Intrinsic Value ReNew Energy Global Plc (RNW)

• Previous Close: $5.42
• Intrinsic Value: $2.76
• Upside potential: -49%

Stock Valuation Context

Business Model And Market Position

ReNew Energy Global Plc operates in the renewable energy sector, specializing in wind and solar power generation. The company’s core revenue model is built on long-term power purchase agreements (PPAs) with utilities and corporate clients, ensuring stable cash flows. ReNew Energy has established itself as a leading independent power producer in India, leveraging the country’s growing demand for clean energy and supportive regulatory environment. Its diversified portfolio across multiple states mitigates regional risks while enhancing scalability. The company’s focus on utility-scale projects and competitive bidding positions it favorably in a market increasingly prioritizing cost-efficient renewables. ReNew Energy also benefits from strategic partnerships with global investors and technology providers, strengthening its operational and financial capabilities. As India accelerates its energy transition, the company is well-placed to capitalize on expanding capacity targets and declining renewable technology costs.

Revenue Profitability And Efficiency

ReNew Energy reported revenue of ₹81.32 billion for FY 2024, reflecting its ability to monetize its renewable assets effectively. Net income stood at ₹3.40 billion, with diluted EPS of ₹9.92, indicating modest profitability amid high capital intensity. Operating cash flow of ₹68.93 billion underscores strong operational performance, though significant capital expenditures (₹-153.84 billion) highlight ongoing investments in capacity expansion.

Earnings Power And Capital Efficiency

The company’s earnings power is supported by long-term PPAs, providing visibility into future cash flows. However, high capital expenditures relative to operating cash flow suggest reliance on external financing for growth. Efficient asset utilization and economies of scale will be critical to improving return on invested capital in the coming years.

Balance Sheet And Financial Health

ReNew Energy’s balance sheet shows ₹27.02 billion in cash and equivalents against total debt of ₹655.66 billion, indicating a leveraged position. The debt load is typical for capital-intensive renewable energy firms but requires careful management of refinancing risks and interest coverage, particularly in a rising rate environment.

Growth Trends And Dividend Policy

Growth is driven by India’s renewable energy targets, with ReNew Energy expanding its portfolio through organic and inorganic means. The company does not currently pay dividends, reinvesting cash flows into capacity additions and debt reduction to sustain long-term growth.

Valuation And Market Expectations

Market expectations are tied to execution on capacity expansion and margin improvement. Valuation metrics should be assessed against sector peers, considering ReNew Energy’s scale, growth trajectory, and India’s favorable renewable policy backdrop.

Strategic Advantages And Outlook

ReNew Energy’s strategic advantages include its first-mover status in India’s renewable sector, diversified asset base, and strong counterparty relationships. The outlook remains positive, supported by regulatory tailwinds and increasing corporate demand for clean energy, though execution risks and funding costs warrant monitoring.

Sources

Company filings, investor presentations