ReNew Energy Global Plc (RNW) Q2 2027 earnings review
ReNew raises its profit plan, while net debt climbs higher
ReNew's wind and solar farms generated much more electricity this quarter while its solar panel factories kept their high profit margins. Total income and operating profit before depreciation both jumped by 28% or more from a year ago, and first-half cash flow to equity already topped the full-year target. The Indian clean-energy group lifted the bottom of its full-year profit plan by INR 2 billion, though by our math the outlook implies second-half profit will dip 4% against last year's gain-heavy comparison.
| Total income | INR 49.6B +29% from a year ago |
|---|---|
| Operating profit before depreciation | INR 33.6B +28% from a year ago |
| Solar factory profit outlook | Raised INR 2B now INR 12–14B for the year |
| Full-year operating profit outlook | Raised low end middle of the range: 8.6% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because the solar factory beat the cautious pace implied by the earlier plan, forcing a INR 2 billion raise, while solar plant efficiency rose from a year ago for the first time in over a year. One caution: net debt climbed another INR 14 billion from last quarter to INR 711 billion, and the Pending $7.02-per-share buyout by a group including chief executive Sumant Sinha remains set to close in early 2027.
The question now is whether the solar factory's 33% profit margin can last once new competing Indian factories open next year. Either ReNew's own cell production keeps profit high, or growing domestic supply pushes margins down toward the lower second-half pace implied by the company's plan. Third-quarter factory margins and the launch of the new 4-gigawatt cell line will decide.
🐂 Bull Case
Strong Wind and Solar Lift Power Profit
ReNew makes most of its money as an independent power producer (IPP), building wind and solar farms and selling the electricity. For the past year, grid bottlenecks in Rajasthan and uneven weather held back solar output. This quarter, both wind and solar generation improved at the same time.
- Power sales revenue: INR 33.8 billion, up 30% from a year ago
- Wind plant load factor (the share of maximum possible power a turbine actually produces): 43.9%, up 6.6 percentage points from a year ago
- Solar plant load factor: 19.8%, up 0.4 percentage points from a year ago
- Power business operating profit before depreciation, by our math: INR 29.5 billion, up 29% from a year ago
The solar gain is small, but it breaks a streak of year-on-year declines caused by grid limits. Combined with a 19.5% larger fleet of operating power plants, total electricity sold jumped 29% from a year ago, proving the core power business can grow fast when weather cooperates.
What to watch: the third-quarter solar plant load factor. Another increase from a year ago would show that grid bottlenecks in Rajasthan are easing for good rather than just benefiting from seasonal weather.
Solar Factory Profit Beat Forces Outlook Raise
ReNew also makes solar panels and cells, using some for its own power plants and selling the rest to outside buyers. A standing worry is that new Indian rivals will flood the market and squeeze profit margins, while the company has argued its factory targets were simply conservative.
The numbers backed the company this quarter. Outside factory sales brought in INR 12.5 billion, up 23% from a year ago, and earned INR 4.08 billion in operating profit before depreciation. By our math, that is a 32.8% margin, almost unchanged from 32.9% a year ago and more than double the quarterly profit implied by the previous full-year plan.
Because first-half factory operating profit reached INR 9.73 billion, the clean-energy group raised its full-year factory target by INR 2 billion, to INR 12–14 billion. Even the raised plan implies second-half factory profit will drop 47% from a year ago by our math, leaving room for another beat if margins hold.
What to watch: third-quarter operating profit margin on external solar factory sales. A reading near 30% would show that domestic supply growth is not yet hurting pricing.
Asset Sales Unlock Cash as Builds Progress
To fund new power plants and factories without issuing stock, ReNew sells stakes in older projects, a strategy it calls capital recycling. It is also building a 4-gigawatt solar cell factory that is "expected to commence commercial operations in Q4 FY27" and expanding its corporate power-supply business.
In October, the company signed an agreement to sell its stake in 3E, a European software business, to private equity firm Hg. The deal "will result in a full exit of ReNew’s investment in 3E" and bring in about INR 8 billion of cash on an INR 4.68 billion investment. Meanwhile, ReNew switched on 628 megawatts of new wind and solar capacity during the quarter and another 112 megawatts in October, bringing its seven-month build to 1.36 gigawatts.
What to watch: the first solar cell produced at the new 4-gigawatt factory, scheduled for the third quarter. Starting production on time would keep the fourth-quarter commercial launch on track.
🐻 Bear Case
Take-Private Deal Nears Close With Tweaked Terms
A buyer group led by Canada Pension Plan Investment Board and ReNew founder and chief executive Sumant Sinha is buying out public shareholders for $7.02 per share in cash. Because the chief executive is on the buying side and the price sits below an earlier $8.00 non-binding offer, governance and terms remain a major concern for outside holders. Two large investors holding 51.1% of the eligible votes have already promised to vote in favour.
On October 28, the buyers and the company signed a side letter to "amend the leaver provisions applicable to certain replacement awards under the new incentive plan" and filed an updated buyout statement with US regulators. ReNew still "expects the Scheme will become effective in the first calendar quarter of 2027" once regulatory approvals arrive.
What to watch: publication of the final scheme document and the shareholder vote date. Any regulatory delay past the March 31, 2027 deadline would put the buyout agreement at risk.
Debt Climbs Further as New Provisions Hit Costs
ReNew uses asset sales to help control its borrowing, and earlier in the year it aimed to bring net debt below 5.5 times operating profit. Despite steady asset sales, total borrowing keeps climbing to pay for new power plants, and the earnings release again left out the 5.5-times leverage target.
- Net debt: INR 711.3 billion ($7.42 billion), up 9% from a year ago and up INR 14.2 billion from last quarter
- Total principal debt: INR 806.4 billion, up 7.5% from a year ago by our math
- Other operating expenses: INR 6.74 billion, up 56% from a year ago, rising 2.3 percentage points as a share of total income
- Employee costs: INR 1.94 billion, up 36% from a year ago
The jump in overhead costs cut against the strong power quarter. The company blamed higher solar factory activity, maintenance on new plants, "provisions created for contractual obligations in Q2 FY27", and "other employee costs related to 3E". Until large asset sales actually close and pay down loans, debt growth continues to eat into cash.
What to watch: net debt in the third quarter once proceeds from the Purvah solar sale and the 3E software exit arrive. If net debt does not fall after those cash inflows, construction spending is outrunning the asset-sale strategy.
Risks this quarter didn't answer
Three standing operational and balance-sheet questions got no update in the second-quarter earnings release.
- Rajasthan grid curtailment losses: solar plant load factors rose slightly, but the release did not state how much revenue was lost to uncompensated grid limits; the conference call Q&A is the next check.
- Closing of the 1,055-megawatt Purvah asset sale: signed in August for INR 18.1 billion in expected cash, with no closing date given in the release; completion will reduce the 20.5-gigawatt portfolio.
- Power contract signings: the total portfolio stayed flat from last quarter at 20.5 gigawatts, and the release gave no count of new power purchase agreements signed.
👓 Other Themes
Weather Remains the Swing Factor for the Plan
As a wind and solar operator, ReNew depends on monsoon wind speeds and clear skies to hit its financial targets. The company explicitly noted that its full-year profit and cash flow plans are "subject to weather and resource availability being similar to FY26". After poor wind speeds forced a target cut two years ago, strong second-quarter winds kept this year's plan on track.
💲 Other KPIs
More than doubled from INR 4.59 billion a year ago, reversing last quarter's 16% drop. Cash flow to equity — operating cash left after interest, taxes and scheduled loan repayments — reached INR 23.03 billion for the first half, already beating the full-year plan of INR 18–22 billion.
Collection time for power bills improved by 21 days from 84 days a year ago, after state utilities paid overdue bills earlier this year. Solar factory collection time also dropped to 9 days from 29 days a year ago, pulling total customer receivables down 6.7% to INR 28.08 billion.
Cash spent on property, plant and equipment fell 36.8% from INR 31.61 billion a year ago, coming in at 40.3% of total income by our math. Over the first six months, cash capital spending rose 6.8% to INR 47.54 billion as the company commissioned 1.24 gigawatts of projects.
🔮 Guidance
Raised at the low end by INR 2 billion, lifting the middle of the range to 8.6% growth for the year. By our math, that leaves INR 43.0 billion for the second half, down 4.5% from a year ago because last year's second half included INR 5.9 billion of asset-sale and revaluation gains. Stripping those gains out, the plan implies about 6% underlying second-half growth.
Raised by INR 2 billion after the factory earned INR 9.73 billion in the first half alone. By our math, the middle of the new range leaves just INR 3.27 billion for the second half, a 47% drop from a year ago. Last year ReNew raised this same target three times and still beat the top end.
Unchanged. The plan still calls for INR 20 billion at the middle of the range, down 7.4% from last year. Because ReNew already generated INR 23.03 billion in the first half, the full-year target implies negative INR 3.03 billion of cash flow to equity in the second half by our math, when wind generation is seasonally lower while loan and interest payments continue.
Unchanged. The target remains 2.0 gigawatts at the middle of the range. With 1.24 gigawatts commissioned in the first half and another 112 megawatts added in October, ReNew needs only 0.64 gigawatts over the remaining five months to hit the middle of its plan, after delivering the 2.4-gigawatt top end last year.
❓ Key Questions
Has the first 4-gigawatt solar cell line started testing?
Last quarter the company expected to produce its first cell on the new 4-gigawatt line by the end of calendar 2026. The release mentions commercial operations in the fourth quarter of fiscal 2027 but gives no update on the first test cell.
How much power did Rajasthan grid limits block in Q2?
Half of ReNew's portfolio sits in Rajasthan, where temporary grid connections have suffered uncompensated power cuts for four quarters. Solar plant efficiency rose 0.4 percentage points, but the release did not separate weather from grid losses.
What are the contractual provisions that lifted other expenses 56%?
Other operating expenses rose by INR 2.41 billion from a year ago, partly due to provisions for contractual obligations in the second quarter. Management has not disclosed the size of these provisions or which projects caused them.
When will the 1,055-megawatt Purvah solar sale close?
ReNew agreed in August to sell 1,055 megawatts of solar projects to Purvah for INR 18.1 billion in cash. Closing the deal will trim the 20.5-gigawatt portfolio and provide cash to slow the rise in net debt.