Inox Wind Stock Research Report

Supercharging an RE branded house….

We attended the INOXGFL Group Vision Day held on 2 Dec’24; takeaways being the INOXGFL group’s foray into: 1) renewable power generation for the commercial and industrial (C&I) sector with an envisaged capacity of 3GW by FY27/FY28; 2) production of solar cells and modules as well as EPC and O&M services; and 3) systematically targeting third party C&I players looking for hybrid RE solutions through these new ventures. The group is spreading its wings beyond WTG (and related services) to become a forward-integrated comprehensive renewables player. The vision of the group is to be present across the value chain in India’s pursuit for energy transition. The group aims to leverage the solid foundation of Inox Wind to piece together the rest of the puzzle. Maintain BUY at a TP of INR 245.

Kicking off RE solutions for C&I players

The group is setting a C&I renewable power generation company – ‘IGREL Renewables’ – at the promotor-level. The group aims to build a hybrid portfolio of 3GW in the next 2–3 years. PPAs and LoIs with GFL (the group’s chemical arm) and other third party off-takers are in place. Operational capacity of IGREL is 157MW of wind with another 36MW near commissioning. Moreover, orders have been placed for another 750MW of wind and 250MW of solar.

Venturing into solar manufacturing

The group is also venturing into the production of solar cells and modules along with end-to-end EPC and O&M solutions through ‘Inox Solar’. The group aims for a capacity of 4.8GW of modules and 2.4GW of TOPCon cells by FY27.

Synergising their part in India’s RE story

IGREL to benefit from Inox Wind (WTG), Inox Resco (Wind EPC) and Inox Green (O&M) through backward integration and GFL as initial off-taker. Similarly, Inox Solar to benefit from these companies via forward integration.

FY25 guidance reiterated; maintain BUY with a TP of INR 245

The company also reiterated its guidance of execution of 800MW (2x FY24) in FY25 and stated its goals for FY25 (1.2GW; +50% YoY) and FY26 (2GW; +67% YoY) as well. We believe the synergies from the new businesses are to benefit Inox Wind as well. We maintain BUY with a TP of INR 245 per share.

Outlook and valuation

Inox Wind (INOX) is benefitting from the improvement in industry prospects. Due to industry slowdown and low execution, INOX saw a substantial spike in debt from FY17-FY23. The company has been deleveraging and its net debt reduced to ~INR 6.5bn by end-FY24. In addition, the industry is looking up and a revival led by a slew of policy actions is in the offing along with strong bidding activity for RE projects with wind component of 10–12GW in FY24.

INOX has witnessed a sharp improvement in order inflow (at 2.3GW in FY24). This inflow was largely driven by 1,500MW of order from CESC, which may be executed over the next 3–4 years. This has improved execution growth visibility over the next 3–4 years and should substantially improve execution growth over the next 1–2 years. We maintain BUY on the stock with an SoTP-based target price of INR 245/share, valuing the wind business at 35x FY26E EPS.

Key risks: 1) Slowdown in order inflow; and 2) slowdown in RE project bidding.