ReNew Energy Global Plc (NASDAQ:RNW) Q3 2025 Earnings Call Transcript

ReNew Energy Global Plc (NASDAQ:RNW) Q3 2025 Earnings Call Transcript February 19, 2025

Operator: Thank you for standing by. And welcome to the ReNew 3Q 2025 Earnings Report. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session [Operator Instructions]. I would now like to hand the conference over to Mr. Anunay Shahi. Please go ahead.

Anunay Shahi: Thank you. Good morning, everyone. And thank you for joining us. We put out a press release announcing our results for fiscal 2025 third quarter ended December 31, 2025 last night and a copy of the press release and the earnings presentation is available on the Investor Relations section on ReNew’s Web site at www.renew.com. With me today are Sumant Sinha, our Founder, Chairman and CEO; Kailash Vaswani, our CFO; and Vaishali Nigam Sinha, Co-Founder and Chairperson, Sustainability. After the prepared remarks, which we expect will take about half an hour, we will open the call for questions. Please note our Safe Harbor statements are contained within our press release, presentation materials and materials available on our Web site.

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 furnish in our Form 6-K and the presentation on our Web site for a more complete description. Also contained in our press release, presentation materials and the annual report are certain non-IFRS measures that we reconcile to the most comparable IFRS measures and these reconciliations are also available on our Web site, in the press release, presentation materials and our annual report. It’s now my pleasure to hand it over to Sumant.

Sumant Sinha: Yes. Thank you, Anunay. Good morning, everybody, and/or good evening or good afternoon. Glad to have you all on our earnings call for the third quarter of fiscal 2025. Before we get into our business and the updates for the quarter and the nine months, let me give a short overview of the macro environment related to our industry in the past three months. In India, the GDP growth rate which had declined to 5.4% in Q2 fiscal 2025 is expected to again pick up from Q3. Inflation is also benign with RBI cutting rates by 25 basis points earlier this month after a fairly long period of time with further cuts — rate cuts being anticipated during the year. We anticipate that Indian domestic banks should pass on these benefits to borrowers like us, thereby reducing borrowing costs for infrastructure companies and making projects more attractive.

Power demand has also increased from December 2024 and the recent union budget also had a strong focus on boosting consumption, which is encouraging. The renewable energy environment looks promising with more than 50 gigawatts of renewable energy capacity already auctioned during the year. Therefore, while the US equity markets for renewable energy companies remain challenging, the underlying fundamentals governing renewable energy in India continue to remain quite robust. Let me now turn to updates about ReNew. ReNew has now entered the 15th year of its operations and we proudly celebrated our anniversary recently. From our modest beginnings in 2011, we have expanded our footprint to almost 11 gigawatts of commissioned capacity. I extend my heartfelt appreciation to all of our shareholders, our employees, customers, lenders, advisors, whose unwavering support has been instrumental in our journey since day one.

Now let me turn to highlights from our business on Page 6 of the presentation. Over the years, we have maintained our leadership in project execution and commissioning greenfield projects. I am pleased to report that we have achieved one of the highest year-to-date megawatt commissionings with approximately 1.3 gigawatts and an additional 150 megawatt hours of batteries commissioned so far this fiscal year and a total of 2.6 gigawatts delivered since December 2023. With this, our operational portfolio now stands at 10.8 gigawatts with a 26% increase year-on-year. Our total committed portfolio now stands at 17.4 gigawatts, representing an impressive 27% growth year-on-year and an additional 1.1 gigawatts since the last earnings call. We have secured 3.9 gigawatts of renewable energy capacity and 600 megawatt hours of BESS through auctions so far this fiscal year, bringing our total pipeline to approximately 24 gigawatts plus 2 gigawatt hours of batteries, representing one of the largest renewable energy portfolios in India.

A notable trend this year has been the strategic shift towards more complex projects with the majority of our auction wins this fiscal originating from such projects. While we are not aggressively seeking additional capacity in the near term, we continue to adopt a disciplined approach targeting auctions that offer attractive return profiles. With the decline in battery prices, the market has seen increasing number of battery plus solar solutions auctions. We are excited to announce that we won our first solar plus battery energy storage system tender this year. We remain confident in meeting our targeted megawatt installations by the end of the year. This includes about 600 megawatts, which is subject to timely regulatory approvals and build out of transmission infrastructure.

Our manufacturing facility continues to expand towards its full potential and is now producing about 10 megawatts per day of modules. Additionally, we have been able to secure an aggregate order book of about 2 gigawatts till date, doubling it in a quarter. These modules and cells are expected to be delivered over the course of the next fiscal. Our manufacturing facilities have produced by this time in aggregate about 3.6 gigawatts of modules and about 300 megawatts of cells till date. Continuing our path towards world class ESG practices, ReNew was also recognized as India’s highest rated pure play renewable energy company by S&P. Let me now hand it to Kailash for finance and other highlights.

Kailash Vaswani: Thanks, Sumant. Turning to Page 7. We are committed to bringing in efficiency in our operations and reducing costs while we continue to deliver profitable growth. This quarter we saw 500 basis points improvement in margins, primarily driven by our cost optimization initiatives and lower provisioning than the previous comparable quarter. Our DSOs, which is [debtors] to sales outstanding, saw a 22 day reduction from Q2 of this year, solidifying our balance sheet and improving our cash flows. Wind PLFs trended lower this year compared to last year due to which we have reduced the FY25 EBITDA guidance range to INR74 million to INR78 million, and the cash flow to equity guidance to INR11 billion to INR13 billion.

When providing guidance for the current fiscal year, we assume weather similar to FY24 while actually we have experienced lower wind PLFs almost every quarter and fourth quarter is also below the same quarter in the prior year so far. Lastly, the new shareholders have received a non-binding offer by a consortium comprising of CPP Investments, Masdar, ADIA and Sumant Sinha. These special committee comprising of independent directors and advised by Rothschild and Linklaters have been in discussion with the consortium regarding the offer. While we understand that our stakeholders are eager to know what’s going on, however, you will appreciate that currently we can not comment on the timing or status of the process and we will report to the market as soon as there is a development at our end.

We will not be able to comment further on the offer at this stage. Let me turn it back to Sumant.

Sumant Sinha: Yes. Thanks, Kailash. Turning to Page 9. I’m happy to report that we have been able to increase our operating megawatts by about 26% year-on-year and our total operating portfolio now stands at 10.8 gigawatts. During the last 12 months, we have been able to commission over 2.6 gigawatts and have commissioned about 1.3 gigawatts so far in this fiscal year. In addition, our total contracted portfolio has also grown by about 27% to 17.4 gigawatts. During the year, we signed PPS for approximately 3.8 gigawatts of RE capacity and our committed capacity is now 17.4 gigawatts along with 800 megawatt hours of BESS. While the auction market provides ample opportunity to grow, we continue to be disciplined in our approach to bidding.

We are selective and conservative in our bidding and so far this year have managed to secure 3.9 gigawatts of RE in the current fiscal year along with another 600 megawatt hours of BESS. We do see that batteries will play a significant role in providing grid balancing in the future and provide flexibility to grow with more certainty on returns. We have won our first solar plus BESS bid in the current fiscal and will continue to focus on these bids as well. Our capital recycling program also continues as earlier as we signed an agreement to sell a 300 megawatt SECI solar asset with the transaction expected to close by March 2025 with valuations in line with our past capital recycling transactions. Turning to Page 10. Execution remains our core strength and time and again we have demonstrated our ability to build large scale projects efficiently and within budgeted costs.

On the solar construction front, we have already commissioned 1,120 megawatts this year with an additional 175 megawatts in the final stages of regulatory approvals. Moreover, 400 megawatts of solar projects are fully erected and will move towards COD approvals. The peak power project has also been commissioned under the PPA and we have also commissioned almost 800 megawatts of our RTC project. In the wind segment, we have commissioned 140 megawatts year to date with another 500 megawatts of turbines already installed and ready for grid connection. While most of the work has been completed at our end, large pile connectivity and administrative hassles could have a minor impact on the commissioning timelines. Our manufacturing business is turning out to be a significant competitive advantage for us.

On one hand, we get access to uninterrupted supply of high efficiency modules. On the other hand, external sales enable in generating cash for the company and help derisk the business. The business generated an EBITDA of approximately INR560 million in Q3 of fiscal ’25. Our manufacturing facilities have produced an aggregate of 3.6 gigawatts of modules to date and is approaching an average daily production rate of nearly 10 megawatts every day. As we ramp up production, our sales team has played a crucial role in securing contracts for surplus capacity. To date, we have secured an external order book of two gigawatts, which includes 1.1 gigawatts of sales plus modules, a volume we aim to deliver over the next fiscal year. Lastly, our sales facility started commercial production in the current year, in the current quarter, and has already doubled — has already produced over 300 megawatts of cells.

We have achieved an industry leading efficiency of 23.2% for our cells underlining our commitment to quality and high standards. I will now hand it back to Kailash to go through the finance section.

Kailash Vaswani: Thanks, Sumant. Turning to Page 12, our operational portfolio has seen a 26% year-over-year increase in megawatts, underscoring the strength of our EPC execution capabilities. Our cost optimization efforts are showing results and EBITDA margins have expanded significantly from 75% to 80% in the current quarter and improved by 240 basis points for the nine month period ended December. Adjusted EBITDA rose by 11% year-on-year, primarily impacted by weaker than expected wind performance. We also continue to see improvement in DSOs. Our DSOs now stand at 72 days, our lowest ever and a 22 day reduction over the previous quarter. If you look at the year-on-year EBITDA work, while newly commissioned projects contributed an additional INR2.8 billion in revenue but lower than expected wind resource led to a revenue reduction relative to guidance of INR1.6 billion for the quarter.

Furthermore, asset sales during the period resulted in a competitive revenue reduction of approximately INR900 million, partially offset by the INR1.1 billion savings in the quarter that we achieved through our cost optimization initiatives, such as internalization of O&M that was earlier outsourced to wind OEMs, SG&A reduction and a reduction in discretionary spends along with the lower one-off impact. Let me now turn to Page 13. All of India has been impacted by poorer wind resource in fiscal 2025 compared to last year, details of which are there on Page 23. While we based our initial guidance on weather being similar to fiscal ’24, however, wind PLFs have been below fiscal ’24 levels and solar PLFs have also been slightly lower. While our cost optimization initiatives have helped mitigate this impact onward, we still have to make a revision to our FY 2025 EBITDA guidance due to the INR4.7 billion impact on account of weather.

In Q3 FY25, portfolio level wind PLF stood at 13.5%, a decline from 17% over the previous year. During the first nine month period, absolute wind PLFs have fallen by almost 240 basis points. Although wind performance has been lower than anticipated, our cost optimization initiatives have helped mitigate part of the impact due to savings of INR2 billion in the first nine months of the current fiscal year. Turning to Page 14. In spite of the lower than expected EBITDA performances, we continue to be committed towards being disciplined in our leverage. Our operating project leverage ratio continues to be below 6x using trailing 12 month EBITDA rather than the run rate figures, which under normal weather conditions should improve slightly. Let me now hand it over to Vaishali for comments on ESG.

Vaishali Sinha: Thank you, Kailash. Turning to Page 16 and reviewing advancements in ReNew’s ESG initiatives and targets now. 2024 has been a stark reminder of our climate reality. With global temperature surpassing the 1.5 degrees centigrade threshold the importance of sustainability has never been more evident. At ReNew, we remain unwavering in our commitment to this call. Over the last quarter, we have made significant strides in the following areas. ESG ratings, ReNew’s performance in the highly regarded S&P Global corporate sustainability assessment has been a major highlight for us in this quarter. We became the highest rated pure play renewable energy company in India by achieving our highest ever score of 73 out of 100.

Additionally, we made history as the first company from India’s electric utility sector to be included in the prestigious S&P Global CSA Yearbook. Green certifications, ReNew’s Jaipur manufacturing plant achieved the highly acclaimed LEED Gold certification, further reinforcing our commitment to a green and sustainable set of operations. Leadership Awards, in the past quarter, ReNew has received nationwide recognition from leading publications and organizations. We were named Company of the Year by FirstView for our business excellence, innovation and renewable energy leadership. Our solar, wind and hybrid plants secured the CII Performance Excellence Awards while Financial Express honored us as the winners in the clean energy champion category at the Green Sarathi Awards.

Now turning to Slide 17 to review the progress made across our ESG targets. ReNew remains committed to achieving its SBTi validated net zero target, the development of our decarbonization road map for manufacturing is underway. And we are advancing a first to reduce Scope 3 emissions through the ongoing assessment of a sustainable supply chain, which includes detailed supplier ESG assessments, target setting and advanced monitoring. Social responsibility is integral to our business, driving community stewardship, volunteerism and equitable development. This commitment propels us towards our goal of impacting 2.5 million lives by 2030 with the programs already reaching over 1.4 million lives impacted. In quarter 3, we made considerable progress in this regard.

We distributed 163,000 blankets to those who needed them the most. Solar electrification of 46 schools is underway and 55 digital labs have been established across the country. As part of our [soar pan] work program, we are upskilling women and a total of 595 women have been trained to date with 150 completing this training in quarter three. As part of our company wide sustainability targets, we remain on track to achieve both our short and long term rating goals. These ratings underscore the impact of our first integrated report and we look forward to building on this momentum and reporting our progress with the release of our second integrated report in 2025. I will now ask Kailash to cover guidance.

Kailash Vaswani: Thank you, Vaishali. Coming to our guidance, we are reaffirming our megawatt guidance for the year, which includes 600 megawatts, the commissioning of which is dependent on timely regulatory approval and timely build-out of the transmission infrastructure. While we have a good handle on execution, we are impacted by weather and its seasonality. We are lowering the range of our full year 2025 expectation on adjusted EBITDA and cash flow to equity guidance. On the other hand, we are happy to update the run rate guidance for our target portfolio of 17.4 gigawatt, which is up 1.1 gigawatts since the last quarter. With that, we’ll be happy to take questions.

Operator: [Operator Instructions] Your first question comes from Justin Clare with ROTH Capital Partners.

Q&A Session

Justin Clare: So first off, I wanted to start just on the wind PLF. Q3, the PLF was lower than it has been historically here. I was wondering, is this just the result of lower wind speeds in India broadly, was there any other issue or any factors in terms of the performance of your specific projects? And then wondering if you could just talk about how you seeing wind PLFs trend into Q4 and whether or not we’re seeing a return to kind of historical averages?

Sumant Sinha: Look, the PLF reduction was entirely on account of wind. Wind speeds in Q3 were significantly lower. And so you should assume that the entire delta and PLF is on account of wind speed differentials from the long term averages, that is really what was the decline in revenue along with that. So far, wind speeds in Q4, it’s always obviously early to comment on it, are getting closer back to normal. So I would say they’re not entirely back to normal but they are certainly not as — quite as bad as they were in Q3. So that’s where we are right now.

Justin Clare: And then I wanted to see — you mentioned that rates could be lower than India here. I was wondering where you think rates could settle for your project finance, what do you think the outlook is there? And then how much of your debt do you think could be — could benefit from lower rates here in the near term and if you could [potentially] quantify what the potential impact might be that would be helpful?

Kailash Vaswani: So Justin, as far as the rate reduction is concerned, so we’re yet to see the transmission of that from the lenders into their lending rates. But wherever we have rates which are linked to short term benchmarks like three month treasury bills, there, we have started seeing the benefit of that because the short term rate have started reducing but that would be a small component of our portfolio. I think the overall, the variable rate part of the portfolio, you will see some reduction happen, which is around 30%, 35% of our portfolio would be borrowing from domestic institutions where some part of this benefit we will see. But when the transition happens, how much will happen, that will be known as more time goes by.

Right now, we’ve not seen any bank significantly cut their marginal cost lending rates which is the MCLRs. And hence, we have not benefited on a large part of our portfolio. But on a small part, which could be still less than 10%, which was linked to any short term rates, we started seeing that benefit. But that is — in any case, that was more of a leading indicator. Those rates, in any case, gone down and hence, we got that benefit earlier before the rate cut also happened.

Sumant Sinha: And Kailash, the long term outlook [Multiple Speakers] outlook?

Kailash Vaswani: So long term outlook, again, with inflation coming in big and government focus being on encouraging more growth, also encouraging more consumption, I think there would be continued reduction in rates, which is likely to happen. Only caveat there is obviously the currency where, to some extent, given that the rupee had depreciated quite sharply against the dollar, that could be one, which would be playing on the government’s mind in terms of how much to reduce and how fast to reduce because, obviously, then that will result in flight of capital.

Justin Clare: And then just one more, curious on the battery plus solar solutions here. I was wondering if you could talk about the anticipated product returns and how those compare to plain vanilla solar projects or more complicated around the clock projects? Just how attractive do you see the returns there?

Kailash Vaswani: I think a lot depends on the assumptions that you make on the pricing of batteries, obviously, when you make the bid. Now prices of batteries have continued to go down quite substantially as we all know. And so therefore, wherever we have batteries and whatever batteries we have in our portfolio are looking attractive because the assumptions that we made on pricing were relatively conservative. And because of the reduction in pricing, we’re sort of looking at, I think, attractive returns on those. I would say that plain vanilla solar, probably in a way gives us just the lower returns of the 3 and then you have solar plus storage and then we have the [FDR] rebates, which are probably the highest return. The delta between them is probably — in terms of IRR is maybe 3% — 2% to 3% or thereabouts with solar plus BESS being somewhere in the middle.

But eventually, when we get to execute the projects, it may be that BESS prices have gone down to a level that we actually are doing quite well on those projects as well.

Operator: Your next question comes from Maheep Mandloi with Mizuho.

Maheep Mandloi: First, just on the solar manufacturing you guys have. I think on the last call, you said you’re at 10 megawatt per week run rate. Could you just remind us what the run rate is on the cell and module for you guys and how to think about the backlog, how much of that should be — do you expect revenue recognition on a quarterly basis going forward here?

Sumant Sinha: So look, I think I’ll talk about the production and I’ll ask Kailash to answer on the revenue part. On the production part, we are sort of between 10 and 11 megawatts right now per day of modules, that’s the rate that we are producing at right now. So if you want to annualize that assuming 350 workdays then you get a sense of where the megawatts is from a overall standpoint. The eventual goal is to get that to over 12, 13 megawatts a day. So we are sort of moving in that direction quite well, given that some part of our module capacity was commissioned fairly recently. On the cell side, we are close to — we are producing between 3.5 to 4 megawatts every day right now and that is something that again, it’s getting close to what the expected production rate was or needs to be on a steady state basis.

And the more important thing almost there is that the efficiency levels on sales is actually among the highest in the country right now. So our team has been able to really stabilize the plant at a fairly high operating efficiency level. So that’s positive. On the revenue side, Kailash, would you like to take that?

Kailash Vaswani: So again, Maheep, just to clarify. Most of the revenues from captive sales which happens to the renewable energy arm of ReNew, that is all capitalized into the balance sheet because, obviously, it’s within the group’s own consolidation and it gets knocked off. So for third parties what we have reported in our numbers for the first time this time. So for the first nine month period, which was largely, most of the sales happened in the quarter, we had INR3.4 billion of revenues and around INR600 million of EBITDA that — for the current period. And going forward, obviously, as and when third party sales has happened and similar amounts would then be reported for the third party portion only.

Maheep Mandloi: And maybe just a follow-up on the module side. We see lot of Chinese companies and maybe US companies also claiming ownership of TOPCon patents and a bunch of lawsuits and — not in India or other regions. But is that a concern for you, are you seeing any of those put over to the Indian market?

Sumant Sinha: I was just saying that, see, in any case, not mostly companies who are exporting into the US, that’s where most of these actions were taken given that we do not have any exposure to the US market in terms of exports. We didn’t see any — or we don’t plan — expect to have any such impact.

Maheep Mandloi: And just one last one. On the 300 megawatt sales runs, and I’m not sure if you talked about it. But could you just talk about the multiples you are expecting on those or if they’re in line or better than what we saw in the past sales you have?

Sumant Sinha: So it’s commented obviously in the presentation that Sumant gave. But basically, it’s in line with our past recycling initiatives.

Operator: Your next question is from Nikhil Nigania with Bernstein.

Nikhil Nigania: My first question is on the broader renewable space. While the government is pushing on their plans, maybe some headwinds, land availability for wind, transmission access, which seems to be alluded in the presentation as well and in PPA signing. So if you could share some color on these aspects. Is ReNew facing similar challenges on how does this company see it on these aspects?

Sumant Sinha: So I think that the allusion that we made to transmission issues really is a very sort of small issue, which is that there’s a bid that we’re connecting to in one of our projects, that day is getting ready a month later than it was supposed to. And because of the March 31st deadline for commissioning, therefore, it sort of puts a little bit of a question mark on — or a big [witty] on whether that is going to then get done before March 31st or not, whereas we’re going to be fully ready from our side. But whether it happens on March 31st or if not then it will happen 10 days later. So that is not such a big issue from our overall revenue generation standpoint and so on. And the bigger issues that you’re addressing or you’re raising are around land and general connectivity, availability and PPA signing.

So let me try to address those quickly. So as far as we are concerned on transmission, we have got all the connectivity for all of the 24 odd gigawatts of pipeline that we have got fully in hand. So we don’t have any issues around connectivity right now. And in fact, we have surplus connectivity, I think, as you had yourself written in a report some time ago, we have surplus connectivity. And therefore, any new bids that happen, we’ll actually be in a really good position to use some of that land based connectivity that we have to win those auctions. Now we are also able, based on the connectivities commissioning dates, we’re also able to, in some ways, smooth out that execution of this 24 odd gigawatts over the next few years’ time. Now there may be delays in some of the connectivity coming up by a few months here and there but by enlarge the delays are not more than that.

And therefore, if you plan your execution are reasonably well in terms of which projects go into which substations and so on. By enlarge those get delivered. As I said, there could be a few months here and there but the delays are not more than that. So I would say that connectivity is becoming a problem for those companies that have not proactively blocked the connectivity earlier, which unfortunately something that we had done. So therefore, connectivity per se is something that is fine as far as we’re concerned. As far as land is concerned, land is a problem in wind. It has always been a problem with wind projects. And that is why if you see a lot of our increase in our commissioning is happening out of solar not so much out of wind. We don’t expect that wind is something that is going to exceed maybe 5 gigawatts a year in the country over the next few years, maybe the next two, three years, you’ll probably end up just doing about that much of capacity in wind as an industry, I’m saying.

And our share within that will be whatever it will be based on our own commissioning plans. So land is definitely a problem. And particularly, in the last six to nine months, there are a lot of projects have been done in Maharashtra. There were specific issues on account of certain Ministry of Defense issues because of the elections that are coming up and then local loan order problems that I’m sure you’ve read about in the press and frankly, that has also impacted us in terms of our commissioning time lines. Otherwise, we hopefully have got some of the wind projects commissioned by this time. So that always is something that we have to bake in to our plans that wind projects do take longer to get commissioned than solar projects very often.

And then as far as PPAs are concerned, on the PPA signing, I would say that this year, there has been reasonably decent progress on PPA signings given the large backlog on the large amount of bids that have happened in the last two years, the fact that out of the maybe 120, 130 gigawatts of bids that have happened in the last — in this current financial year and the previous one, there are only maybe 30 to 35 gigawatts of unsigned PPAs. But the balance of it has all got signed. So I would say that there is a lot of headroom that is built up now in terms of signed PPAs. If you were to look at that as another indicator of what capacity additions may happen in the near term. So my sense is that the balance PPAs also get signed. And at this point, the government is wondering — not wondering but is considering slowing down the pace of bids potentially to allow the old bids to get signed.

And that is perfectly fine because the pace of bidding has been extremely rapid. So I think it will give all of us a little bit of breathing room to just reassess where we are and look at our execution pipelines and so on. So I think that is a — that would be healthy thing in my opinion. So my sense is all the PPAs eventually will get signed or at least the most amount of them will get signed.

Nikhil Nigania: Second question I had is the solar cell business. I mean, a very timely commissioning of the business — manufacturing plant. But when we see some peers, we understand you have captive views, but when we see some peers, they talk about sales prices, domestic sales prices being around [14, 15 cents] [Indiscernible] so we’re expecting sort of a higher impact of that. So do you see in the coming quarters it could be a sizable number that the manufacturing business could throw for profitability?

Sumant Sinha: For sure, I think sale prices in the market right now are fairly attractive. And we are not selling any cells to ourselves, we are selling modules to ourselves right now and we are selling cells into the market upside to the external market, simply because most of our projects don’t require domestic cells at this point. So all of our cells will be going into the external market. And so to that extent, we will actually gain from the pricing that is in the market right now and that will, of course, start getting reflected in our P&L as we go forward.

Nikhil Nigania: And one last question…

Sumant Sinha: [Multiple Speakers] we are putting at a lower price and where the market is at, just by the way. So that is not the case. So you should assume that wherever the market is, we are also sort of at the same point.

Nikhil Nigania: And one last question I had is, I mean, the dollar has moved much faster than many of us anticipated. So just on the hedging front, I wanted to understand, both on a debt and CapEx front. So debt, is it all hedged by swaps or is it options as well? And on the CapEx front also, whatever exposure we have, are we hedged on the currency side?

Kailash Vaswani: So basically, for hedging, we use couple of different instruments. Most of our borrowings from foreign commercial bank for [DFIs] that are fully hedged using swaps. Some of our bonds also — recently when we had the opportunity of seeing lower hedging costs and the rupee was also fairly stable for the longer period of time below 83, we had most of that into full swaps, full currency swaps. We have two bonds. One of them has a call spread where there is full coverage up to a certain point and beyond that, their exposure, which is, I think, if I remember correctly that limit is like 90% or 92% in that range beyond which we have some exposure. And then there’s one bond in which we are exposed till the 90 or 92 point beyond which we have exposure. So it’s like a diversified hedging policy that we follow and we know what our maximum exposure could be, and it’s again in line with our stated hedging policies as approved by the Board and Audit Committee.

Operator: Your next question comes from Puneet Gulati with HSBC.

Puneet Gulati: My first question is has been [indiscernible] right now. Are you now baking that also in your 17.4 gigawatt guidance estimate?

Sumant Sinha: So Puneet, basically the expectation is that, that’s obviously a long term guidance. So we don’t make long term changes into that. It is largely what we’ve tried to do is that assume a long term forecast, which have been corrected [bases] between for the last two years but not reflected of every year-on-year performance, for example. And that way, we have tried to estimate the long term guidance. Our expectation continues to remain that wind does move in cycles and this has been an extended cycle, which hopefully will reverse and we should see the dividends on that also.

Puneet Gulati: And secondly, you also have a lot of unsigned LOEs and why [indiscernible] due to the fact that [Indiscernible] get signed, there is also a guidance note floating around with say that unsigned LOEs beyond 12 months can be allowed to lapse. Can you comment on what is your view on that?

Sumant Sinha: So I think, Puneet, there are lots of conversations, obviously, that are happening in the government. There’s also another school of thought that says that canceling any PPAs will lead to a lot of reputational damage for the government. Then the question also becomes what happens to the connectivity associated with those pays, how does that get allocated. So it’s a little bit of a complicated question. And also what will happen is that these LOAs or these bids that have happened are bids that predate the ALM for cells. And so any future bids that happen, which will have to account for domestic sales, will be more expensive. And therefore, the chances are that [Discoms] that rely that those earlier bids are actually more attractive and we’ll look to potentially sign those rather than have those getting canceled.

Puneet Gulati: And thirdly, if you can also comment on the process of [Technical Difficulty]. I know you won’t comment much, but what is the next stages should we see on the buyback front?

Sumant Sinha: So Puneet, it’s not exactly a buyback. It’s an offer by a group of shareholders to buy out the investors, the public investors and with the intention of taking the company private. So again, as we said in our earlier remarks that we have got this offer, which is being evaluated by the special committee, advised by [indiscernible]. And once there is any movement then we will be announcing it.

Puneet Gulati: So will the independent board get involved here or is there some…

Sumant Sinha: So the special committee form, which comprises of only independent directors.

Puneet Gulati: And lastly, if you can talk a bit about capacity addition plans for FY26 and specifically for projects which you can commission before June of 2025?

Sumant Sinha: Before June of 2025, in terms of [Multiple Speakers]. So I think [Multiple Speakers]. So there is 600 megawatts lag, which is what if it spills over then it would be commissioned over in April of FY26 which is April ’25. And apart from that, obviously, we have — we will be giving out our long term guidance in our June results. I mean our March result, which will come out by early June.

Kailash Vaswani: So Puneet, I think it’s difficult to give an estimate, by the way, at this stage. So would advise waiting for our FY26 guidance, which [indiscernible] come out along with our March results.

Anunay Shahi: I think we have one question from Aniket Mittal of SBI Mutual Fund. Aniket, you want to go ahead

Operator: [Operator Instructions] The next question will come from Aniket Mittal of SBI Mutual Fund.

Aniket Mittal: So while [Technical Difficulty] levels have come down and the drop in our average [Technical Difficulty]

Sumant Sinha: I couldn’t catch that question at all, Anunay, if I don’t know whether you guys did, but if you can repeat it, that would be great.

Aniket Mittal: [Technical Difficulty]

Sumant Sinha: If I can just — Aniket, for someone’s benefit, I think I broadly got the question, correct me if I’m wrong. It’s like our PLS decline has been higher compared to some of the other peers. So it’s relative, is it a function of the region where we are present where we’ve seen a bigger decline…

Aniket Mittal: Yes, that’s the question. And I think just to understand, would these PLS now be closer to P90 limits [Multiple Speakers]?

Sumant Sinha: Yes, they’re probably closer to P90, although we haven’t done the exact math. I don’t know what the guidance is or what the estimate is that you got from the other companies, so I really can’t make a comparative statement. I would just tell you that the wind in the month of October and November was drastically lower than it has been in prior years. And that could be perhaps because the monsoon got extended and we had fairly warm sort of periods of time at that time. And that’s why the usual reversal of wind that takes place from the Southwest to the Northeast that took a lot longer to happen than expected than it normally does. December was closer to average, still not fully at average and January has been kind of similar to December and February, of course, is happening right now.

So hard to comment. The only other thing I would say is that at least in North India, there’s been a very warm winter. And we need temperature differentials between land and sea to increase for the Northwest winds to flow. And that is something that we have not seen as much this winter. And so that, I think, also has caused this lack of wind this period of time.

Aniket Mittal: The other question was just as I look at your pipeline, right, increasingly it’s becoming more FDR and hybrid heavy. And in the presentation, you’ve sort of talked about the fact that the capacity that you’re trying to put up is subject to change, which probably implies that you’re looking at battery versus storage over here. Could you just give us some broad follow-up in terms of how do we look at the capacity additions for the incremental hybrid project, what sort of contributions are you thinking about in terms of wind, solar, hybrid? So for example [Indiscernible] FDR [Indiscernible] sort of having a relook at wind over there. So just some color over there would be fairly helpful.

Sumant Sinha: So the configuration is a function of the bid requirement as well as sometimes you have the ability of certain bids, also buying a certain amount from the market and also a function of, obviously, the pricing of wind, solar and storage. So all of those things impact the configuration. Now at the time that we bid in some of these bids, the pricing was at a certain level and we came up with a certain configuration based on that, the pricing as well as, of course, all the other parameters that I was talking about earlier, which are the bid requirements and specifications. Now as time has elapsed or is lapsing, some of those relative pricing levels change. And as I said, for example, first of all, solar prices have come down quite dramatically over the last couple of years.

So any bids that happened two years ago, for example, would now have a different configuration because the price of solar has come down. The same thing with batteries. Battery costs have also come down quite dramatically in the last year or so. And so therefore, what we have required more wind earlier potentially can do — will actually get more optimized or lead to higher returns now with a higher degree of solar and storage and a lower amount of wind. So this is a dynamic situation in every bid and obviously, at the time that we sign the PPAs when we have to fix the final configuration. And so at that time, we rework the models and the basis that we come up with what is the best model, what are the best configurations at that given point in time based on all the costing and so on.

So that — and that changes, as I said. So because the cost of solar and storage have been coming down, therefore, we are moving more towards solar and storage in these FDRE bids and less wind.

Aniket Mittal: The other question was on the [indiscernible] impact, I think Kailash mentioned in the remarks that one of the reasons for declining wind has been the internalization that we’ve been doing. If you could provide some color on that, how much of the O&M is now being done internally, what’s the scope over there going forward and how do we look at the O&M expense [indiscernible]?

Kailash Vaswani: So again, just to answer the question, basically, for solar, we do all the O&M in-house. For wind, whether we have like legacy assets, we have legacy long term O&M contracts with the OEMs. Now in many of those cases, they’re always sticky contracts, so it was quite difficult to get out of those. So whenever we were not able to get out what we tried to do is we reduced the pricing, renegotiated the pricing and accordingly we got some savings. And whether we could — wherever the free O&M period was over and where there was no such long term arrangement in place in those cases we have started doing the O&M in-house for these projects. Exact numbers, we can circle back but largely that’s what we are seeing. Now this year, what we have seen is the benefit largely growing on account of both the reduction in the O&M costs that we had and because we had built certain O&M equalization reserves in the past just to — the difference between the fee earned on the paid O&M period because we had a reduction in the O&M cost, we were able to write back some of those reserves, because those were no longer needed.

And hence, there was that benefit that we saw in the current nine month period.

Aniket Mittal: Just one last question. In terms of the external module sales unit this quarter, what’s the quantity or other volume?

Sumant Sinha: What was the question…

Anunay Shahi: So the question is, what was the quantity of external modules in the third quarter?

Kailash Vaswani: So Aniket, it was a little north of 200 megawatts of external sales that we booked for in Q2.

Operator: There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.