This report is an updated version of the report published on 27 November 2024.

ReNew Energy Global PLC (NASDAQ: RNW)

ReNew Energy Global PLC (NASDAQ: RNW) is a leading decarbonization solutions company listed on Nasdaq. ReNew's clean energy contracted portfolio, which stood at approximately 16.3 GWs as of November 19, 2024, is among the largest in the world.

Recommendation Rationale – SELL at USD 6.14 

• Decline in Net Profit: The group reported a net profit of INR 5,333.0mn in H1FY25, compared to INR 6,754.0mn in H1FY24, reflecting a 21.0% decline, driven by lower resource availability and reduced late payment surcharge from customers. Merchant tariffs and resource availability were lower during both Q2FY25 and H1FY25.

• Trading Near the Resistance: RNW share price surpassed the R1 level recommended on 4 November 2024. Therefore, share price can face resistance at the current levels.

• Overvalued Multiples: On a forward 12-month basis– key trading multiples (EV/Sales, EV/EBITDA, P/E, Price/Cash Flow, Price/Book) are higher than the median of the utilities sector.

• Market Risk: Challenges in the utilities sector include energy price fluctuations, climate change, regulatory risks, and foreign exchange, all of which can disrupt production, supply chains and financials. Additionally, changes in macroeconomic conditions, such as economic cycles, interest rates, and inflation, can also pose significant challenges.

RNW Daily Price Chart

Valuation Methodology: EV/Sales Approach (FY March'26E) (Illustrative)

Considering factors such as the decline in net profit in H1FY25, decline in cash flow to equity (CFe), and the company's expectation that adjusted EBITDA and Cash Flow to Equity (CFe) in FY25 will be dependent on weather conditions mirroring those of FY24, the stock might trade at a slight discount to its peers. For conducting the valuation, the following peers have been considered: Ormat Technologies Inc (NYSE: ORA), Altus Power Inc (NYSE: AMPS), Spruce Power Holding Corp (NYSE: SPRU), and others.

Considering that the stock surpassed the R1 level, market uncertainties, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of USD 6.14, as of 27 November 2024, at 9:15 AM EST.

'Renew Energy Global PLC (NASDAQ:RNW) is a part of Global Green Energy Portfolio.'

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 27 November 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.