What’s behind the financials and market position?

Innox Wind Co., Ltd.: As awareness of the importance of sustainable energy sources increases, demand for new and renewable energy continues to increase, and demand for wind turbine manufacturers is also increasing accordingly.

Some stocks in this sector have recently caught the attention of investors. In particular, Inox Wind Ltd. is one of the stocks that has caught the attention of many people.

Inox Wind Ltd is a major player in the renewable energy sector in India, providing comprehensive solutions for wind energy. Since its inception in 2009, the company has played a key role in transforming India’s energy sources to sustainable and clean energy sources through wind turbine production, installation and maintenance services.

The company’s stock achieved an impressive return of 314.86% in one year. The company also plans to merge with Inox Wind Energy Limited. The objective of the merger is to consolidate the wind energy business and streamline the group’s structure and operations.

This article takes a closer look at Inox Wind’s company overview, financial performance, order book, and the drivers driving the stock’s growth in the ever-changing renewable energy sector.

Innox Wind Co., 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 design, manufacturing, installation and maintenance of wind turbine generators.

Inox Wind is an integrated player in the wind power industry, operating through two main segments: Wind Turbine Generators (WTG) and Engineering, Procurement and Construction (EPC).

The first sector is concerned with the manufacture of advanced wind turbine generators. While the second part deals with providing complete solutions for wind power projects.

Before discussing the company in more detail, let’s take a look at Inox Wind’s financial performance.

Inox Wind Financial Review

The company reported net revenue of Rs 736.9 crores in FY23, an increase of 17.98% over the previous year’s revenue of Rs 624.62 crores.

However, the company recorded a net loss of 67.07 billion won.

The main reason for this could be the huge cost incurred on raw materials. Raw material costs incurred this fiscal year were $511.56 million, contributing significantly to the company’s costs.

However, the company recorded sales of 50 billion won. Despite the second quarter being a sluggish quarter for the wind power industry due to the impact of the monsoon, it recorded 250% growth compared to the previous year, from KRW 39.3 billion in the second quarter of 2024 to KRW 11.2 billion in the second quarter of 2023.

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

Inox Wind Ltd stock performance over the years

From Rs 69.10 in 2019 to Rs 447.95 today, the stock has returned 548.26% in the last five years.

Although the company has reported net losses over the past six years, the company’s order volume and future outlook remain positive.
Why is the company’s stock price rising so rapidly? First, let’s look at some of the reasons for the company’s rising stock price.

Possible reasons for Inox Wind’s upward trend

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

Inox Wind Ltd received Rs 800 crore from its promoter Inox Wind Energy Ltd.
On October 31, 2023, Inox Wind Energy Limited, the parent company of Inox Wind Ltd, successfully raised approximately Rs 800 crore by selling shares of Inox Wind Ltd on the stock exchange. This process included block deals and attracted the participation of notable domestic and foreign long-term investors.

The funds raised were used to repay Inox Wind Ltd’s current debt. This strategic move was a significant step forward in Inox Wind Ltd’s efforts to achieve financial stability and profitability.

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

CRISIL also highlighted Inox Wind’s improved operational performance in the first half of fiscal 2024, successful commercialization of its 3.3 MW turbine, strong market position, focus on cost efficiency, healthy order book and strong execution capabilities.

Another reason could be the successful commencement of the first phase of NTPC’s 50 MW renewable energy project in Dayapar, Gujarat. This is an important achievement. As part of the project, Inox Wind supplied and installed 25 wind turbine generators (WTGs) with a capacity of 2.0 MW each. Inox Green Energy Services, a subsidiary of Inox Wind, will provide ongoing operations and maintenance services.

This successful project highlights Inox Wind’s important role as a trusted supplier to NTPC. Going forward, Inox Wind remains a key partner in achieving NTPC’s renewable energy goals, supporting projects such as NTPC-II (200 MW) and NTPC-III (150 MW).

company order form

Source: Annual report

As of FY2023, the company’s net orders stood at 1,327 MW, thanks to the addition of 150 MW follow-on order from NTPC and 100 MW order from ABEnergia Renewables in Q1 FY24. Executing these orders will drive significant revenue growth for the company over the next few quarters and strengthen the company’s position in the wind power OEM market.

What does the future hold for the company?

In the last four months, Inox Wind has raised Rs 1,300 crore through sale of promoters’ stake in the company, with the proceeds being used to repay interest debt. Reduction in interest expenses will help boost returns over the projected period.

India has set targets to meet its renewable energy targets and has made recent policy changes to support these targets. The Ministry of New and Renewable Energy (MNRE) has announced plans to auction 250 GW (50 GW per annum) of capacity from FY23-24 to FY27-28 to accelerate capacity additions.

Inox Wind has launched a new 3.3 MW wind turbine generator (WTG) platform and plans to manufacture and supply it in fiscal 2024.

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

Conclusion: A promising future?

In conclusion, Inox Wind Ltd plays a significant role in India’s renewable energy sector, navigating challenges and showing growth. Key highlights include successful projects, strategic stake sales and innovative moves such as the launch of the 3.3 MW WTG platform.

While financial indicators such as reported losses and increased debt-to-equity ratio pose challenges, positive factors such as CRISIL’s upgraded rating, successful financing and solid order book indicate a resilient outlook.

Going forward, Inox Wind is expected to succeed amidst increasing demand for renewable energy and government support policies.

As we look to the future, important questions still remain. Will Inox Wind continue to ride the wave of success in the renewable energy sector? Only time will tell. In the meantime, please share your thoughts on the article. Was the information insightful? Let us know your feedback in the comments section below!

Written by Akshita Malu

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