New repeat order for 3MW WTGs (279MW); order intake to rise in 4QFY23
Inox Wind (INXW) bagged a repeat order for 279MW for its 3MW Wind Turbine Generators (WTGs) from a large commercial and industrial (C&I) player earlier this week. The order includes equipment supplies along with limited scope EPC for 180MW and an additional 99MW 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, INXW has a longstanding relationship with the customer as it has already executed ~325MW of orders for them to date. INXW’s net order book at the end of 2QFY24 was 1,276MW and this new order takes the gross order book to 1,555MW, excluding 3QFY24 execution and other smaller retail orders.
The company is confident that execution is expected to pick up pace towards 2HFY24 as supplies of 3MW 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 4QFY23, likely to boost the company’s order book; INXW currently has ~1.5GW bidding pipeline. The inclusion of the 3MW variant in the product portfolio would also boost profitability, the impact of which should be majorly reflected in 2HFY24/FY25. Over the last four months, INXW raised ~Rs 13bn 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 2MW/3MW WTGs. We expect INXW to execute 450MW/600MW/800MW orders in FY24/FY25/FY26. We value INXW at 30x FY26E to arrive at a revised target price of Rs 575/share.
Revenue to see a sharp surge in FY24E
FY25/FY26 to see major earning boost
Revival in order execution to drive profitability
Healthy cash flow generation in the absence of major capex
RM costs to see an uptick as order intake and executions pick pace
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