Inox Wind, Suzlon Energy Valuations Likely To Moderate In FY25

Inox Wind Ltd. and Suzlon Energy Ltd.—two publicly listed wind equipment manufacturers—have seen significant gains this year, with their stock prices rising by 72% and 115%, respectively, driven by their improving financial performance and growing order books. Both companies, historically operating at a loss, have recently reported net profits and have reduced debt by raising capital.

Currently, Inox Wind and Suzlon Energy are valued between 108 and 122 times their enterprise value-to-Ebitda ratio, according to Bloomberg. However, a study by NDTV Profit Research based on Bloomberg data, companies' financial statements and research reports indicated that these valuations are likely to moderate in the fiscal 2024-25 as robust order books provide revenue stability.

Inox Wind's shares have jumped by 32% over the past month, with the stock now trading at four times its value from a year ago. The company is currently valued at an enterprise-value-to-Ebitda ratio of 122.09, as per Bloomberg. This ratio could decrease to 44.04 in fiscal 2025 due to a significant increase in the order book, as per NDTV Profit calculations.

Inox Wind's order book currently stands at 2,917 megawatts. The company had said that each megawatt generates revenue of Rs 6 crore. With an execution target of 800 megawatts, it expects to achieve a topline of Rs 4,800 crore in fiscal 2025. The company has also projected an Ebitda margin of 15–16%, translating to an estimated Ebitda of Rs 744 crore for the same period.

Suzlon Energy's shares have risen by 52% in the last month, with the stock price now four times higher than a year ago. The company’s enterprise-value-to-Ebitda ratio currently stands at 108.17, according to Bloomberg. However, NDTV Profit analysis suggests that this ratio may moderate to 64.19 in the current financial year.

Suzlon Energy's order book is currently at 3,817 megawatts. Brokerage firms Nuvama Research and Geojit Financial Services project that Suzlon could generate revenue of Rs 10,000 crore in the ongoing financial year. The company’s management has provided guidance for an Ebitda margin in the mid-to-late teens, with a 17.5% margin potentially leading to an Ebitda of Rs 1,750 crore in fiscal 2025.