Inox Wind Ltd: What Lies Behind its Financials and Market Position?

Inox Wind Ltd: As people become more aware of the importance of sustainable energy sources the demand for renewable energy continues to rise, and with that, the demand for wind turbine manufacturers has increased.

Recently, some stocks in this sector have gained the attention of investors. In particular, Inox Wind Ltd. is one such stock that has caught the eye of many.

Inox Wind Ltd is a major player in India’s renewable energy sector, providing comprehensive solutions in wind energy. Since its establishment in 2009, the company has been instrumental in transforming India’s energy sources into sustainable and clean sources through its wind turbine production, installation, and maintenance services. 

The company’s stock delivered an impressive return of 314.86% within a year. Furthermore, the company will be undergoing a merger with Inox Wind Energy Limited. This merger aims to consolidate the wind energy business and streamline the group’s structure and operations.

This article digs into Inox Wind’s company overview, financial performance, order book, and the drivers driving its stock growth in the ever-changing renewable energy sector.

Inox Wind Ltd

Business Overview

Inox Wind Ltd is a leading renewable energy company in India founded in 2009. The company specializes in providing complete solutions for wind energy, including designing, manufacturing, installing, and maintaining wind turbine generators.

Inox Wind operates through two key segments, Wind Turbine Generator (WTG) and Engineering, Procurement, and Construction (EPC), making it a comprehensive player in the wind power industry.

The first segment is concerned with the manufacturing of advanced wind turbine generators. The second segment, on the other hand, deals with the provision of complete solutions for wind power projects. 

Before discussing more about the company, let’s dive into the financial performance of Inox Wind. 

Financial Walkthrough of Inox Wind

The company reported a net revenue of Rs 736.9 crores in FY23, an increase of 17.98% as compared to the revenue being Rs  624.62 crores in the previous year. 

However, the company reported a net loss of  Rs 670.70 crore.

The main possible reason for this could be due to the huge costs incurred on raw materials. The cost of raw materials accounted for this fiscal year was 511.56 crore, contributing significantly to the company’s expenses.  

However, the company recorded a Revenue of Rs. 393 cr in Q2 FY24 vs Rs 112 cr in Q2 FY23, registering a growth of 250% YoY, despite Q2 being a subdued quarter for the wind industry due to the impact of monsoons. 

Although the company’s financials paint a different picture, investors have shown interest in the company’s stock, resulting in a significant increase in its returns over the years.

Stock Performance of Inox Wind Ltd over the years

From Rs 69.10 in 2019 to now at Rs 447.95, the stock has given a return of 548.26% in the last 5 years. 

Although the company has reported a net loss from the last six years, the company’s order book and future outlook still depict a positive picture.
What could be the reason for such a drastic uptrend in the company’s stock? Let’s first explore some of the reasons for the uptrend of the company’s stock.

Possible Reasons for the uptrend of Inox Wind

In May 2023, the company completed the commissioning of its 50 MW Nani Virani Solar Power Venture (SPV) and is now in talks with potential buyers to sell the asset. This strategic move aims to reduce debt and improve the financial position within the wind business

Inox Wind Ltd, received Rs 800 crore from its promoter Inox Wind Energy Ltd.
On October 31, 2023, Inox Wind Ltd’s parent company, Inox Wind Energy Limited, successfully raised approximately Rs 800 crore by selling Inox Wind Ltd’s shares on the stock exchanges. The process involved block deals and attracted participation from noteworthy long-term foreign and domestic investors. 

The money raised was to pay off Inox Wind Ltd’s current debts. This strategic move was a major step forward in Inox Wind Ltd’s efforts to achieve financial stability and profitability.

In November 2023, the credit rating agency CRISIL upgraded Inox Wind Ltd’s ratings with a stable outlook. In a regulatory filing, the company stated that CRISIL upgraded its long-term rating from BBB+ to A- and short-term ratings from A2 to A2+, reflecting a stable outlook on its banking facilities. The upgrade is attributed to the promoters’ efforts in fiscal 2024 to reduce debt, resulting in a significant improvement in the financial and business risk profile. 

Additionally, CRISIL highlighted Inox Wind’s enhanced operating performance in the first half of fiscal 2024, successful commercialization of the 3.3 MW turbine, strong market position, focus on cost efficiencies, a healthy order book, and robust execution capabilities.

Another reason could be the successful launch of Phase-I in NTPC’s 50 MW Renewable Energy project in Dayapar, Gujarat, which marks a significant achievement. Inox Wind, as part of the project, has supplied and installed 25 Wind Turbine Generators (WTGs) with a capacity of 2.0 MW each. Inox Wind’s subsidiary, Inox Green Energy Services, will provide ongoing operation and maintenance services.

This successful project underscores Inox Wind’s vital role as a trusted supplier for NTPC. Moving forward, Inox Wind remains a key partner in completing NTPC’s renewable energy goals, supporting projects like NTPC-II (200 MW) and NTPC-III (150 MW).

Order Book of the company

Particulars	Order capacity (MW)
SECI	350
NTPC	500
LOI for 3.3 MW WTG from Adani	501.6
Retail and others	143.1
Total as of FY23-end	1,494.7
Less: supplied	168
Net order book as of FY23 – end	1,326.7

Source: Annual report

As of FY2023, the company’s net order book stood at 1327 MW, aided by the addition of a 150MW follow-up order from NTPC and a 100MW order from ABEnergia Renewables in Q1FY24. The execution of these orders will result in substantial revenue growth for the company over the next few quarters, reinforcing the company’s position in the wind OEM market. 

What Does The Future Hold For The Company?

Over the last four months, Inox Wind raised Rs 1,300 crore through the promoter entities’ equity stake sale in the company, the proceeds to be used to pay off interest-bearing debt. The drop in interest costs will help boost its earnings over the forecasted period.

India has set a goal to achieve its renewable energy targets and has made recent policy changes to support this objective. The Ministry of New and Renewable Energy (MNRE) has announced its plans to auction 250 GW of capacity (50 GW annually) from FY23-24 to FY27-28 to accelerate capacity addition.

Inox Wind has introduced a new 3.3 MW Wind Turbine Generator (WTG) platform and plans to start manufacturing and supplying it in the fiscal year 2024. 

The company is actively bidding and discussing partnerships with various Public Sector Undertakings (PSUs) and Independent Power Producers (IPPs) for the delivery of these WTGs. 

Conclusion: A promising future?

In conclusion, Inox Wind Ltd stands out as a significant player in India’s renewable energy landscape, navigating challenges and showcasing growth. Key highlights include successful projects, strategic equity stake sales, and innovative moves like the launch of the 3.3 MW WTG platform.

While financial indicators like reported losses and increased debt-to-equity ratios pose challenges, positive factors such as CRISIL’s upgraded ratings, successful fundraising, and a robust order book indicate a resilient outlook.

Looking ahead, Inox Wind appears poised for success amid growing demand for renewable energy and supportive government policies. 

As we look ahead, the key question remains: Will Inox Wind continue to ride the winds of success in the renewable energy sector? Only time will tell. Meanwhile, we invite you to share your thoughts on the article. Did you find the information insightful? Let us know your feedback in the comment section below!

Written by Akshita Maloo

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