Inox Wind Ltd was expected to deliver (or Execute) ~500 MW of Wind Energy Equipment in FY24.
Although on a yearly basis, the execution was ~3.5X compared to last year, Markets are forward-looking and Expectations of 500 MW had been ‘priced in’. The Actual execution was close to ~25% lower than ‘Expectations’.
At the end of Q2FY24, when asked whether 500 MW would be on track, Management said we’re ramping up and rightly so, every Quarter has been better than the last.
By the end of the December 2023 Quarter, Managements outlook and commentary was still bullish (104 MW Execution in Q3) and references were made to ‘2W Annual execution’
Meanwhile, Suzlon was reporting scarcity of EPC guys (think : Sanghvi Cranes) and slow execution on account of the Evacuation Grid not being ready.
“It appears that its Customers (IPP - Independent Power Producers) are running into execution problems - Land Acquisitions, Grid Connectivity, and a shortage of EPC guys (such as Sanghvi Movers) - Suzlon Valuation Note
Inox Wind Management used this opportunity to sh*t on Suzlon while at the same time highlighting the merits of their Order book i.e - EPC + Equipment Delivery, alluding to the fact that while Suzlon may have EPC issues they do NOT because of their ‘plug & play’ Infrastructure and ‘EPC capabilities’
Finally, It turned out that by the end of Q4, Inox Wind has fallen short of their 500 MW target/expectation by a significant margin.
Bottomline is :
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Q4 Results were NOT ‘as per expectations of 500 MW execution’ ! However, from the vantage point of FY23 executions, 3.5X in FY24 is obviously spectacular but all that is already ‘priced in’
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IWL Management has NOW upped the FY25 Execution to 800 MW !! I remain skeptical until proven otherwise [Watch Q by Q developments closely & Track Suzlon & Sanghvi as well]
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The Biggest Trigger for boosting Earnings is the hoped for reduction in Interest Cost. Every Single Cr saved goes straight to the bottom line ! The co’ is expected to be ‘Net Debt Free’ which means Debt - Cash = 0.
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