PACRA Maintains the Entity Ratings of Reon Energy Limited

Reon Energy Limited ("Reon" or "the Company"), a wholly owned subsidiary of RMH International DMCC, has established itself as a leading provider of smart and green energy solutions in Pakistan, operating under an EPC model across the Commercial & Industrial (C&I) and Telecom segments. The Company's track record includes over 500 MW of deployed solar PV capacity and 90 MWh of battery storage across 7,500-plus telecom sites, complemented by its proprietary REFLEX™ lithium-ion battery storage platform and SPARK™ energy asset management system — the former enabling reliable power backup and energy arbitrage, and the latter driving real-time monitoring and optimization of energy performance — alongside an expanding international presence across the Middle East and Africa. This positioning sits well within Pakistan's broader pivot toward renewable energy, propelled by elevated electricity tariffs, grid constraints, and improving solar economics, while the Company's off-grid, PPA-driven model keeps it relatively shielded from the recent net-billing transition and well placed to benefit from rising storage demand. The Company's revenues are generated on a contractual basis across C&I, Telecom, and O&M lines, with C&I remaining the principal contributor, Telecom lending meaningful support, and O&M furnishing a smaller yet steady, recurring stream. Revenue for CY25 declined, reflecting normalization following the prior year's sharp growth; margins remained broadly stable, supported by a healthy project pipeline. Working capital requirements continue to be met through a mix of internal cash generation and short-term borrowings. On the capitalization front, Reon's leverage rose following the addition of a PKR 400mn Sukuk. The Sukuk, however, has since been redeemed in full in June 2026, easing the borrowing base and bringing leverage down from its Dec-25 level. This was accompanied by a further build-up in the equity base to PKR 1,540mn, driven by growing accumulated profit.
Sustained execution across Reon's C&I, Telecom, and battery storage project pipeline will remain central to the ratings, given the inherently project-based nature of its revenue model. The Company's proficiency in translating its project pipeline into timely realization of receivables, while safeguarding margins amid intensifying competition from established and new entrants in the C&I solar and storage space, assumes particular significance, alongside the evolving regulatory landscape following the shift to net-billing. As Reon continues to scale operations and explores avenues to diversify its funding mix in support of its longer-term growth plans, its capacity to preserve leverage and capitalization within prudent thresholds will remain a key determinant of the assigned ratings.

About the Entity
Reon Energy Limited, was incorporated on September 15, 2014 as a public unlisted company to carry out the business of trading and construction of renewable energy projects, mainly solar, to commercial and industrial consumers. On March 2023, the BOD of DLL approved a share purchase agreement with 'Juniper International FZ-LLC' for the sale of DLL’s entire shareholding in the Company. The sale was ratified by the members of DLL in May 2023. After the satisfaction of the corporate guarantee issued by DLL condition was satisfied, allowing the DLL to issue NOC to RMH International DMCC. Effective from October 8, 2024, the company became a wholly owned subsidiary of RMH International DMCC. The CEO-Mujtaba Haider Khan, is assisted by a team of qualified individuals with significant experience in the energy business.