ReNew Energy Global Still Unloved For No Good Reason

seekingalpha11-22

India’s renewable energy goal is 500 GW by 2030, with ReNew Energy playing a crucial role, despite market undervaluation.ReNew Energy’s Q2 2025 earnings call showed impressive results: 30% growth in ...

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Warrant","LU2249611893.SGD":"BNP PARIBAS ENERGY TRANSITION \"CRH\" (SGD) ACC","RNW":"ReNew Energy Global","LU2357125470.USD":"BNP PARIBAS ENERGY TRANSITION \"CLASSIC RH\" (USDHDG) ACC"},"translate_title":"ReNew Energy Global仍然无缘无故地不受欢迎","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"RNW":0.9,"RNWWW":0.9},"content_text":"India’s renewable energy goal is 500 GW by 2030, with ReNew Energy playing a crucial role, despite market undervaluation.ReNew Energy’s Q2 2025 earnings call showed impressive results: 30% growth in operating capacity, 14% increase in adjusted EBITDA, and 31% profit rise.The company’s strategic shift to solar PV and battery storage, along with strong grid connectivity focus, ensures project success and market competitiveness.Despite market skepticism, Wall Street analysts largely recommend buying ReNew Energy, aligning with my confidence in its pivotal role in India’s energy transition.   Urupong/iStock via Getty Images India sits in the middle of the climate crisis. If it followed the traditional path of fossil fuel led development ,there is no doubt that global attempts to address the climate disaster would fail. India is paying attention to the need to decarbonize as its economy grows at a happy pace of more than 7% this fiscal year. India has a significant goal of achieving 500 GW of renewable power by 2030 and this year the total renewable power capacity exceeded 200 GW (203.2 GW). The Indian Government is confident that the 500 GW renewables target will be met, perhaps in light of the solar PV capacity over the past year increasing by 27.9% to 92.1 GW. Since there remains ~300 GW to be installed by 2030 (6 years away) the rate of renewable energy needs to increase substantially annually from year-on-year (to October 2024) increase in renewable capacity of 24.2 GW. Note that India’s entire electric energy capacity is now 452.7 GW, and so renewables account for 46.3% of the country’s total installed capacity. ReNew Energy Global (NASDAQ:RNW) is an important player if the 500 GW goal is to be achieved. I’ve covered ReNew Energy in four Seeking Alpha articles since October 2022, the most recent being in June of this year. ReNew Energy remains unloved by the market, being down 10.9% year-on-year and (worse) down 12.4% since my June article. I remain confident about the future of ReNew Energy, and here I cover the recent (19 November) Q2 2025 Earnings Call transcript, which supports my optimism. Key results reported on Q2 2025 Earnings call  My followers are aware that I like earnings calls because they provide the opportunity to hear from senior management how the company is progressing and also one gets a sense of how the company is regarded by analyst questions. The competence of senior management is on the spot in the calls. As I’ve seen on previous quarterly calls, the senior management of ReNew Energy was confident and very open about its results, which were pretty impressive. Areas that needed explanation were confidently addressed with answers in the Q&A session. I highlight a few issues that came from the call below. I had expected to see trouble on this call, as ReNew Energy isn’t exactly a market favourite currently. In contrast to my expectations, I found the results and path forward to be very positive. CEO Sumant Sinha preceded his remarks with commentary about the global climate emergencies that provide a context for the urgent need to rapidly embrace clean energy developments. It is clear that the challenges in India are consuming ReNew Energy at this time, although looking more globally is still on the horizon for the company. Sumant Sinha acknowledged that the ReNew Energy stock price is affected by US Macro factors, but he indicated that these issues have little or no bearing on growth or profitability of the business as at this stage it is entirely focused within India. High level figures included that total operating capacity has grown by approximately 30% and in fact the results are even better than this as 400 MW of capacity were sold (profitably) last year. PPAs for 2.9 GW of renewable energy capacity have been signed in the current fiscal year, growing the current portfolio from 13.8 GW to 16.3 GW. These figures don’t include an important 900 MW of battery storage capacity that are a key part of ReNew Energy’s complex projects. These projects are bundled with ReNew Energy’s own digitization and data analytics. In the past quarter there was a 14% increase in adjusted EBITDA, driven by cost optimization. And profits after tax increased by 31%. ReNew Energy’s 6.4 GW solar module manufacturing facilities are now fully operational, and the cell facility has started trial production. Excess production capacity has a 900 MW external order book ensuring excess production will be taken up by the market. ReNew Energy prides itself in having a sustainable competitive advantage in one of the fastest growing global markets through accessing capital from the cheapest sources. ReNew Energy only engages in projects that have returns significantly above the cost of capital (leveraged returns of 16-20%). Key issues concerning renewable power delivery Solar and wind power are distributed energy sources and renewables projects in the early days (and continuing still) in the US and China were focused on building the capacity without necessarily paying attention to connectivity to the grid. ReNew Energy has been focused from its beginning on building renewables projects that deliver power to the grid on completion. So connectivity and supply chain issues are key in deciding about beginning a major new project; this applies to both bid wins and contracted capacity. Lack of foresight on connectivity has been a problem for some Indian projects, as it has been elsewhere, but ReNew Energy has a strong track record of avoiding delays in connectivity by making sure it has this area covered at project commencement. The Q2 report provided confidence that ReNew Energy continues to lead the pack in this area. Changes in renewable energy configurations  It is clear from the Q&A that ReNew Energy is changing the balance between solar PV and wind, because of some variability issues with wind over the past 4-5 years and the dramatic cost reductions with solar PV (and battery storage). This makes sense for onshore wind which does seem to have more variability than solar. However having a balance between solar and wind is a strength of ReNew’s business because the timing of power profiles from these power sources is often complementary. Offshore wind was not discussed and it is probably problematic for very cost focused renewable power provision, but I wonder if there will be a place for offshore wind down the track? At the moment the company is making hay from its decision to get into solar panel manufacturing. The above issues were front of mind in analyst questions. There was little discussion about how complex projects are proceeding nor was the digital platform highlighted. These were significant issues in my June 2024 report. I took the absence of questions in this area as a good sign because had there been problems I suspect that they would have been raised. Solar manufacturing ReNew Energy became a manufacturer in a strategic move to ensure its supply chain, as India moved to restrict imports of solar modules. The move has been successful and it is clear that there is a market for excess panels if ReNew Energy can produce more panels than it needs. The company is looking to de-risk its capital by finding partners for its manufacturing business. What the market thinks I think I’m becoming a broken record about what the market thinks. Perhaps it reflects my “contrarian” stance. The thing is that ReNew Energy is barely covered by Seeking Alpha authors with just one “hold” rating in the past 90 days. On the other hand, the limited coverage of six Wall Street analysts over the past 90 days aligns with my conclusions. Wall Street has four “strong buy”, one “buy” and one “hold\" recommendation. The weird one is Seeking Alpha’s Quant rating, which makes no sense to me at all. The Quant rating is “sell” but digging into the details is beyond my pay grade. For example, I’m mystified by the “F” for “Profitability”, as of the 13 metrics scored under profitability there are only two “F” ratings. On the other hand, Quant has four “A+” and one “A-“ scored under profitability; go figure. A converse score in Quant concerns “Valuation” which Quant scores as “A-“. Of 15 metrics scored under Valuation, there is a single “A+” score, seven “B- to B+”, one “C”, 3 “D-\" and 3 “F” scores. How can this lead to an “A-\"? I continue to have the view that Quant is great for some companies, but for many companies that I cover the final score is a mystery and how it is reached seems obscure. Conclusion With global attention on wars in Ukraine and Gaza, the US highlighting a historic change that is difficult to follow, and China going gangbusters with its renewable energy developments (achieving its 2030 renewables target of 1200 GW in July of this year), it is perhaps no surprise that India’s solid efforts to navigate development without major expansion of fossil fuel consumption is being overlooked. The ReNew Energy Q2 2025 earnings transcript was revealing to me not only in the excellent results achieved by the ReNew Energy team, but also in the respectful questions and solid answers from ReNew Energy management. As I indicated in the introduction to this article, India is an overlooked major player in the global energy transition that is underway. I remain confident that my investment in RNW, which is currently underwater, will deliver when its prominent position in India’s transition gets the recognition that it deserves. I am not a financial advisor, but I do follow closely the massive transitions happening as the end of the fossil fuel era looms and renewable energy becomes the source for power and wheeled transport. I hope that my comments are of interest to you and your financial advisor.  Editor's Note: This article covers one or more microcap stocks. 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