Q3FY20 result highlights
Key positives: 200MW order from Continuum Energy, a Morgan Stanley based PE platform
Key negatives: Continued disappointment in execution for industry led by grid issues; muted participation in new wind auction.
Impact on financials: Downgrade our earnings estimates for FY20E/FY21E to (Rs4.0)/Rs3.1 on account for delayed execution; introduce our FY22E estimates.
Valuations & view
INOX Wind (INOX) had a disappointing execution in last 30 months as industry wind power installations fell 40% yoy to 1.8GW in FY18 and 1.5GW in FY19. We believe the transition from Feed in Tariff (FiT) to auction regime continues to impact volumes in FY20E and will turn the tide in the wind power industry favour from FY21E onwards. However, continued delay in execution on the order book of 1.5GW and consequently, the risk of cancellation of existing order book is rising for the company. We maintain our Underperformer rating on the stock with a revised target price of Rs31/share (10x FY21E P/E) on delay in execution of existing order book and uncertainty on the future.​
Inox Wind Ltd. Inox Wind Limited is an integrated wind energy solutions provider. The Company is engaged in the manufacture of Wind Turbine Generators (WTGs). The Company provides Engineering, Procurement and Commissioning (EPC); Operations and Maintenance (O and M), and Common Infrastructure Facilities services for WTGs. The Company offers various products, which include Inox DF 93.3, Inox DF 100 and Inox DF 113. The Company offers various services, which include infrastructure support and capabilities, operations and maintenance, and customer relationship management (CRM). The Company offers wind energy solutions and provides servicing to independent power producer (IPPs), Utilities, Public Sector Undertaking (PSUs), Corporates and Retail Investors. The Company also manufactures Blades and Tubular Towers, and Hubs and Nacelles. The Company has over three manufacturing plants located in Gujarat, Himachal Pradesh and Madhya Pradesh.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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