Where is Inox Wind Share Price Headed in 2025?

Rising environmental consciousness combined with earnest policy initiatives undertaken by the Indian government, has made the green energy sector an attractive investment avenue.

We can say that India's future will be green thanks to this megatrend. Leading the way are India's top renewable energy companies.

India aims to become self-sufficient in the renewable energy segment. The power sector, which earlier faced a lot of headwinds and was considered boring by investors, now enjoys tailwinds.

Developments are happening at a rapid pace and we are seeing the effects of the transition to renewables. These stocks hold the potential to be big wealth creators.

In India's green energy ecosystem, Inox Wind holds an important position.

India's wind energy sector is on the cusp of a historic surge. India's existing robust wind turbine manufacturing base with a 10-12GW annual capacity, positions the country for a dominant role in the global wind energy landscape.

In this editorial, we will discuss the outlook for the company.

An Overview of the Company

Inox Wind is one of the largest manufacturers of wind turbine generators (WTGs) in India. It's part of the Inox group.

The company takes a comprehensive approach to wind energy. It provides blades, tubular towers, hubs, and nacelles. Its four manufacturing plants have a combined production capacity of 1,900 MW of nacelles and hubs, 1,600 MW of blades, and 600 MW of towers.

It also offers engineering, procurement, and construction (EPC) services for wind farms, even generating and selling wind power itself. The company prides itself on providing complete solutions, from site acquisition to development, operation, and maintenance of wind farms.

Some of its notable clients include Tata Power, Adani, NTPC, NHPC, and Oil India.

Inox Wind's subsidiary, Inox Green Energy Services, is also the only listed wind O&M services company in India, having a strong portfolio of more than 3.2 GW with a strong growth path ahead.

However, one must note that the Inox group has had corporate governance issues in the past.

Back in 2018, we wrote about how Inox Wind's auditors resigned just because they were busy with other assignments.

A Look at the Financials

In FY24 the company's revenue rose 137.8% on a year-on-year (YoY) basis.

At the operating level, the company barely broke even after making repeated losses with an operating margin of 0,1%.

The bottomline was still in the red. However, the net loss narrowed considerably by 92.7% over FY23.

The company's operating cash flow was negative but the operating cash loss reduced sharply by 62.3% YoY.

The return on equity (ROE) was negative but improved to -3% in FY24, from -40.7% in FY23. The return on capital Employed (ROCE) improved to 10.7% in FY24, from -13.1% in FY23.

The company's debt to equity ratio for FY24 stood at 0.1 compared to 0.5 in FY23.

The past financials are not impressive by any standard. However, the company has been reporting decent quarterly numbers recently.

In the April-June quarter, Inox Wind delivered a strong performance. Revenue grew 83% compared to the same quarter last year, reaching Rs 6.4 billion (bn).

The company also reported a net profit of Rs 480 million (m) for the quarter, a major turnaround from the net loss of Rs 635 m in the corresponding quarter of the previous year.

In the July-September quarter, the company delivered yet another good performance. Revenue came in at Rs 7.3 bn up 97.36% compared to the same quarter last year.

The company also reported a net profit of Rs 256.7 m for the quarter up 161.24% from Rs 102.7 m in the corresponding quarter of the previous year.

Conclusion

With the amalgamation of Inox Wind Energy into Inox Wind, the revenue of the combined entity is expected to scale up quite well. The recent quarterly numbers reflect the same.

It's also commercialising some new products, which can aid in revenue growth.

The current order book is strong. Inox Wind has secured quite a few orders recently from several notable clients and has improved its order execution.

Strong support from the parent group, an established track record in the wind turbine manufacturing business, and improved performance will aid the company's growth in the medium term.

Even though the company's financial performance has remained shaky in the past few years, the company does seem to be making good progress as the fundamentals have started to improve and sectoral tailwinds are adding more optimism.

The company is all set to leverage its position as a fully integrated wind energy player. It plans to continue providing end-to-end solutions, from project conception to commissioning, along with ongoing operations and maintenance (O&M) services.

The growing demand from C&I players for renewable energy, driven by its environmental benefits and favourable pricing compared to grid-based power, will further boost the company's growth.

Inox Wind also anticipates benefits from the draft proposal by NITI Aayog for domestic content requirements in wind turbines. This could lead to increased consolidation among suppliers in the domestic market.

The group has also guided for strong execution this year and the one after that. It plans to execute 800 MW in FY25 followed by 1,200 in FY26.

The market is looking at Inox Wind as a situation similar to Suzlon, which was a beleaguered company not long ago, before it became a stellar turnaround story.

The stock price is reflecting the same. But it remains to be seen if the company can deliver on its promise. The ongoing turnaround will be the main focus for investors in 2025 and beyond.

Finally, investors should keep an eye on the corporate governance of not only the company but also at the group level.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...