Inox Wind - Propelling A Green Future: Systematix Initiates Coverage With A Buy

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Systematix Research Report

Inox Wind Ltd. is on path to recovery after almost seven tough years faced by India’s wind power industry. The last decade saw a series of government interventions, frequent policy changes, later laced with extensive lockdowns during the pandemic, which aggravated the situation further.

The last few years were marked by slump in installations and a highly leveraged balance sheet caused by a steep fall in wind capacity additions in India.

However, with favorable policy changes in FY23/FY24 and a gamut of strategic actions, Inox Wind is at the forefront of reviving its operations, which was already evident from its performance in the first quarter of this fiscal (Q1 FY24); Inox Wind turned Ebitda positive in Q1 FY24 after having reported negative Ebitda over FY18-FY23 (barring FY19).

Since inception, the company has set up state-of-the-art blade manufacturing facilities and turbine assembly units across three Indian states. Its long-standing relationships with superior wind technology providers are testaments to the quality of its products.

In the Indian wind energy solutions space, we believe Inox Wind is a market leader since it is one of the only two companies that provide end-end-end wind farm development services. Suzlon Energy Ltd. is the only clear competitor, in our view. Together, Inox Wind and Suzlon command a market share of ~50%.

With the current order book at ~1.3 GW, we expect Inox Wind to execute 450 MW/500 MW of orders in FY24/FY25 likely to result in a sharp reversal in its FY24 earnings.

We initiate 'Buy' with a target price of Rs 262/share, based on 23 times FY25E earnings per share. Execution delays, insufficient grid capacity, and logistical constraints pose key risks.

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Systematix Inox Wind Limited - Initiating Coverage.pdf

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