Inox Green Energy Services LtdQ2 FY25Power

Inox Green Energy Services Ltd

Q2 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→FY 2026 guidance for execution is 1,200 MW, with a target to increase to 2,000 MW in FY 2027.
→The company is on track for 1,200 MW for the current year despite some quarterly fluctuations.
→Manufacturing capacity exceeds 400 MW, with expansions such as a new blade plant in South India and nacelle and transformer factories commissioned.
→The firm order book stands at 3.1 to 3.2 GW, covering approximately two years of execution, with advances in place.
→Order book growth is expected to continue, supported by bids in PSU and private sectors, including large tenders expected in the next 1-2 quarters.
→The industry outlook anticipates wind capacity additions of 5 to 6 GW this year, potentially rising to 8-10 GW in future years.
→Revenue growth is expected from both execution volume increases and higher profitability, with cash PAT and PAT up significantly year-on-year.
→INOX Green is also expected to scale significantly from 5 GW to 17 GW of assets under management.

Margin guidance

Category 3

→The company maintains a firm annual guidance of 1,200 MW execution in FY26 and 2,000 MW for FY27, indicating strong volume growth.
→Profitability is a key focus, with management highlighting consistent upgrades to guidance and execution ahead of targets over past six quarters.
→Cash PAT is up 168%, PAT up 134%, and PBT up 167% year-on-year, demonstrating strong profit growth alongside volume.
→Other income from INOX Green is expected to continue growing quarter-on-quarter, supported by value addition services and investments in O&M assets controlling 2 GW.
→Management emphasizes long-term growth over short-term equity dilution concerns, aiming to protect minority shareholder returns.
→Order book stands firm at 3.1-3.2 GW with diverse marquee customers, supporting visibility and sustained future earnings growth.
→Expected sector tailwinds include GST rate cuts from 12% to 5%, reducing capital costs and potentially increasing returns or lowering energy costs, encouraging investment.

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Fundraise plans

→There is a mention of a rights issue raising INR 560 crore.
→Proceeds from the rights issue will be partly used to pare down the remaining net debt, which will strengthen the net cash position.
→The balance amount from the rights issue is planned to be invested by the promoters upfront.
→Additional funds may be used for business expansion, including backward integration and future acquisitions.
→No explicit mention of new debt fundraising; focus is on reducing existing debt and using equity (rights issue) proceeds for expansion.
→Management does not provide detailed guidance on further specific fundraising plans through debt or equity beyond this rights issue.

Order book

Yes

→Current firm order book stands at approximately 3.1 to 3.2 gigawatts, covering roughly two years of execution.
→The company has diversified customers, including 10-12 large clients such as NTPC, CESC, Amplus, Hero, Continuum, and First Energy.
→New customer acquisitions are ongoing, with a few new names expected to be announced in the coming months.
→The strategy focuses on both horizontal growth (expanding existing relationships) and vertical growth (bringing in new customers).
→Multi-gigawatt Letters of Intent (LOIs) and Memorandums of Understanding (MOUs) exist but are not counted until they become firm contracts with advances.
→Recently bid on multiple PSU tenders to increase volume from that segment.
→Order inflow pipeline remains strong, with expectations of 5-6 gigawatt capacity additions in the wind sector for FY '26.

Capex plans

Yes

- Operationalized a new nacelle plant in Ahmedabad to increase manufacturing capacity. - Commissioned a new Trafo factory in Jaipur to enhance production capabilities. - Building a new blade manufacturing plant in South India to cater to regional demand and reduce logistics costs. - Planning to open an additional new factory in South India to further expand capacity. - Investing in special situation funds controlling 2 GW of O&M assets, generating significant other income and strategic value. - Engaged in bidding for multiple PSU projects to gain more volume in the PSU market. - Focusing on both equipment supply and turnkey EPC solutions, continuing to build supply chain and working capital worth thousands of crores. - Continuing horizontal and vertical expansion by adding new clients and broadening order book. These investments and expansions support the company's goal to achieve 1,200 MW execution in the current year and 2,000 MW next year with strong profitability and market presence.

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