Hold Rating on ReNew Energy Global Amid Tariff Changes and Strategic Shifts

Morgan Stanley analyst Girish Achhipalia maintained a Hold rating on ReNew Energy Global (RNW – Research Report) yesterday and set a price target of $7.12.

Girish Achhipalia’s rating is based on a combination of factors impacting ReNew Energy Global’s current and future performance. One of the key considerations is the potential increase in tariffs due to the discontinuation of transmission charge waivers, which could affect the company’s profitability. Additionally, while the company has secured connectivity approvals for its entire portfolio, the lower-than-expected wind power load factors have prompted a shift towards a more solar-heavy portfolio.
Furthermore, ReNew Energy Global’s solar manufacturing capabilities are expanding, with operational module and cell capacities that could lead to increased external sales. However, the valuation for a stake sale to British International Investment is contingent on future EBITDA projections, which introduces some uncertainty. Despite having significant revenue visibility, the internal assessment of a potential take-private transaction adds another layer of complexity to the company’s outlook, justifying the Hold rating.