Inox Wind - New Repeat Order For 3MW WTGs (279MW); Order Intake To Rise In Q4 FY23: Systematix

Systematix Report

Inox Wind Ltd. bagged a repeat order for 279 mega watt for its 3 mega watt Wind Turbine Generators from a large commercial and industrial player earlier this week. The order includes equipment supplies along with limited scope EPC for 180 mega watt and an additional 99 mega watt turnkey solution. The same will be added to Inox Green Energy Services’s (INOXGREE; NOT RATED) O&M portfolio for a multi-year contract.

The new order replenishes the company’s order book and adds execution visibility as it is expected to be completed over the next 18 months, i.e., by June 2025. Additionally, Inox Wind has a longstanding relationship with the customer as it has already executed ~325 mega watt of orders for them to date. Inox Wind’s net order book at the end of Q2 FY24 was 1,276 mega watt and this new order takes the gross order book to 1,555 mega watt, excluding Q3 FY24 execution and other smaller retail orders. The company is confident that execution is expected to pick up pace towards H2 FY24 as supplies of 3 mega watt WTGs have begun this quarter. Furthermore, as the fiscal year ends, a lot of PSU tenders awaiting results are expected to come on-stream in Q4 FY23, likely to boost the company’s order book; Inox Wind currently has ~1.5 giga watt bidding pipeline.

The inclusion of the 3 mega watt variant in the product portfolio would also boost profitability, the impact of which should be majorly reflected in H2 FY24/FY25. Over the last four months, Inox Wind raised ~Rs 13 billion through the promoter entities’ equity stake sale in the company, the proceeds of which will majorly be used to pay off interest-bearing debt. The drop in interest costs will help boost its earnings over the forecasted period. We introduce FY26 estimates and revise our FY24E/FY25E Ebitda by - 9%/+15% based on execution assumptions and the mix of 2 mega watt/3 mega watt wind turbine generators.

We expect Inox Wind to execute 450 mega watt/600 mega watt/800 mega watt orders in FY24/FY25/FY26. We value Inox Wind at 30 times FY26E to arrive at a revised target price of Rs 575/share.

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