In an interview, Sumant Sinha, Chairman and Managing Director, Renew Power said that the share prices do not represent the intrinsic value of the company. Its shares are currently trading at $6.17, well below its listing price of $11 per share, forcing the company to announce a share buyback plan. Its market valuation has dropped from $4.5 billion at the time of listing in August 2021 to $2.5 billion. Edited excerpt:
How is life after the listing of ReNew?
We listed at the end of August 2021 and almost immediately, we had this huge market weakness coming in cleantech stocks globally. In January, cleantech shares were heavily sold as the Nasdaq fell 20%. Since then the market in America has been declining. Unfortunately, even though we’re not a US stock or typical cleantech stock, we’re classified in the cleantech or energy transition or clean energy bucket, and so, we’re stuck with some of that market downdraft. The Nasdaq is about 35% off our high and we’re down about 35% from our listing price.
Interestingly, our performance as a company remained exactly as we had anticipated. We met all of our operational goals. We added about 2.5 GW of capacity in the last financial year which is an increase of about 40% in our capacity since the beginning of the year, and so far, the largest capacity addition by any company in a year in India.
Your share price has fallen from $11 to $6.17, but does the larger project pipeline present an opportunity for you to delist?
We have announced share buyback and share buyback is in motion. We haven’t talked about delisting, but we certainly did talk about buying back some of the company’s shares from the market because we think we’re trading at a valuation that’s more or less the intrinsic value of our company. And from many perspectives, we are trading. At prices that are not great and, therefore, one use of the company’s money is to increase shareholder returns by actually buying back the shares. That’s what we’re doing. We are not looking for delisting, but we are definitely looking at buying cheap shares of the company.
Is removal from the list completely off your agenda?
Whenever a company’s share price reaches a level that doesn’t make sense, I’d say any company’s management will think about it, but it’s practically prudent, or not sensible, the process itself is cumbersome. Is. Also, we’ve only listed last year, not even a year has passed; That’s why you can’t jump up and down so fast. You have to give it some time. Now, in our case, the market has been selling out since we listed, so it has never really given our company’s stock price a fair chance to trade well. So, I think it may not be practically sensible to do something so early. But if the situation persists, it is something, I am sure, not just us, but many companies will look into it.
When will the first battery storage project with Fluence come out?
The JV has started a lot and it is going to put up a project for renewal where we will need the battery for one project for one peak power project and one for round the clock power project. These are projects that we have won in various SECI auctions earlier. So, for the projects we will need 215 MWh of battery, that this joint venture will be the first project to be set up. It will probably be the largest in Asia. In India, the biggest ever is 10 MWh, this 200 MWh is on a different level altogether. This will happen in the next 12-15 months in line with our RTC project and peak power project
What is the progress on Green Hydrogen Project with L&T and IndianOil?
We are talking with partners and are in the process of putting together the entire JV agreement, as well as the JV company. I don’t want to give a timeline but work is definitely going on. We are bringing such great expertise to this joint venture that I am confident it will become a pre-eminent green hydrogen project in India.
The government will release 4GW offshore wind power. Are you planning to enter the offshore wind power segment?
If the government goes ahead with its plans, of course, we will be interested in bidding for offshore wind.
Your revenue growth was good in the last financial year but the company is still making losses. What is your outlook for the current financial year?
A. I think we are making very strong growth. We’ve given guidance for next year as well and we’re talking about a 20% growth rate in the current year as well, behind a year in which we increased our capacity by 40%. We’re still talking about 20% additional growth on top of that. So, there will be pretty strong growth this year as well.