Why Inox Wind Share Price is Rising

The rise of wind energy theme in India in recent months deserves a mention.

The installed wind power capacity stands at 47 gigawatts (GW) as of June 2024. 80 GW of wind capacity is expected to be added over 8 years, making it a decadal growth trend.

A look at Suzlon Energy's performance, which has a cumulative 32% market share in this space, can give good indication on the prospects of the sector.

Once beleaguered, Suzlon has posted a net sales growth of 48% and net profit growth of 96% year on year (YoY) in the September 2024 quarter.

Another notable player in this industry is Inox Wind.

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.

The company is currently sitting on its highest ever orderbook.

In the past 5 days, Inox Wind share price has rallied over 12%.

Let's look at the reasons behind the current up move.

#1 Subsidiary Divestment

The recent up move in Inox Wind shares comes after the company informed that it has sold its entire equity stake in a wholly owned unit Aliento Wind Energy to Nani Virani Wind Energy.

The divestment is part of the group's strategy to streamline operations and focus on core business areas in the renewable energy sector.

The move allows Inox Wind to unlock value from non-core assets and reinvest in areas aligned with its long-term growth objectives.

#2 Repeat Orders

The other reason behind the current up move could be repeat orders secured by the company.

Two weeks ago, the company received a repeat turnkey order for 87 MW from Continuum Green Energy for its 3 MW class WTGs.

Inox Wind will also provide post commissioning multi-year operations & maintenance (O&M) services.

With this order, the company's total cumulative orders from Continuum stand at more than 700 MW.

This also took Inox Wind's orderbook to around 3.4 GW, the highest ever in its history.

#3 Upbeat Earnings

Last month, Inox Wind turned profitable and registered a profit in the most recent September 2024 quarter as compared to a loss in the year ago period.

The company posted a net profit of Rs 902 million for the said quarter on the back of higher income.

In a separate statement, the company had said its order book touched 3.3 gigawatt (GW), which includes 1.2 GW of fresh orders in the first half of FY25.

During the quarter, Inox Wind also signed a consortium agreement with banks for Rs 22 bn worth facilities, largely non-fund based, sanctioned on the financial strength of its balance sheet.

What Next?

Post earnings, the company's CEO said that Inox Wind is focusing on multiple products to improve its fundamentals in the coming years.

This includes the launch of larger blades, commercialisation of new products and backward integration.

Given the multiple ongoing negotiations with new and existing customers, the company said that it's confident of adding more orders in the quarters to end FY25 on a strong note.

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.

Financial Snapshot of Inox Wind (2020-2024)

Rs m, consolidated	FY20	FY21	FY22	FY23	FY24
Net Sales	7,602	7,107	6,246	7,330	17,432
Growth (%)	-47%	-7%	-12%	17%	138%
Operating Profit	-1,060	-892	-2,817	-2,432	3,247
OPM (%)	-14%	-13%	-45%	-33%	19%
Net Profit	-2,797	-3,056	-4,802	-7,086	-404
Net Margin (%)	-37%	-43%	-77%	-97%	-2%
ROE (%)	-15.3	-20.5	-43.4	-53.1	-3.0
ROCE (%)	-6.1	-7.2	-11.5	-8.9	4.4
Dividend (Rs)	0.0	0.0	0.0	0.0	0.0
Debt to Equity (x)	0.7	1.2	0.9	1.4	1.9

Source: Equitymaster

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

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.

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.

In conclusion, 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.

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.

How Inox Wind Share Price has Performed Recently

In the past five days, Inox Wind share price is up 12%.

In 2024 so far, the stock price is up 58%.

Inox Wind has a 52-week high of Rs 262 touched on 23 September 2024 and a 52-week low of Rs 73 touched on 4 December 2023.

In the past 1 year, shares of the company have rallied 150%.

Here's a table comparing Inox Wind with its peers.

Inox Wind Peer Comparison

Company	Inox Wind	HPL Electric	Suzlon Energy	TRIL	V-Guard Indus.
ROE (%)	-2.9	5.4	26.5	9.9	15.4
ROCE (%)	4.4	11.1	23.4	15.1	18.4
Latest EPS (Rs)	1.5	9.9	0.7	8.1	6.8
TTM PE (x)	136.2	54.2	94.1	123.5	61.2
TTM Price to book (x)	9.8	4.1	20.1	13.5	9.4
Dividend yield (%)	0.0	0.2	0.0	0.0	0.3
Industry PE	87.8
Industry PB	15.9

Source: Equitymaster

About Inox Wind

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

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.

For more information, check out Inox Wind's financial factsheet.

Happy Investing.

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