure to what central government agencies that have a strong record of one time payments is expected to result in immediate improvement in dsos over the next several years.
It is worth emphasizing that dsos should fundamentally improve over time as an increasing percentage of our sales will be to central Goldman on shaky, which vintages bills promptly and on time.
Could they be at some 0.6 Gigawatts I'll put it in about 30% of what assets are with toward this comes at a higher DSO.
As most of our future organic projects in our portfolio out of it.
Our customers that are on time, they exposure to this Ford as comps will fall to about 24%, which would represent an improvement of about 55 days and about what all you. So it just makes sense.
We also wanted to flag that we do expect DSO to have an upward bias a bit for seasonality, which we all noticed over the last several years during the.
First few months of deal.
It's going to typically be a studio model each month, but we deliver more electricity during the monsoon, which lifted the DSO how long do we expect that this would be better year on year every quarter. This year.
And in FY 'twenty three at a low level.
Than the end of FY 'twenty two.
One of the frequent questions, we get asked as much supply cost inflation, which would just because on page 16.
Project cost for the megawatts added during fiscal 'twenty two we're at the higher end up over the estimated cost provided during our original guidance.
There's been some increase in costs related to budget for projects.
We are delivering for the remainder of the year after considering the lower financing costs that we are realizing we continue to expect that our projects under construction will deliver an equity I don't know if he didn't want a targeted range of 16% to 20%.
You wouldn't know that most of all solar projects in 'twenty three but we're still supplying our next large orders for wind turbines won't need to be completed until late this year early next year.
Turning to slide so it wouldn't be.
Which highlights how interest rates in India remains favorable.
And benign.
Allowing us continued opportunities to reduce our interest cost to refinancing.
Currently we are assuming term sheets for lending at it to it in Hopper sync, which.
Which is about 50 basis points less than a year ago.
Overall interest rates on variable there down about 200 basis points lore since March of last year, which should more than offset any impact of potential rating position in this fiscal.
One example of this refinancing activities are conditional redemption of our $505 million Green bond, which carries about pinpoint and 5% in rupee terms.
To finance this with the 828 and help us and learn from one non bank financial company.
About 75% of our debt is fixed with an average period of approximately 40 years.
It was 100 basis points change in short term borrowing rates for all over there.
Variable rents will equaled only about one 2% in the cash flow annually.
Thank you and with that I will turn over to rationally to update everyone on our ESG initiatives.
Accordingly.
Thank you for that.
And thank you to all of you who joined US on this call.
I want to start by saying that Oh accident, you know our mission is to address climate change and in fact, most scalable and market conditions are creating a sustainable and equitable future.
Asking you.
Yes. She approach is based on 41.
To create a carbon seamless to our commitment to sustainability.
<unk> collaboration.
Our corporate citizenship.
On slide 19, these turn some light into what we're doing each of these teams.
And so creating a carbon a fever when you have avoided.
About Oh, what 10 million tons of carbon dioxide equivalent in fiscal year, 'twenty, one, which is 200 times a school funding to emission.
This translates just to give a perspective to avoiding 0.5% are finished carbon emission and 1.1% of emissions from the power sector, while contributing to one 5% of India's power capacity.
This data has been validated by Dnb.
Renewal and its upcoming sustainability report, which will be out in September 'twenty, two maybe disclosing.
Scope three emissions and even also align with the P. C FD disclosure.
In line with our commitment to carbon neutrality of our operations, we are committed to creating a carbon sink.
This whole environment D are recommitting to planting 100000 trees by 2025.
And this will be done across 70 sites.
Yeah.
Yeah and also on the World Economic Forum Advisory Council for the one trillion three initiatives. The goal of this program as you can tell Christoph ankle actually increased by 2030 across the board when you buy a home and is committed to leading this initiative yeah.
Number two what's commitments to sustainability.
From our board to our sites for Neil is deeply committed to sustainability.
Yes, I'm sorry.
Yes, she's latest commitments we have made.
Excuse me.
We aim to be water positive by 20 Pepe.
One of the examples of our drive towards this goal is that we are replacing a cleaning of our rooftops into market cleaning.
We have increased our robotic cleaning to about five times compared to fiscal year 'twenty one.
Saved about 332000 liters of water.
We are ensuring zero waste to landfill by 2030.
Currently all EV and batteries are saying to authorize recycler.
We have an ESG policy in a very defined three tier E. S E governance system right.
For the board to the management and to the working through all the way to our site.
We have also integrated E N E. R E R M C.
Additionally, as Aneel is also committed to creating a very diverse and inclusive workforce.
We believe it's critical as we March ahead too.
The challenges of climate change action you, we have various initiatives to engage to hire more women are we have a power establish that new platform, which is for women who get engaged we have various initiatives for Paypal Ricky do you have a leader Mentorship program.
And I'm proud to say that thanks to my board to attract men and various management members, we have regular town halls to sensitize, our managers and to push the envelope to making when you Oh workplace niches inviting for women and who did you sell in the top.
Leadership for us.
On slide 20, we have highlighted the father of the collective which.
Which is required and is critical to tackle climate change with greater.
Genesee and hence for all of us to meet the goals.
For this we are collaborating with civil Society global institutions institutions policymakers across the board.
When you have been driving Dino globally, and nationally around climate action to enable institution and corpus to scale, the netgear efforts and create demand solutions.
One is some of the roles. We play are as founding members chess need us in and high performing institution in prestigious institution in platforms like the clock all economic Forum first one was coalition you added global compact to name a few.
Oh, yeah, I'm, including communities and taking action on the pound has always been a priority for us.
On slide 21 on.
Corporate citizenship.
Wanted to see that we have taken up a target is impacting $2 5 million lives to our CSR initiatives by 2030.
When you have all these basket.
The 650000 people across 250 villages in 10 states across India.
This is discussed in detail in our CSR report, which is public and it's available on our website for you to read.
Our flagship socially intervention include lighting lives, which is in the area of providing electricity wire so little stop into.
For most parts of the country, we engage the U T R and ensure that they get English in.
This whole movement of climate change, which is happening in our country and most importantly for the youth who are present in and around our sites as well to sensitize them to make them aware of the challenges of climate change and to provide them the opportunities, which are there for them to work and get a job in getting each can be.
We have electrified 84 schools using off grid and around 40000 students across seven Indian States, who are benefiting from this initiative, we have various initiatives around climate, a rad women are being <unk>.
Each one of them is in the state of good job engaging softbank workers in the renewable energy sector, which has been multiplied that current income we are working with women who are impacted by the use of poor quality cookstove too cleanup cookstove and this will benefit.
About 10000 women, we are working with international.
Partner for some of these initiatives and also supporting climate entrepreneurs, who are women.
An accelerated program in partnership with IIT Delhi and UNDP.
I'll be supporting entrepreneur adventures led by women in the area of.
Energy efficiency storage, the calamity seawater desalination to name a few.
The base water conservation is.
A critical and important for us and we're doing a lot of work in and around Rajasthan to ensure that we can run projects and programs to conserve water.
By using traditional rainwater harvesting methods.
Have also till date, we have a decent mix 100 tank cars and a lot of work to benefit people in the area of Jason Me about 25000 people have benefited from our programs that.
This initiative has been recognized by the Ministry of Corporate Affairs coming in India as a benchmark CSR case study for water conservation across India.
Gift from now, but not the least is a program, which is a program where we engage when he was.
Voluntary program because he want all our renewals to be engaged in the climate in fact, what we are doing and since 2015 16 16 excuse me we have distributed close.
Close to 400000 blanket cross selling in states.
We believe climate change.
Provides a lot of you know Ken.
Temperature fluctuation in this program really addresses that I will now turn it over to someone for guidance and closing tomorrow.
Yeah.
Yeah. Thank you so much for that Vishal.
I'm very happy to report that despite the uncertainty around supply.
Corporate issuers in 'twenty 'twenty five 'twenty eight 'twenty two.
Not only will be able to continue to deliver on all of our ESG and sustainability programs, but.
But also able to deliver on our guidance for adjusted EBITDA, excluding the impact of weather and foreign exchange movements.
Turning to slide 23, we are making some changes to our guidance to be in Indian rupees, and also providing guidance on a per share basis.
We have been actively buying back stock when we believe this will provide the highest return opportunity.
So far we have repurchased about 4 million shares since we implemented the buyback.
This leaves us with well over $200 million of authorization.
Under that program.
Our FY 'twenty EBITDA guidance is for about 20% EBITDA grew up about FY 'twenty, two which translates into between.
Rupees 66, and 69 billion.
155 to 160 rupees bullshit.
Our cash flow to equity guidance is 21 billion to $22 7 billion rupees altogether.
<unk> 49 on a per share basis, 49% think it'll be associated.
On an absolute basis converted to U S dollars at the current exchange rate, our FY 'twenty three EBITDA would be in the range of roughly 800 to 920 million and a gaslog equity would be approximately $280 million to $300 million.
Our guidance includes an assumption that the weather impact would be about $40 million to $60 million about half of the impact that you saw this year that is FY 'twenty two.
After adjusting for about 20% growth in megawatts.
We still expect that there will be normal in future years, but probably it would be prudent to take into account some impact this year as well.
We've just basically taken the midpoint of reversal back to the mean from FY 'twenty two.
So far.
Through the first two months of this fiscal year, so better has actually been closer to normal.
We are on track for that long term guidance that we have provided previously and we will provide more information later this year at an analyst day that we plan to host.
As a closing remark media has many competitive advantages and compares very favorably towards global renewable energy peer group.
We have leading EBITDA margin.
Have competitive advantages and one of the largest fastest growing and renewable energy markets in the world.
We have equity funding in place for growth beyond our current portfolio.
Our EBITDA and cash flow to equity growth rate is significantly higher than the peer group average.
We have an upside option value and green hydrogen and battery storage.
Yet when you have this 13% gaslog.
Two equity yield on our current portfolio and create a meaningful discount to our global renewable energies.
It also trades at a meaningful discount to what we can sell assets for in the private market right now.
The issue that we have heard from investors such as DSO and legacy issues are being resolved hopefully fairly soon.
And this will argue it presents a great investment opportunity at this point.
But.
Let me conclude and we will be happy to take questions from all of you. Thank you.
If you wish to ask a question. Please press Star then one on your telephone and wait.
For your name to be announced if you wish to cancel your request. Please press star two if you're only speakerphone. Please pick up your handset to ask a question.
Yeah.
Our first question comes from Justin Clare from Roth Capital Partners. Please go ahead.
Hey, thanks for taking our questions.
So fertile call here.
Yeah. So first off you're you you mentioned that you're expecting I think I heard a $40 million to $60 million weather impact for fiscal 'twenty three at least that's what you factored into the guidance here.
I was wondering is is that I expect it to impact only the wind assets and then the solar assets are expected to perform in line with historical averages.
And then along the same line could you give us a sense for how you expect the pls to trend in fiscal 'twenty three relative to 'twenty two for for both your solar and wind assets.
Yes sure.
Let me take that yeah. So look I think as you know that's in the variability of sort of assets is a lot lower because of the aviation changes as compared to winter weather variability does tend to be highest the number that people assume it's essentially a number for both wind and solar together.
We have not actually differentiated.
And to your question of what is the fear that there would be expect to get this year. You know we've been obviously expect to get normal pls, but we have just being prudent in assuming a certain impact though of weather.
<unk>, which we have assumed it would be half of the impact of last year.
Frankly speaking there is there is no real specific time so there's.
Dominik you will have to see how the how the weather plays out but just given the long term pattern. Brad as you know two years ago was really bad nausea was already getting back to closer to normal but was not fully that we've just assumed that we'd have a similar improvement this year.
Without a full conversion back to them.
So that's the assumption that we've made ultimately will have to wait and see how the year plays out, but that's to be able to get a good thing so I'm off the performance actually.
Okay.
Okay, Great. That's that's helpful. And then also on on the guide just wondering how much of your guidance are you expect it to be delivered from the portfolio commissioned as of the end of fiscal 'twenty two versus how much is dependent on our new assets. So.
I know you also acquired 528 megawatts recently here and you're expecting the cash flows are you know starting I believe it was April 1st of this year. So just wondering if that if the cash flow and EBITDA from those from that acquisition is fully factored into the guide.
Well.
Yeah Finance team would you cannot would you like to answer that get out of the loss.
Yeah.
Yeah, So the guidance factors the benefit of the acquisition.
However, it is subject to closing so I think all my top it up.
Which isn't to be you know not at the beginning of the euro in the middle part of the year.
So I think that's the answer to your second question.
And could you repeat your first question. Please.
Yeah, just just wondering if the guidance is dependent on additional acquisitions or commissioning of projects throughout the year or is it really the portfolio are you know starting the year will that support your expectations.
Expectations for the year.
Yeah, the reliance on the newer additions for the current year. They may lose anybody that is quite long. So I think the sensitivity is far out here to the portfolio that we're getting from the beginning of the year.
If that helps you may not quantifying the exact amount. However, the current deals I mean was that EBITDA largely shipped baidu opening portfolio.
Got it okay.
And then just shifting gears you know for your for your manufacturing plan, just wondering how youre thinking about the amount of cell capacity relative to your module capacity. It looks like so at this point is about one third of module capacity, but you know looking forward what is the optimal.
Ratio that youre thinking about there.
And then also just on manufacturing.
How much of your supply over the next say one to two years do you anticipate a two.
To produced in house versus how much do you think you need to.
Still potentially procure modules from from external sources.
Actually one other piece on this is just the where do you anticipate procuring sells for like given that your module capacity is higher than themselves.
Yeah. So let me take that Justin as far as our cell capacity is concerned right now as you know we are still doing two gigawatts that will be ready sometime towards.
The.
Second quarter of next calendar year, AR and VR.
We are just going a little bit slower on cell capacity, but our eventual goal will be to have a battery cell and module capacity.
Because eventually as you know India does impose a 25% customs duty on cell imports as well and our sense is that that the cost of production sales in India will end up being cheaper than imports less 25%. So eventually we would like to have a balanced capacity off of cells and modules.
We are going a little bit slower themselves and roll out because it's a little bit.
A little bit more complex than putting up memorial planters and so what you wanted to do was to essentially make more headway on the first two gigawatt get that.
Get absolute comfort that everything is under control and then the safety expand capacity after that but you should look.
You should assume back or what time, we would look to balance out the cell and module capacity is right now.
Your second question of bad or how much capacity will be procuring ourselves from.
From our own supply and how much from outside.
Oh five total.
Outstanding solar projects that we have been constructing right now.
One of those capacities are grandfathered so those capacities, we can import the molecule score.
And and essentially get they'll get a refund on the custom duty. So some part of our go to capacity, we will therefore be doing that.
And the bulk the bulk of the remaining capacity being centrally and intend to sell supply and so really most of that will come from Dan in terms of course, there may be a few field.
200 megawatts of balancing requirements here a bit but.
Fundamentally most of the balance will be self supply.
Do your third question about evenly and bought the sandstorm.
Defense will be imported from you don't do that.
The manufacturing companies are mostly out of China.
The same same countries like laundry and delinquency et cetera, who lead by currency I'm doing this from so you would essentially goes buy cells from them instead of modules. So I think that's to be thinking about it.
Okay, Great I appreciate all the color I will pass it on.
The next question comes from Julien Dumoulin Smith from Bank of America. Please go ahead.
Good evening. This is actually Kerry Clark on for Julian Thanks for taking my questions.
So just first on just inflation and numbers came in at 30 year highs kind of increasing the likelihood for rate hikes cognizant that rates have remained in the eight to eight 5% range for now but looking into the future. How are you thinking about higher costs and also if you could just remind us on the sensitivity for returns there.
Okay.
Yeah.
Sure.
Question.
Yeah, Yeah yeah.
So julien as far as our rates are concerned are you going to account for the increasing interest rates.
That's one of the new projects every bid for we will obviously factor in higher rates, even when we were building previously we were not factoring in the very low rates that we were getting.
Before the rate hike cycle began so all the reads that we were factoring was taking into account some increase in interest rates that would happen in any case, so largely the projects that we have which are under construction in the pipeline are those are quite insulated from the interest rates at least up to another.
What I would call. It another 150 200 basis points from here on in.
And you didn't become very active in the past when the rates were lower so we did a lot of refinancing activities prior to March 31.
And there's a lot of fixing all five are interest rates in the portfolio. So that way you know most of the portfolio with fixed whatever it is floating Ah is we'll have a very small impact that financed cash flow to equity is concerned hardly around 2% and what it would've been the pipeline. Then there is some buffalo would take this and for new bids even factored in.
The increase.
The increase in interest rates into our bids and on that basis.
We really are baked into our cost of higher rates that prevailed going forward do.
Do you have a second question as far as sensitivity is concerned.
So again, we don't expect the interest rate increases to remain for a long period of time, so weird increase or higher interest rate about 100 basis points allow hardly like applying 2% they could get out and back.
Understood. Okay. That's helpful. And then thanks for the incremental disclosure around the corporate PPA opportunity set but just wondering if you can just give a little bit more color on how you plan to capitalize on that potential opportunity and also what has been the conversion rate for customer.
So historically what percentage of the capacity that is under discussion ultimately leads to sign Ppas. If we're thinking about that one three gigawatts as you mentioned.
Yeah sure.
So I'm sorry, what was your first question.
And on color on top of it just yet.
Yeah, Yeah, just see here.
Do you plan on capitalizing that you know you mentioned not too much competition, yeah, but yeah.
Where they are right. Okay. Yeah. So look the corporate PPA market has much less competition than the regular beating market and the reason for that is that you you know that the actually the amount of customization or the conversation that you need to have a corporate customers is quite lengthy and.
If you haven't been there been engaging with corporates for a while and so you can just sort of a biogen and and do something because the requirements are different a lot of the a lot of the corporates have requirements in specific states. They may have specific requirements of what the profile of the bubble that they wont need should be that's all of them are connected to the interstate transmission make.
Welcome to therefore, the solution for them might be different so each cohort each customer requires in some ways a bespoke solution and that requires the ability of having development pipeline and a number of different states.
And that development pipeline you can only happen if you have a sense of what customers really want.
So it's a bit of a chicken and egg because you have to keep looking at okay.
Right right over quite a long period of time to be able to get a convergence going and so that's really what we've been doing and if you'll recall I've been talking about corporate ppas for the last almost ever since you've got listed try at least to go but certainly this is a market that we've been working for quite some time and developing.
To service this market and therefore, we do have a pretty significant edge in in addressing the market as we go forward just to let you know the Indian government came out recently with Zeus that basically makes our open.
Open access Green open access for corporate customers easier or do you have every state has its own rules and regulations, which actually made it there for more complex in some states would disincentivize corporate from getting out of the grid and buying directly from people like US now the central government has essentially decided to standardize these rules and processes.
To really encourage corporate store.
Buying a directly a lot more so that's actually gonna be a big Ah I think a big positive to open up the market even further.
So we as a company given our wind and solar capability, our ability to come up with intelligent energy solution and all the development work that we're doing and all the marketing work that didn't really have a very significant edge in this small very rapidly growing market, especially as prices are going up and up the the department or the desired on the auto.
Corporate customers. This market is a lot better a lot higher so we think that this is going to become a more important segment of our overall capacity going forward, but we as I said, having lot of conversations going on now to what extent will conversion happen you know it really depends on what point you look at it.
I would say the one three gigawatts that we have mentioned that conversations that you're having is fairly close to being final stage.
They're out of course that is of course behind that a pipeline of almost a year or two or three X of that beaches I'll have more early stage, but the one three gigawatts really is much more closer to getting consummated and so that's why I didn't mention that number but behind that there is no doubt.
A lot of other conversations that you're having icon I should give you a specific conversion factor, but but they you know they just to say that that's becoming a very interesting aspect of our portfolio going forward.
Absolutely understood and just lastly for me curious how you're viewing the timeline for new utility scale options you know what steps should we be looking out for from Kentucky, and especially in the current black powered backdrop as you highlighted.
Yeah, So I think that a lot of conversations going on between say he understands.
Secondly, after their previous experience of taking longer to sell the power is just making 100% sure of that.
They just come to a lined up and that's why they are taking a little bit of extra time on finally coming out with debates, but they've already announced a fairly large amount of also projects that are coming up a bit and that's the number we talked about that 21 Gigawatts has already been put into the pipeline.
And over the next few months, we'd start seeing all of those bids coming in for first line and second on submissions are very soon and a larger proportion of those bids now really is around the clock intelligent energy installations, because most of the states are.
Really moving in the direction of one thing that's kind of a bubble at all the Indian Railways, which as I mentioned also is the single largest customer.
Customer for power in the country can become Cypress central go to bother consumption in India. So so all of those oh, the entire sort of U S demand in a number of states are moving in the direction of RBC bothersome.
Gigawatts. Therefore, you didn't see a lot more of the round the clock power type auctions.
Yeah.
Got it that's all I had thanks again and best of luck.
The next question comes from Nicole <unk> from Alliance Bernstein. Please go ahead.
Yeah, Hi, Thanks for taking my question My question relates to singular powered on the public exchanges and the charter market.
Let's see the new selling some followed in the short term market as well.
Wanted to get a sense of what percentage of your food revenues.
Broadly came from Doctor area, and B are there any plans to set up a much and b plant or some open capacity.
Liberated time similar to the current one Red X Gene's places are really high.
To get an update on the other investments.
Yeah. They can I I left my finance team answer the first question, but the second question.
Answer first.
First so you know a essentially a like now you're absolutely right. Our power prices have gone up dramatically given the shortage of Butler and our sense is that going forward.
This shortage is going to continue simply because power demand is growing quite substantially and 6% to 7% a year.
And there is very little new capacity being added beyond our renewable energy capacity and renewable energy capacity is also.
Well you had a certain pace.
This is not going to be sufficient to meet their demand.
In addition to that.
The supply of power, which is really cool base Baba we were of course seen coal prices go up very substantially and are likely to stay elevated for a considerable period of time, given what's happening to pharma prices globally. So I would I would think that prices in the merchant market are likely to stay at fairly robust.
Some considerable period of time and therefore.
We have been contemplating looking at increasing the exposure that we have to that to that segment of the market now some exposure, we get naturally because the commission certain projects before the.
The P P a.
Supply.
So therefore those megawatts, we're able to sell into the merchant market. There is some overflow Pavel as you know somewhat Odyssey project that we will be selling into the merchant market, but they're also looking at setting up now.
One or two dedicated projects to sell into that market and and see how that goes. So I think we will of course keep the overall exposure limited to.
Perhaps less than 10%.
To ensure that you don't want to expose ourselves, but we'll see how that market grows and overtime being potentially then take a decision you know based on our experience and so on.
On the first part.
And then it seems you guys have an exact answer or a general answer.
Yeah, I I haven't seen a low quarter for yeah boy quite yet.
Please go ahead Peter.
Yeah, No I was just saying the quantum point quarterly income is about $232 million 60.
62 crores and the contribution is still in single digits. So we can get to an exact number nickel, but the contribution is.
In low to mid single digits.
That's helpful. Thank.
Thank you so much.
Thanks.
Jason will go ahead, and I'd say, there's one more question on the line go ahead and take care.
Our next question here I'm sorry, My line was muted. The next question comes from Amit <unk> from Morgan Stanley . Please go ahead.
Oh.
I just wanted to understand your order for a new plan for this capex plan that they've laid out.
I'll ask Tony to 180 corridor below Capex is equivalent parcel times EBITDA, so how much sort of assuming liquidation or that oh.
I expect next year.
The use of cash towards other activities like anybody that clients can do even with my background Pittsburgh Huh.
Yeah, Hi, I was just kind of I saw a fund as you know the total debt acquired Oh for the near term Capex is somewhere around $1 $3 billion in the next 12 months period of time lag leads for the D. C project in the peak.
Jay which will see a lot of construction activity in the current fiscal year and are we have already tied up date for both of these projects are again.
Before the Odyssey project, we are borrowing.
<unk> loans.
And with a big pad projects, maybe borrowing from 100 domestic can be a CS.
Alright, okay.
Yeah.
Alright there.
Conference has now concluded thank.
Thank you for participating you may now disconnect.
Yeah.
Yeah.
Thank you.
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