Q3 2023 Renew Energy Global PLC Earnings Call
Thank you for standing by and welcome to the reviews third quarter fiscal year 2023 earnings Conference call.
All participants are in listen only mode. There will 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.
Followed by the number one on your telephone keypad.
I would now like to hand, the conference over to Nathan Judge of Investor Relations. Please go ahead.
Thank you, Jason and good morning, everyone and thank you for joining US. This morning, the company issued a press release announcing results for its fiscal third quarter 2023.
We ended December 31 2022.
A copy of the press release and the presentation are available on the Investor Relations section of Green News website at Www Dot redo dotcom.
With me today are semi seen huh founder chairman and CEO .
And it's a dollar pace CFO .
After their prepared remarks, we will open the call for questions.
Please note our safe Harbor statements are contained within our press release presentation materials and available on our web site lease.
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 a certain non I S. R. S measures that we reconciled to the most comparable ISR paas.
Measures and these reconciliations are also available on our website and the press release presentation materials and annual report.
It is now my pleasure to hand, it over just a month.
Yes, Thank you Nathan and good morning, good afternoon, Oh, good evening to everybody.
Listening in on the call and welcome to the call.
Let me start off by saying.
That'd be Indians are newbuild, LNG market remains and he's gotta be robust.
And we see plenty of high return investment opportunities on the horizon.
Then we do believe we have a competitive advantage specifically in the complex projects and corporate PPA segments.
We have developed a platform that is differentiated not only in India, but even when compared to peers globally.
We have operational expertise across the global energy technology, with leading proprietary digital capabilities that create the optimal and customized product for our customers.
We believe that the world is shifting.
Increasingly recognizing the climate is competitive.
Central to this and I believe rapidly to Decarbonize.
We have one of the few companies globally that can deliver that decarbonization Felicia for our customers.
That most other companies are not really focusing on as much.
As these leases.
The electrical leadership complexity and customization.
We believe that we will be the decarbonization beta and will be even better positioned to capitalize on these opportunities.
More than ever before.
From my perspective, as you look at it today, we believe that our EBITDA will grow at least 50%, although the current bid as we execute on our entire portfolio in the coming two years.
Expect to layer further growth on top of this with it particularly interesting number of upcoming auctions over the next year given the complexity.
In addition to this is the evolution of opportunities in digitalization and green hydrogen that's somebody that investors incredible upside option.
That many countries are not focusing on it as much at this point.
We believe that the value of our shares do not reflect one of the best good faith in the renewable energy industry.
With equity returns that are among the highest in the world.
So much so that we have already bought about $160 million a bottle in stock, which represents over 15% of the free float in only the last 10 months or so.
We have another $90 million of authorization at another 20% of seafood Amdocs.
Doximity and have every intention to use that authorization of gasoline given that the current share prices.
We believe the value of the company has been highlighted with over 500 million of asset sales over the past 18 months and valuation multiples that I can just simply higher.
Then you build multiples.
Starting on page four.
To discuss highlights this quarter.
We continue to report strong growth.
And so the first nine months of this fiscal year 'twenty to 'twenty three.
Revenues from contracts with customers grew 24% year on year.
Adjusted EBITDA was 18% higher.
And gastro do equity increased 11% from the same period in the prior year.
We have commissioned capacities of seven seven Gigawatts operating and the total capacity under construction currently it's five four gigawatts and another 337 megawatts in the boxes are being acquired which brings our total portfolio size to 13.4 Gigawatts.
So far this fiscal year.
Core operation.
What we can control are tracking within the mutual fund internal budget provided at the beginning of the fiscal year.
But only about six weeks left in this fiscal year.
That'd be will end the year around INR 61 to 63 billion.
The revision in guidance is essentially for reasons beyond our control.
This includes the delayed completion of the acquisition.
We had announced earlier this fiscal year and we're just still in the process.
Based on baby are in the process. We now expect the acquisition to close early next year.
We had expected that this acquisition would add about INR 3 billion or so this year in our original guidance, which looks to be.
Realized in FY, 'twenty, one and beyond.
Even though the acquisition has not contributed to EBITDA. This year it is contributing to our balance sheet.
Lockbox date was set at the beginning of this fiscal year, and we retained the economic value and cash generation, we get close to our balance sheet.
Also carbon credits.
1 billion that we expect it to be realized this fiscal year and not likely to slip into early next fiscal year.
Given the backlog of projects that are in the process for registration of bearish carbon exchanges.
Also better continues to be a bit of a headwind.
And whilst we captured the majority of the negative hit this year in our guidance at the beginning of the year the weather along with a variety of other items.
Look to end up another 1 billion so wasn't a big name off the other assumptions.
We all focus on the long run and still believe that the new could be delivering adjusted EBITDA of 89 to 94 billion rupees over the next several years at about 50% higher than this year.
Virtually all of this growth is contracted and highly visible.
As we have reiterated many times.
We are focused on creating value.
And one of the key determinants of creating value is maximizing the gun.
Not really to disciplined bidding and product offering but also to execution.
In this way and say keep began granting extended construction time lines.
Which may present us an opportunity to enhance the returns on these projects under development.
Module prices are also down 20% or so in the last couple of months.
Which allows us to feel like construction schedules for our five four gigawatts under development and potentially bringing plant earlier to capture market share.
Which could materially improve the returns on our pipeline.
We are planning to update the market in the next couple of months.
But broadly we do expect that'd be adjustments would be moderate and all the projects in our pipeline will be executed as they are all expected to the undertone.
Sexual minimums.
We are making good progress a lot of accounts receivable.
And I see regular payments from the peak summer.
Take distribution companies.
Had the highest amount of whole body.
Also during the quarter, we added another 300 megawatts of corporate P. P S breaking bad portfolio to 1.8 gigawatt.
At about 13% of our total portfolio.
Separately, we also received some strong ESG rating some definite.
Sustainability and carbon disclosure project.
Definitely the recently updated their E. S U D T Andre and you and we are now ranked as the second highest of any electric utility all I P. P globally.
Sustained Olympic ranked us as the top E N G rated company.
We also received the highest ratings by the carbon disclosure project.
Not all Indian renewable companies.
Onto signing a new P. P is on page five as I said, we have signed another 300 megawatts of Ppas. This quarter and we have also be restarted growth has only 1% of 13.4 gigawatt portfolio has pending P. Pes.
The corporate PPA portfolio has nearly tripled from the same time last year and as I said, there's not 1.8, gigawatts really growing backlog.
We estimate that we have the largest market share by a significant measure in this market.
You saw that differentiated advantage in this business segment.
Corporate Ppas offer higher returns than plain vanilla renewable energy projects, given higher barriers to entry.
Our ability to partner with corporate customers and provide them energy solutions sooner than our competitors.
We continue to believe that renewable have a four to five gigawatt corporate PPA portfolio 2025.
The volume of auctions for complex projects, such as round the clock and peak power continues to be robust.
At the moment that is about 12 gigawatts of auctions for these complex projects in the process and given our differentiated platform that provides us cost.
I'm definitely advantages, we remain bullish that we will be able to capitalize on these at returns that are above our minimum it's untouchable.
With regard to Capex.
The prices on materials modules, it's going to have Capex have moved in our favor since our last earnings call last November .
And this is discussed on page six.
On this front, we have seen around a 20% reduction in prices for modules compared to levels in November .
Falling prices for people and sell prices are likely to also make the delivered prices from our captive manufacturing even more competitive.
From where we stand today, we are even more confident about delivering returns within our target is to exceed the 20% equity either age at the project level.
We believe there is further opportunity to improve the debt to capital recycling.
Implementation of protracted digitalization and continued pursuit of operational excellence.
As a reminder, we have locked in wind turbine prices, but there is essentially no material exposure on this front.
If it would be event that any additional new project has an expected either below a minimum thresholds as you know we would like to see.
We will remain disciplined with your capital.
With that I would like to turn it over to get out to go with the latest quarters financials.
Yeah.
Thank you so much.
I'll now move to slide eight which provides the highlights of the fiscal third quarter of 2023.
We added 66 megawatts this quarter, bringing the total to 1.8 gigawatt operating.
We signed another 282 megawatts of Ppas, which brings the total amount under construction to 5.4 Gigawatts.
I remember when he was home customers rose, 24% year on year in the first nine months of fiscal 2023.
I'm pleased that in parts and in the nine months of fiscal 2023, when compared to the same period in the prior year.
And our cash will be quitting cause you know unfortunately.
While solar generation was better than last year.
But we feel it was about 200 basis points lower than the variety of which was in keeping with the lower production probably insights recorded across all of India.
Turning to page nine which provides a reconciliation of adjusted EBITDA in Q3.
Which stands at INR 11.6 to 8 million.
The wind resource continues to be below normal elevate above the lows witnessed several years ago.
Carbon pitch sales were below last year, although we expect this will come in the next fiscal.
EBITDA for the nine months ended about might be unfortunate vote until about your non auto.
A lot of in core operations, excluding the impact of weather in Monday on the timing impact of carbon credit sales.
Full year it looks like it will end up you got all the same.
With regard to our cash flow generation on a nine months basis, our cash will be what he was 11% higher than the prior year. Although this quarter was impacted by the timing of interest payments after refinancing a green bond.
That said the interest by annually with domestic debt, which basically interest monthly.
Also worth noting that the strong cash generation promoter cashflows checkmate gastro from operations for the third quadrant it quite quality nearly doubled to $61 million for the same period in the prior year.
As one of the largest positive contributor was the $1 billion reduction in our receivable problems.
I'll just take a quick look what do you think.
Don't even want to page 10, as we have highlighted many times over the past year have been focused on improving collections on the past due receivables from the state distribution companies and we are pleased to announce that we have made a sizable progress.
Q3, DSO improved by well, what's the word a half months compared to the end of Q3 in the prior to that.
<unk> contributed about one to 2 million to our cash position as the discussions that have been late on payments have now been making a payment.
As a reminder, the EP the scar, which represented about 42% up or get them past due receivables in March 31 agreed in June to be positive over the next 12 months and equator monthly installments.
And it's made about six six or seven minutes or up 12, so far.
The other states that were late have also been making payments on pause views at this point, we are expecting to end up for school, but for that improvement to the vehicles, which would represent a release of cash from working capital.
Okay no problem.
At least 6 billion rupees are more from the prior year.
We continue to expect further improvement over.
Over time, as an increasing percentage of our sales will be to the central government.
Vicki, which paid its bills promptly and on time.
Good I would say 1.8 Gigawatts operating about two people showed up over a third party with the bite squad ideas soon as almost all of our committed project started with sneaky.
Or would corporate customers, who pay on time.
The exposure to these fight is going to fall to about 32% by the time, we complete the ignition of the portfolio.
This customer mix shift.
And unemployment at 55 days, you know what it would all be just by itself.
With that I will turn it back just one for an e-commerce, although when you usually need to beat the guidance.
Yeah. Thank you get up I'm, taking up ESG on behalf about sustainability.
Michelle.
Turning to page 12, our continuing.
Continuing our momentum from last year, we are committed to setting new benchmarks in all sorts of ESG performance and transparency.
Latest here's your ratings and scores that testimonials to our endeavors on this front.
As a validation of our ESG commitment and fulfillment.
Recently received this quarter, but if you want out of 100 from definitive.
Mobile provider of financial market data.
This cooperation and U as number one in India in the electric utilities and ITD be category.
As I said earlier number two globally in the same category.
Furthermore, the new has been recently included in the top rated EOG companies list released by Morningstar sustained analytics part of the year.
2022 'twenty three.
We believe this is a validation of the news ability to identify and manage is you there that can impact our operations.
GDP has they did then U S. B for climate change, which is the best fitting them into renewable energy companies in India and higher than the Esher average, which is a seat.
A b rating from CDP supporting you reflected the company's speaking coordinated actions for climate change mitigation.
To drive collaboration and went back to work with fossil free future. We continue to work with our employees communities and partners towards this and did you have undertaken the following initiatives.
We have pledged to plant 1 million trees by 2030.
And the World Economic Forum as one trillion fee initiatives.
Our corporate office and go to come.
And yet in India has been recognized as the best existing buildings like yeah. It's answered Greensboro deeply integrated habitat assessments, India's Green building rating agency equivalent to the U S. G B C United States Green building Council.
Angle program called gift warmed has benefited 275000 people across 11 states in India. This year.
One of our other initiatives project studio focusing on job training and entrepreneurship development of women Salt and book goes well showcase in golf twenty-seven, India, India Pavilion, and the G 20, Apollo's inception event.
Turning to slide 13.
We continue our efforts to achieve about ESG targets with specific initiatives.
Earlier last year, we submitted our final space G E G reduction targets.
Which have now reached the validation stage by S. B T H.
Working towards our target to achieve water neutrality by 2030, if feasibility studies currently underway near outside to identify community based initiatives to offset a waterfall based on data from our operation.
We also I should say have achieved a 12% women's representation in our workforce by the end of Q3 and they're working on infusing it substantially to 30% in the next few years.
We would be disclosing progress across our targets and our forthcoming sustainability reports.
I invite you all to engage with our sustainability report 'twenty, one 'twenty, two which was released in October 2022.
Yeah.
Moving on.
With regard to our guidance there should not be on the sustainability section.
We got to our guidance outlined on slide 16, we have.
Shifting now to FY 'twenty adjusted EBITDA guidance as I said earlier to a range of 61 to 63 billion rupees, which reflects the absence of the expected EBITDA contribution from our acquisition on the process there.
For the chairs and some impact of weather, which is therefore ease off on EBITDA.
Again, we are not revising our portfolio EBITDA, which is about 50% above expected levels this fiscal year.
Which is essentially fully contracted.
It should be at least over the next couple of years.
On the buyback front as I said, we have repurchased about 25 million shares since we implemented the program, but it still leaves us about $90 million of authorization remaining.
19 million represents approximately 20% of the currency flows.
Good day share price.
We continue to see considerable value in our shares as we have evidenced by numerous asset sales over the past year.
I didn't that you trade at a meaningful discount to what we can sell assets for.
As I shared one of the highest the dull investments of scale that we can make we have been actively buying back stock. When do you believe that could provide the highest return opportunities are actually got holders.
With that we will be happy to take any questions Nathan back to you.
Thank you.
If you wish to ask a question. Please press star 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 on a speakerphone. Please pick up the handset to ask your question.
The first question comes from Julien Dumoulin Smith from Bank of America. Please go ahead.
Hi, Thanks for taking the questions. This is actually Morgan read I'm, sorry, Julien.
Can you first talk about the execution on the corporate Ppas. This quarter. It seems like this is clearly an increasingly relevant portion of that pipeline would be interested to understand what proportion of the portfolio you think that can kind of.
The common that next year kind of trying to understand where you are focusing your guys clay.
Talked about this opportunity quite a lot.
Yeah.
Yeah. So you know in terms of Dx you know if you've signed a lot of our corporate ppas in the last six to nine months.
And in less than that's a lot of these studies have been under execution, but I think the important thing to note is that besides.
We signed most of this 1.8 gigawatts in the last 12 months and that gives you a sense that the momentum in that part of the market is pretty good and it's picking up.
We've also stated earlier that we expect almost about 25% of our future P. P. S should come from the corporate market.
We have a pretty healthy backlog at this point in time, and so I suspect that that is something that we should be able to achieve in the near term.
Got it. Thank you and then can you also kind of elaborate on the value that you're associating with the decline in module prices. It seems like maybe there's some accelerated development opportunities and certainly some decrease in Capex can you can you just talk about how we should think about that as we're looking at our current development opportunity.
You get up you want to take that.
Yeah. So I think we spoke about the 20% decline in the module prices Oh from November till now and the new deals that we are placing not at the level, which makes us pretty comfortable if we wait for some more time, there might be a little bit up for the decline as well, although some of these things are not fully.
Oh predictable and yes, I think this allows us to manage the capex well this allows us to.
Good diet arms back in shape.
Because the prices, especially during June to November period were quite elevated as we know.
So we are we continue to track and we continue to.
Staggered the orders and deliveries in the manner in which we stay very close to our target range of diet us.
Yeah.
Great. Thank you I'll take the rest offline.
Yeah.
Our next question comes from.
Nikhil the Johnny <unk> from Bernstein. Please go ahead.
Alright, Thank you for taking my question.
On the acquisition front.
528 megawatts last time, you can avoid the same any.
Any reason for that and also on timelines on completion of calculation that you could get somebody.
Yeah. So nikhil. This activation was another slumping route which means he also change the tide to go down but like I said you know you.
To transfer the PPA yoga transport needs.
Transfer the title of all of the assets in that little.
You know little relatively little more time in Wyoming, Prostates compared go up your share purchase agreement and our business, giving us a lot of learnings, but as we said the.
The lock box and it is already agreed from beginning of this year.
So the cash flow for those Ppas will get to our balance sheet as a reduction from the capex.
What this has also done is this has allowed us to reflect and dump salt.
The quality of the assets that we are pursuing and in the next few months. We will you will make a judgment as to what's the right proportion I'll do that says that we should be finding it why do it.
And Oh, maybe we'll end up with.
Likely higher than the Hawk.
We were targeting earlier, but as I said the please take all this ethane today.
Our guidance at this point of time, we'll be announcing probably by the full year. When we have a clearer picture of the COO.
Total ppas that will take a look.
And maybe a buyback month, maybe from all.
The time, we will have more people to pull your reserves will have much bigger idea onboard.
The the number or.
The final data that will people want and the timeline portfolio integration.
If I am I noticed that your dad Duffy.
Yep.
I would just say that look as you know most depends on most of the M&A transactions all Oh God.
We're seeing share transfer. This one was a slump sales because of the specific situation in Bosnia and that process has just taken longer than anticipated I expected because of the transit of so many different things, but I think it's something that they're now fairly close to completing and it is something that should.
Would be finished by early next year.
And that will then also allow us to get back to you on exactly what percentage you're going to acquire but they were below two assets within that but might be something that we don't really want to go ahead with all the harder to close because of all these regulatory issues and that's why we have decided to do to sort of decrease the amount that he would like.
But even a little bit.
Yeah.
I appreciate that answer.
Second question was regarding Oh, the athletes in news, which is going to down about 1.1 gigawatt.
Potential entities like Bogging shove instead of news and you use it supposed to negotiate on that.
Yeah.
On that.
Yeah.
Get off and let me just maybe take a stab at.
Taking bad so you know capital recycling as a strategy is something that we've talked about quite a bit in the past and I think a more.
Global renewable energy company.
<unk> followed the same strategy and we are doing the same.
I think the idea really is that he can build more than we can necessarily hold or want to hold and so therefore you.
You know building more than allows us to capitalize on our value creation or create value and go back to Billy and then sell them at higher multiples. So I think that's eliminated any sensible strategy for us to pursue and so you can just see in the future certainly are looking at selling more assets.
But just want to say that our portfolio will not grow it will grow as well and Oh look you've got there's a lot of news in the Indian fastest you love It and so you just have to wait for something specific to be announced by us before.
But until that point, we really can't comment as you guys do that at all.
Got it got it thanks, a lot for muscle.
So two more questions quickly then.
One is are you seeing there on that element.
And it might get relaxed a in the near term.
If that happens that's a handful of people and timelines, but any context.
Goodbye.
I think she project, which is a big one are locked into guidance for Q2 FY 'twenty four.
That's that change a.
Saturday or if that mix change.
Yeah.
Yeah.
Yeah. So look at how does the NMM is concerned are you.
No as you know we sit on both sides of that equation, we have both a developer and we're also looking at getting into manufacturing so youre fairly neutral to the <unk>.
It'll be it pans out, but really allow us to commission projects earlier.
Not necessarily on first of all you know that the it hasn't actually come out as a specific policy. Yet. So you know you have to wait and see exactly what happened.
So I can't say that it's going to allow us to commission earlier, because it will obviously have to see where you can buy the more you saw on one of the people of the timelines and so on but to the extent that began commissioning.
Yeah, certainly we would like to do that because as I was saying in my remarks as well.
If they're able to commission, probably Australia, you are able to satisfy all debt that barbell are into the merchant market and I think one of the things that is the monkeys like clearly it appears is that prices in that market I was gonna be while it can be a little button.
So that opportunity potentially gander open up but you know we haven't studied it specifically.
To give you any any any sort.
While a clear cut answer on that.
Your second question on the RTC, a Q2 commissioning look I think the RTC Calder Casino is comprised of five different all different projects prevailed in one solar and then of course, there's a battery component as well.
These targets should be commissioned progressively over the course of literally starting pretty much now on but still the sort of.
And also I would say Q2 Q3.
So I think that that's what's going to happen the whole project.
Michel you know revenues can start whichever part of the partnership Commission the whole project for US to then you know sort of bullish I can't say the whole public Commission might take in Q2, our two three off this coming financial year FY 'twenty.
So we are largely on track on that from an execution standpoint got it.
Okay makes sense.
Just sorry, one more last question for small one if I can pick it up later.
Hey, this is just on the on the balance sheet.
Chris It's a there's a jump ball.
I'm going to pause and clause.
Possible to give us what what is the reason for that.
Yeah.
Yeah. So a couple of items, which has gone up.
We haven't made an acquisition.
Italy and Turkey.
And we have only a 40% stake in that entity. So part of that gets a recording the Dod that says you also made some and wants it.
Absolutely that's part of the RTC and meet its budget. So I think it's all good things good.
Got it.
Perfect. Thank you so much COVID-19.
That's it from us.
The next question comes from Justin Clare from Roth and Kim. Please go ahead.
Hi, yes, thanks for taking our questions. So I guess first off you had indicated that you expect further improvement in dsos by the end of this year and then into fiscal 'twenty. Four. It was wondering if you could just give us a sense for how much more improvement might be possible and then it was just more general.
Could you talk about whether you expect this improvement in dsos to be maintained so at this point you know has there been a lasting structural change in the market, where you know, there's there's gonna be particularly lower risk AR DSO is getting extended in the future.
Yeah, we believe so I think the.
You you must have heard.
What about several pronouncements from the.
Regulators, and which is helping us see two things happening one is the old he without getting cleared and the current yields are getting promptly paid on time and both of these are helping us to you know get a reduction quarter by quarter and to be a source and second factor, which we mentioned is the mix of off takers.
Ranging in all doors warping much earlier set up.
A proportion of park for that Oh picked up as a proportion of our central authority like cheeky that is going up and the progression of comps is going down from 55 to cut it to.
For both the Lps, and specifically and the changing mix, although because it is helping us and we believe this is structural and this will continue for some time.
Uh huh.
No.
Compared to the December so we do expect about 15 to 20 days for that reduction is not as much.
And similarly going forward as well.
Right. Okay. Thank you.
And then it looks like the a L. M. M was recently relaxed for a period of two years and then we've also seen a decline in module cell and wafer pricing. So just given the changes that have happened here can you talk through your module sourcing strategy has there been any change.
As of now you are planning to self supply with about <unk>.
60% of your projects are for your own manufacturing he has that changed at all or are you thinking there.
Just any update there would be helpful.
Yeah, so well.
So look at this point in time, we are first of all the element that has been an announcement by the minister as it solved but its probably come out as official government policy, yet so we have to wait for that to happen and to see if it happens.
So I think that's number one number two is that we haven't yet been able to make an assessment of how this.
This change might impact us keep in mind that the customs duty or 40% of modules and 25% and says it's still that that is not changing which essentially means that imports from China. For example are still not going to be possible from one or two other geographies like southeast Asia it might be but it's a question.
Finding out how much availability there is in those in those markets given that a lot of the modules from there that'd be shipped to the U S and to Europe . So we'd have to make that assessment, which we have not been able to do yet because this is obviously still want our official policy on the part of the government.
And as far as our own loss. So supply is concerned look our module will be up and running in the next few months.
And you know once it's stabilized then of course, we expect that to supply to us and for most of our suppliers to come from Baird.
But again you know some of our projects are in fact grandfather, because the abundant before there's a duty and the animals about announced and so therefore for those projects we are able to import.
Modules from from China at an EBIT, that's for that matter and so I think it'll depend on a really Oh, you know at what point does apply to get stabilized one of those specific deals at that point in time.
And the basis that we escaped the most optimal decision I think behind all of this you have to keep in mind that the good news is that module prices in some places also have come down dramatically and therefore, you know whichever way we look at it I think on module costs are going to be lower than we had.
Potentially sort of anticipated and that's going to be good for us now I can't give an exact sense of how much would come from our own supply versus how much would be imported from which geographies because that's still a little bit uncertain at this point in time, given the given the.
Uncertainty a little bit around the government policy and and and on supply sources.
Okay I appreciate it thank you.
Yeah.
Again, if you have a question. Please press Star then one.
Our next question comes from Amit <unk> from Morgan Stanley . Please go ahead.
I had two questions one with the link Pls situation right now and be thinking of reassessment Oh, what are we looking at the near term forecast and any update on the Reassessments that we were planning.
Yeah. Those are both good question. So look as you know in the guidance that we've given for the current financial year.
Already assumed Oh, you know a lot of sort of when the speed Oh northern forecast for this year and and that is something that is almost being met as far as the wind speed up. This year is concerned although of course it is significantly below what you might consider to be the long.
I mean.
The chances are that will carry on with the same kind of the same level of forecast into next year as well we are unlikely to change.
Change that substantially from the current level because I think it's still a it's you know it's.
It's sensible to be prudent.
We've had as you know now see are not good years already.
And that's a failure that event, but it is not that it is unknown what happened. It has happened in the past in other geography was bad.
Typically when that kind of thing happens then that at some point they bounce back, but it's hard to say when that might happen and how much that might be so.
Thank you.
We will therefore somewhat from a prudency standpoint, just carry on with the very conservative guidance have you been that you gave this year into next year as well as far as the long term a proper assessment. So that is something that we're working on right. Now we are discussing with a number of the bailey forecasting agencies and I think the good news.
So it would be early conversations you've had with them is that the the technologies the methodologies and the bias that they used to forecast long tail wind in India is no different from what they used anywhere else in the world.
And and so therefore, I would I would feel that as we go deeper into this work that we shouldn't be able to get a good sort of a view.
View on a lot of these issues.
We should be able to come back well if you I think very soon on this matter, but I think the other thing I should also say is that because of the speed. It's all been done the last two years, we've already become very conservative in our forecast for the future has been not just for our existing assets, but also the assets that they're going to build in the future. It's just a lot of that concept.
They just don't get already building into our forecast. So I think that you won't really see any big data from the Carpathia into next year, and so I'm simply because as I said, we've already reduced our forecast quite substantially and for future projects.
We had also been already quite careful about the forecast that they are not doing so I would not anticipate any further.
Further reductions from this level in terms of our.
In terms of our guidance, but I think we will just got chicken corroborate all of this with the wind agencies and get back to all of you with more specific and from a sort of abuse from them.
From these forecasting agencies are in about the next time that we interact with you all hopefully in the next few months time.
Oh, just anecdotally on this one I would call them in this planning or eight gigawatt auction on the wing so forcing that they also have this good idea that it should not it should not be concentrated in some states. So it would be diversified across states with the wind immediately they would could it be more so how do you see.
Approximate that if in fact, though when you look at two aspects one when you left already speech already impacted and although you would have to diversify into a different state where the wind speeds may not be very optimal.
Or the auction so how do you see that.
Got it I don't think I don't think so.
Yeah. So look I don't think that'll have any impact frankly simply because we had them for example, as a company are already operating in most of these eight states.
And so we have already good experience in terms of forecasting and all of those states and look eventually even if the build quality is lesser in one state compared to another that gets reflected in the guidance that people based because the data just tend to be higher in the in the states that have no great speed.
The government intends to do is to bundle all the vegetable all the big projects together from across various states and offer the single port a tariff to the end buyers of the popular so I actually.
It doesn't matter, which state you put up the capacity.
Yeah.
Okay got it.
And another question that I had was on the domestic manufacturing for modules now doctor or the mortgage basis selling mortgage prices are declining all if we look at all the financial aspect of it how much would be the differential like how much would it be the output.
But I saw the output from our own manufacturing versus.
Well see imports plus cause some duty free.
Say around 2025 cents for our imported right.
Oh, the custom duty and maybe I mean, whatever is the price for the domestic one how much would be the differential between the two.
Yeah. So I can't give you an exact answer that at this point, nor do I want to be very specific on this issue right now I didn't know what do you think is as you know that import duties of 40%.
And on module and 25% on sales.
And you know any any any modules have been making India that they'd be making India I'm gonna be significantly significantly less than our you know what the protection that the duty that the beauty provider. So I think that ultimately are the comparison really somebody does not food imports because those are obviously more expensive at the booth.
But the deals that are in some ways. The comparison, who should really be bid and what is being manufactured in India otherwise by other companies and I think in that respect, we will be but anybody competitive simply because of our scale.
And also because of the fact that you'll have a much more modern plants with the latest technology.
Sorry about that.
Ballpark it would be around 25 cents or something but domestic manufacturing I would put I know what I mean, I was just saying no no no.
Ultimately.
No I I hate to generalize because it really depends on for example, the input cost.
Off of either sales or this is like I know, what you're buying and that price is moving around a little bit. So therefore, it's hard to give US you know a fixed number on that at this point.
Alright.
Yes.
It was all my questions. Thank you.
Thank you.
Our next question comes from Puneet Kolata Kolache from HSBC. Please go ahead.
Yep. Thank you so much and best wishes.
My first question is you haven't been very very actively participating in the utility scale ups and auctions.
Uh huh.
Check with you that you know two adults with focusing more on corporate then on utility scale.
So police as you know that haven't been that many auctions a lot of the auctions that have happened have either been state level bids.
All bids bears.
As you know because you have been partly in Manila.
Hello.
Those ones as we have stated in the past, we don't intend to participate in because we don't really want to take a lot of direct state exposure. All we don't want to participate in vanilla choose where do you think you're speaking because we feel that our competitive edge lies in the more complex auctions. So I think we are focusing on.
The more complex bids and as we've stated we expect a lot of those to come down and so therefore they'll be enough for us to bid for also the corporate PPA market as you've mentioned many times is very active and so between the RTC Slash peak bothered bids on the one hand, and the corporate PPA market frankly.
A handful.
And that is why you're choosing not to participate in the plane and allow auctions at the state level auctions.
Okay.
Understood and did I hear it right you said that you know.
You would not be revising estimates on account of it.
Your EBITDA guidance is already prudently capturing that.
That is right.
Oh.
Yeah, that's that's what we've said.
Okay.
And then last one you know Bob when I look at your Capex guidance this quarter versus last.
Hum D manufacturing link had been slightly slower than FY, 'twenty, three and no more move towards FY 'twenty four.
But why would that be the case and then what are the timelines for completion now for your module manufacturing capacities.
Yeah. So look all on our module plant is running about a couple of months behind schedule. It was supposed to be commissioned by end of Q1, it'll probably just spillover into early Q2 early Q1 of next financial year, So theres not a significant delay there. Thank you.
The cell and module plant up pretty much money as they were supposed to run into lay it out maybe putting them up so there should not be a significant difference in capex actually they may just be some payment a phasing issue more than anything else.
Alright.
Yeah and on the carbon credits can you explain what really happened that you reduced the guidance on account of carbon because he says is is that Oh, I'm gonna entitled or is it more short term and what part of your.
Portfolio level guidance is attributable to carbon credits.
Sure.
Yeah, that'd be one thing.
That's it.
Yeah, Yeah. So when it does that basically are he created small weight all those we hope to have more voluntary nature based solutions and things like that but as of now. These are are they going to do.
What we understand is the global E. M series, we'd start off with as they start the project as eligible for carbon credits, but it's got a backlog.
Actually some of this is beyond our control and it just the time and they put out from quad.
Or to put up this year to probably first half of next year.
I'm always wrong.
1 billion rupees.
But as I said, primarily completion of other credits in our nature.
Going forward the idea is to a little more a higher proportion of the voluntary creators.
And then the portfolio level.
But what sort of contribution have you assumed.
994 billion every day.
Okay, Yeah, yeah. So it won't be it would be in mid to high single digits not more than that.
To any single digit.
Well in fact in fact puneet because that's what I'm, saying is ginger yeah. In general you know that carbon credits on our existing portfolio.
Is in some ways really not sort of winding down because of the way the Kyoto protocol is being phased out.
And so really there isn't a lot of public data.
I mean will be available in the future. There are some markets that are developing bad was that.
Probably because they still have some value like in the middle East and so on but we don't know how those market that will develop over time. So I just wanted to be very conservative on making any assumption about any revenues coming in from carbon credits in the future from the renewable energy Park. Okay ask it I've said there are theres a whole separate us.
Dream of work that we're doing right now on developing carbon credits based on nature based solution, but that's a whole different thing altogether, that's not really in some ways. That's not part of this 89 to 94 billion guidance that you gave which is really revenue was based on our EBITDA base went up 13.4 gigawatt portfolio.
Okay, and then he said and he took the solution basically the photos that you might be willing goes will be ultimately contributing to the credits that kind of stuff.
I mean, you know that.
Yeah, but they're not they're two separate yeah. There are there are two separate things of course, I mean, the the trees and all of your planting Oh really from E. S E standpoint, but.
But not for profit in a sense.
But you know there are other projects that are that are emerging that you know.
That are at very early stages.
This testing out right now so it's not something that we can really talk about it in detail, but should there be some of those and that's going to be additive to any of these things.
That's what he's lastly until that Oh boy, you talks of going out of India and do renewable projects, there or are you likely to focus in Indiana.
Yeah.
That's a that's a very interesting question Puneet I look at something that's being debated at length, we believe that as a company we have some pretty significant strength.
That that can be left with celebrities and other countries as well, obviously access to equipment access to low cost execution mindset engineering and execution capabilities all of all of the other piece that we do believe we'll have value in other geographies from an execution standpoint as well.
And in addition of course.
We already have significant scale given that at least you know globally also ex China. Among the 10 12 largest companies in the world.
Having said that I don't think that'd be if taken a specific decision at this point that we want to go overseas or not it is something that I think we will evaluate and if it makes sense and then we of course will come back and discuss it with everybody and I think you know think about it at some point in the future, but it is not something that is.
Immediately on the cards.
Having said that as you all know we're also looking at green hydrogen projects.
Those are all at very very early stages, I would hasten to add right now.
And you know so so in that sense because some of those kinds of projects are yes. We are looking at development opportunities outside India, but again I I must add that those are the very early stages and before we make any investments obviously a lot of what keeps what happened behind those.
Sure.
That's all for me so thank you so much and all of this.
Thank you.
Yeah.
Our next question comes from Angie <unk> from Seaport. Please go ahead.
So I just wanted to ask a bigger picture question. So given all of the scrutiny surrounding adani green and their financing I understand that there's very little comparison between your stock and there is that even before the sell off as far as multiples are concerned, but I'm just wondering if.
Any change to the competitive landscape to questions that you are being asked by future lenders renewable power projects. You know are you do you feel like.
This this turmoil surrounding and Andy Green is giving you an edge and bidding for some assets and again any lessons learned from you you know how you can improve your disclosures going forward.
Yeah.
Yeah, So and look I think thank you speaking.
As you said in your own question, we had a very different company from the army in terms of a whole variety of different factors.
I would say that you know in terms of operating situation nothing really has changed in such a I think that.
We would all be considered I think are very high quality company in terms of ESG issues.
That continues to be the case its also reflected in all the ratings that we've got they haven't really been any bids that have happened post this whole situation that one can point to and therefore, saying that this is how this situation might change, but I think what will happen is that there will be an application for high quality well below on companies.
There are truly following the whole ESG methodology and everything that they do and so in that sense.
We would be hopeful that people will look at us with slightly.
What should I say, a high degree of attraction, perhaps but but let me leave it at that because I don't know how how the how the what impact it might have on the Adani group in terms of.
S situation evolves, it's something that I don't know and I'm not aware of and it's really too early to be able to comment on on whether you've seen them change their behavior in the marketplace and so on so.
So it says, yes, and let me just leave it at that came out I don't know if there's anything that you'd like to add.
No I would just say that since will sit on the U S. We do follow very extensive six skiing 20 of disclosures, which are both for financial and operational data and management commentary pretty extensive in nature.
And we will continue to enhance those disorders.
Right, Okay, and then and then unrelated question if I may.
So you mentioned that that keeps granting extensions to our C. O D for some of the assets and I don't think I fully understood what you were saying.
I'm trying to say.
You are suggesting that you'll actually my brain project early on to capture merchants earnings a and just use the fact that that that could be and allowed the delay and official C. O D.
Or is it about yeah yeah.
The fact that the component prices are falling and so the economics of the project might get might get improved if you were to delight them.
Actually Angie, it's book and so each case might be different.
Whenever it is allowed for us to postpone and we feel that the postponement, we can get lower prices that will allow us to potentially postpone the projects and no other capex and still meet take is commissioning the climate. So so that is a that is one potential strategy that you could follow the second part.
The strategy is that we could potentially commission projects earlier.
And sell them in the merchant market, and then sort of the lay them off the wall psyche.
Based on the circuit commissioning extension that you've got so the point is that it gives us a lot more flexibility to optimize the project cost of revenues and so it will be fully intend to use the flexibility that you believe you've been given to maximize on the returns of our projects. So it will allow us doing things that are done either by you don't use it.
Either one of these two strategies.
Yeah.
And then lastly, when you in your prepared remarks, you talked about.
Projects that are exceeds the minimum minimum return thresholds and that's actually.
You do have a range that we're talking about projects that are at least 16% and and and the IRR or yeah, yeah, Yeah, that's right.
I know that that's what I was okay, but all the targets. Therefore, you argue they're not sexual right and now that we have this extra little bit of flexibility that just gives us a high degree of confidence and comfort of being able to meet those thresholds of climate and of course for future projects. We continue to be disciplined as you know and even not based on projects, where we feel that we have.
Not likely to meet with us.
Awesome. Thank you.
Okay.
That does conclude our conference for today, Thank you for participating.
May now disconnect.
Yeah.
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Yeah.
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