Wind Sector - A Policy Flip But Just A Minor Blip: ICICI Securities

ICICI Securities Report

The wind sector saw a sharp re-rating with a new set of initiatives announced in early-FY23, mainly:

1. the removal of reverse auction;

2. wind-specific bids with a cap for 2GW per state;

3. wind-specific renewable purchase obligations; and

4. a new target of 10 giga watt wind-only auction.

Basis media reports, the government is mulling over reverting to the earlier regime – reverse auction and pan-India bids. However, in the last nine months, the government conducted only one bid with removal of reverse auction and state-specific bid in February 2024.

Meanwhile, companies under our coverage have leaped five times and two times since FY23-end with:

1. higher captive (or corporate) wind addition;

2. public sector tenders;

3. lower competitive intensity; and

4. a shift to grow wind in the mix (round the clock and hybrid tenders are norm).

We believe, wind capacity addition will likely expand to 6-7 GW. Thus, we upgrade Inox Wind Ltd. and Suzlon Energy Ltd. to Buy.

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