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Inox Wind
Favorable winds
Satyam Agarwal (AgarwalS@MotilalOswal.com); +91 22 3982 5410
Amit Shah (Amit.Shah@MotilalOswal.com); +91 22 3029 5126
Inox Wind
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset
and S&P Capital.
1 July 2015
Inox Goods
Wind
Initiating Coverage | Sector: Capital
Inox Wind
S&P CNX
8,453
BSE Sensex
28,021
CMP: INR425
Buy
Favorable winds
Expect 65% earnings CAGR over FY15-17; re-rating imminent
Stock Info
Bloomberg
INXW IN
221.9
84.9/1.3
495/385
-3/-/-
Wind energy presents a strong growth opportunity with the markets likely to
expand from 2.3GW in FY15 per annum to 4-5GW per annum in the medium term,
aided by restoration of accelerated depreciation (AD) and generation-based
incentives (GBI).
We believe INXW is suitably placed and expect it to clock sales of 825MW in FY16
and become the number-1 player, with ~25% market share. Over FY15-17, we
expect INXW to deliver 28% volume growth.
Earnings should grow at a CAGR of 65% over FY15-17, driven by 44% revenue
CAGR and improvement in realization. We believe a re-rating is imminent. Buy.
EBITDA
4.6
8.7
11.4
Adj PAT
3.0
6.1
8.0
13.4
27.3
36.2
102.0 104.1
32.7
Wind energy sector at inflexion point: The wind energy sector in India had
witnessed a sharp fall in capacity addition from 3.2GW in FY12 to 1.2GW in
FY13, led by withdrawal of accelerated depreciation (AD) and generation-based
incentives (GBI) in March 2012. However, renewable energy is now a key focus
area for the government, which has ambitious plans to set up an installed
capacity base of 60GW in the wind energy segment by 2022 (vs 23GW as at end
FY15). We believe there are multiple tailwinds that will help drive the size of the
Indian wind energy market from 2.3GW in FY15 to 4-5GW in medium term.
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
64.8
91.5 127.6
RoE (%)
20.6
29.8
28.3
RoCE (%)
19.2
32.8
32.1
31.8
15.6
11.7
6.6
4.6
3.3
21.1
11.4
8.2
Valuations
P/E (x)
P/BV (x)
EV/EBITDA (x)
Mar-15
85.6
DII
3.7
FII
Others
3.5
7.2
INXW prepped for rising wind capacity installation: In FY16, we expect INXW
to clock sales of 825MW and become the number-1 player, with ~25% market
share. INXW is well positioned to benefit from the wind market revival,
supported by (1) strong relationships with IPPs, (2) technology partnerships with
global leaders, (3) ready pipeline of project sites, (4) strategically located
manufacturing units, and (5) established execution track record.
Expect 65% earnings CAGR over FY15-17: We expect INXW to report 44%
revenue CAGR over FY15-17, largely supported by volume growth of 28% and
realization improvement of 8%. Operating profit is likely to witness 58% CAGR
over FY15-17, led by margin expansion of 330bp during the period. Margin
expansion to be supported by various initiatives including New product launch,
Improved logistics and supply chain benefits, Lower Royalty expense, Improved
Realizations, Recent duty benefits, etc. Driven by strong earnings growth and
debt repayment, we expect RoE to improve to 28% and RoCE to 32% in FY17.
Initiating coverage with Buy rating: INXW is well positioned to benefit from the
huge opportunity Indias wind power segment presents. We expect its revenue
to grow at a CAGR of 44% and earnings to grow at a CAGR of 65% over FY15-17.
Backed by its strong revenue and earnings growth, and robust return ratios (RoE
of 28% and RoCE of 32% in FY17E), we initiate coverage with a Buy rating. Our
target price of INR543 (15x FY17E EPS of INR36) implies 28% upside.
1 July 2015
Inox Wind
The wind energy sector in India had witnessed a sharp fall in capacity addition from
3.2GW in FY12 to 1.2GW in FY13, led by withdrawal of accelerated depreciation (AD)
and generation-based incentives (GBI) in March 2012.
However, renewable energy is now a key focus area for the ruling BJP-led government,
which has ambitious plans to set up an installed capacity base of 60GW in the wind
energy segment and 100GW in the solar segment by 2022.
We believe there are multiple tailwinds that will help drive the size of the Indian wind
energy market from 2.3GW in FY15 to 4-5GW in medium term.
1 July 2015
Inox Wind
Exhibit 2: Wind Financing Policys evolution
The Power Ministry plans to amend the Electricity Act to introduce renewable
generation obligation (RGO), whereby conventional power plant developers would
be obligated to generate ~10% power from renewable energy sources. Successful
inclusion and implementation of the RGO norms can help the wind market to
expand from 2.3GW in FY16E to 4-5GW per annum in the medium term.
1 July 2015
Inox Wind
Exhibit 3: Preferential Feed in tariff (FIT) provided by states
State
Andhra Pradesh
Gujarat
Chattishgarh
Gujarat
Haryana
J&K
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajasthan
Tamil Nadu
Uttarakhand
Uttar Pradesh
West bengal
FiT (INR/KWh)
4.7
4.15
WPD >200w/m2:6.25
WPD 201-250w/m2:5.68
WPD 251-300w/m2:5.00
WPD 301-400/m2:4.17
WPD>400/m2:3.91
4.15
WPD 201-250w/m2:5.81
WPD 251-300w/m2:5.06
WPD 301-400/m2:4.31
WPD>400/m2:3.88
CUF20% 5.80
CUF22% 5.27
CUF25% 4.64
CUF30% 3.87
CUF32% 3.62
4.2
4.77
5.92
WPD 200-250w/m2:5.7
WPD 250-300w/m2:5.01
WPD 300-400w/m2:4.18
WPD>400w/m2:3.92
4.48
5.8
5.12 (for projects in Jaisalmer, Jodhpur and Barmer
5.38 (for others)
3.51
WPD >200w/m2:5.0
WPD 201-250w/m2:4.45
WPD 251-300w/m2:3.80
WPD 301-400/m2:3.05
WPD>400/m2:2.80
3.21; escalation of 5.71 for 10 years
Tariff cap of 5.71 for 10 years
VAT rates
Reduced VAT from 14.5% to 5%
5.50%
5%
5%
Source: Company, MOSL
Wheeling and banking: For wind power, wheeling charges (paid to the distribution
company to use transmission infrastructure to send power from offsite locations)
for different states are in the range of 2% (Madhya Pradesh and Maharashtra) to
7.5% (West Bengal). Of the total wind energy fed to the grid in a financial year, Tamil
1 July 2015
Inox Wind
Nadu allows 5% and Karnataka 2% as banked energy that can be accessed any time
during the financial year.
Green cess fund: The Maharashtra Energy Development Agency (MEDA) has created
a green cess (tax) fund. A part of this fund is used to create infrastructure for grid
connectivity with proposed wind farms. Strong evacuation infrastructure promotes
investments in wind power.
Land facilitation policy: State governments like Rajasthan, Madhya Pradesh and
Gujarat have formalized land facilitation policies to expedite wind energy projects.
Major projects get delayed mainly on account of delays in land acquisition.
Exhibit 5: Land facilitation policy
State
Rajasthan
Government land at concessional rates -- 10% of DLC rates, with maximum allocation of 5 Hect./MW.
The conversion charges (private land to industrial use) will be 10% of charges levied for industrial purposes under the
relevant rules.
Madhya Pradesh
Government revenue land use permission at INR1/-(token) premium per year (as per circular No. F-16-3-93-VII-2A,
dated 06-09-2010 and No. F-6-53-2011-VII-Nazool, dated 08-08-2011)
Gujarat
WTGs may be set up on private land, or revenue wasteland / GEDA land, if available
Maharashtra
Developer/Investor can be allotted Government barren land (permissible for industrial use), at declared windy sites, on
lease basis with 30 yrs agreement
Andhra Pradesh
Each eligible developer may be allocated available Govt. land to harness up to a maximum of 200mw of wind power
initially. After commissioning of 100 MW capacity Wind farms in 1st stage in the allocated Govt. land, the Government
may allocate land for another 100 MW capacity Wind Farms. The application from the developers for Government land
will be considered on a first-cum-first-served basis.
According to the Centre for Wind Energy Technology (C-WET), India has the
potential to install over 100,000MW of wind turbines at 80meters hub height,
implying an untapped wind power potential of 78GW. Based on C-WET estimates,
India has explored only 22% of its wind power potential. This indicates strong longterm business opportunity for domestic WTG manufacturers.
Exhibit 6: Potential v/s currently installed capacity (MW)
State / UTs
Andhra Pradesh
Gujarat
Jammu & Kashmir
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Odisha
Rajasthan
Tamil Nadu
Uttarakhand
Uttar Pradesh
Others
Total
Installable Potential
@50 m
@80 m
5,394
14,497
10,609
35,071
5,311
5,685
8,591
13,593
790
837
920
2,931
5,439
5,961
910
1,384
5,005
5,050
5,374
14,152
161
534
137
1,260
489
1,833
49,130
102,788
Installed Capacity
913
3,581
2,549
35
567
4,370
3,053
7,394
22,462
1 July 2015
Inox Wind
1 July 2015
Inox Wind
In FY16, we expect INXW to clock sales of 825MW and become the number-1 player,
with ~25% market share.
INXW is well positioned to benefit from the wind market revival, supported by (1)
strong relationships with IPPs, (2) technology partnerships with global leaders, (3)
ready pipeline of project sites, (4) strategically located manufacturing units, and (5)
established execution track record.
n
n
n
n
Power Evacuation
n
n
n
Infrastructure Development
n
n
n
n
Engineering, Procurement
and Construction
n
n
n
n
n
n
n
n
n
n
n
Wind resource assessment to identify suitable site for a wind farm and physical assessment of the site
Energy assessment of the site
Identification of land including revenue, private, forest and tribal land
Approach road and logistic feasibility
Study of power evacuation options at site
Finalization of evacuation grid substation based on load flow study and capacity
Land or light of way for the transmission line
Development and construction of infrastructure for wind farm
Land development to enable installation of WTGs
Assist the customer in connection with obtaining statutory approvals necessary to install and operate the
wind farm and common infrastructure facilities including the sub-station and transmission lines
Provide support in connection with power purchase agreements and wheeling and banking agreements
with state distribution companies
Construction of WTG tower foundations
Supply, erection and installation of turbines
Construction and installation of a unit sub-station and switch yard at each WTG
Installation of an energy meter to measure electricity generated
Pre-commissioning and commissioning of WTGs
24/7 operation and maintenance of WTGs and wind farms, including preventive maintenance of WTGs,
unit sub-stations and common infrastructure facilities including sub-station and transmission lines
Maintain spares and consumables for operation and maintenance of turbines
Installation of supervisory control and data acquisition for order management
Provide various manpower, including with respect to wind farm security
Support for registration for renewable energy certificates (REC), generation based incentives (GBI) and
clean development mechanism (CDM)
Dedicated customer relationship management for customers daily generation report, monthly billing and
other support
Source: Company, MOSL
1 July 2015
Inox Wind
INXW has focused on the IPP segment and is the preferred partner for 8 of the top10 IPPs in India. Focus on IPPs and timely project execution has helped INXW to
develop strong relationships with the IPPs. The government is encouraging
renewable energy projects and targets to have an installed capacity of 60GW by
2022. Encouraged by the enabling government policies, several IPPs have firmed-up
strong capacity addition plans. Given INXWs relationships with the IPPs, we believe
it is in a sweet spot.
Its successful IPO has improved INXWs profile as a serious player, even for several
MNC PE funds / IPPs setting up wind power projects in India. This should drive
greater acceptance and also enable the company to match market pricing against a
new entrants strategy of offering discounts. In the equipment supply business,
INXW is among the top-2 players in India; while the size of this segment is 15% for
the WTG industry, it is targeted to contribute 30% to INXWs revenue in FY16.
Exhibit 7: Future plans of key IPPs in India
Key Players
Renew Energy
Continuum Wind
Mytrah Energy Limited
Bharat Light and power
CLP India
Tata Power
Hero Future Energies Pvt
MW
500
145
525
200
1,081
Comments
450MW pipeline to be commissioned in 2015
270MW under construction,580MW under development
Plans to have 1,000MW installed capacity by 2017
Plans to have 1,000MW installed capacity by 2019
263MW of wind power plant are under construction
471 469MW wind energy assets under construction across the world
78 Plans to have 1,000MW installed capacity by 2017
Source: Company, MOSL
Installed Capacity
(MW)
Product Range
(KW)
Technology
tie-up
Gamesa
1,500
800/850/2,000
GE
450
1,500/1,600
1100
2,000 AMSC- Austria
Kenersys
400
2,000
250
1,350/1,500 WindFin B.V.
VENSYS
750
1,500
3,700 600/1,250/1,500/ Suzlon Energy
1,000 1,650/1,800/2,000 Vestas Wind
WinWinD,
1,000
1,000
Source: MOSL, Company
1 July 2015
10
Inox Wind
Exhibit 9: Order book composition FY15
Supply of
WTG, 52%
1,355
Rajasthan
1,194
Gujarat
430
Gujarat
164
Madhya Pradesh
285
Madhya Pradesh
634
Andhra Pradesh
20
Maharashtra
300
Andhra Pradesh
Total
2,090
Total
20
2,312
Exhibit 11: Robust order inflow led by finalization of orders Exhibit 12: Turnkey segment sales to reduce, improving
from IPPs
organizational bandwidth to increase volumes
Turnkey Sales (%)
1,162
13%
12%
87%
88%
FY14
FY15
30%
36%
70%
64%
FY16E
FY17E
630
100%
14
FY11
120
FY12
100%
100%
198
FY13
FY14
FY15
FY11
FY12
FY13
n
n
n
1 July 2015
11
Inox Wind
Post
Proposed Expansion
550
550
400
Madhya Pradesh
400
Towers
Madhya Pradesh
300
Gujarat
256
400
Towers
Gujarat
150
300
Component(s)
Plant Location
Himachal Pradesh
Madhya Pradesh
Shift in customer profile from individuals to IPPs augurs well for INXW
The average wind installation size in India has been increasing with the shift in
customer base from individuals (AD market) to IPPs (GBI market). The average
project size has increased from 2MW in 2009 to 7MW in 2013. Project size of 50MW
and above is becoming the norm for IPPs in India. This customer profile shift augurs
well for INXW, as its business model is focused on the IPP segment rather than the
accelerated depreciation (AD) market. It is the preferred partner for 8 of the top-10
IPPs in India. Focus on IPPs and timely project execution has helped INXW to
develop strong relationships with the IPPs. Encouraged by enabling government
policies, several IPPs have firmed-up strong capacity addition plans. Given INXWs
relationships with the IPPs, we believe it is in a sweet spot.
1 July 2015
12
Inox Wind
Exhibit 14: Shift in project size and customer profile in India
<10 MW
2
3
7
17
10-25MW
25
5
19
25-50MW
15
74
73
>50MW
12
24
40
23
21
60
23
41
15
2009
2010
2011
2012
2013
2,802
2,428
1,516
154
318
FY13
150
468
FY14
742
774
1,212
913
274
FY15
FY16E
FY17E
1 July 2015
39
159
FY14
FY15
374
FY16E
594
FY17E
FY18E
FY19E
13
Inox Wind
n
n
n
73
47.5
45.0
42.9
41.6
Realization-EPC (INR M)
Revenue (INR M)
73
Growth-YoY %
70
48
6.6
FY13
11.7
FY14
11.0
7.6
FY15
FY16E
11.6
FY17E
10,589
15,668
FY13
FY14
46,098
56,352
22
FY16E
FY17E
27,099
FY15
Exhibit 19: Revenue mix to move in favor of newly introduced 100 metre WTG (INR B)
93 metre
100 metre
113 Metre
EPC
O&M
60
50
40
30
20
10
FY11
FY12
FY13
FY14
FY15
FY16E
FY17E
Operating profit to post 58% CAGR over FY15-17, led by margin expansion
We expect operating profit to witness 58% CAGR over FY15-17, led by 330bp margin
expansion during the period. Operating margin would expand to 20.1% in FY17.
Management expects margin expansion to be supported by factors like (i) increase
in sales of Rotor 100 metre blades (150bp), (ii) improved supply chain/logistics,
better cost absorption, etc (130bp), (iii) improved market perception, leading to
lower discounts on pricing (100bp), (iv) gains from lower special additional duty
1 July 2015
14
Inox Wind
(100bp), and (v) lower royalty expense (50bp). Inox has to pay fixed royalty per WTG
for the first 450 WTGs with rotor diameters of 93.3 meters and 100 meters, and the
first 245 WTGs with rotor diameters of 113 meters, that it produce. Lower Royalty
payment is primarily on account of extinction of royalty payment on the 93.3 metre
product. We conservatively model margin to increase from 16.9% in FY15 to 20.1%
in FY17E, (expansion of 330bps) to factor in i)increase in competitive intensity with
Suzlon getting aggressive post financial restructuring ii) INXW does not make
warranty provision as against 3% provision made by SUEL.
Exhibit 20: Margins to expand primarily on account of cost Exhibit 21: Operating profit to witness 58% CAGR over
efficiencies
FY15-17
Operating Profit Margin
18.6
Operating Profit
16.9
18.8
20.1
13.1
14.2
Growth YoY %
159.6
89.3
11.2
14.2
8.4
FY2013
FY2014
10.9
FY2015
FY2016E
8,659
-10.3
FY2017E
1,965
1,762
FY2013
FY2014
31.1
11,354
4,574
FY2015
FY2016E
FY2017E
Cash flows from operations as well as free cash flows to turn positive from
FY16
Historically, INXW has witnessed negative cash flow from operations on account of
elongated working capital cycle, as net working capital (NWC) for the industry has
deteriorated meaningfully since FY13. Collapse of the accelerated depreciation (AD)
market had resulted in an increase in the bargaining power of IPPs. We expect
INXWs NWC, which had peaked at 196days in FY15 to normalize at 148 days in
FY17. This is because the AD market is picking up again, the willingness of banks to
fund RE projects is increasing, and the bargaining power of equipment
manufacturers is increasing. NWC normalization would drive meaningful
improvement in cash flows from operations.
Exhibit 22: Cash flow to improve led by normalization of Exhibit 23: NWC to normalize with
working capital cycle
receivables cycle
Cash flow from operation (INR b)
7.0
NWC (days)
7.2
161
0.7
improvement in
196
165
148
148
(2)
(1.2)
(3)
(1.3)
(0.9)
(3.3)
(5.1)
FY2013
FY2014
(3.0)
FY2015
(4)
FY2016E
FY2017E
1 July 2015
(4)
FY2013
FY2014
FY2015
FY2016E
FY2017E
15
Inox Wind
RoE
51
33
31
21
30
29
FY2013
18
19
FY2014
FY2015
32
28
FY2016E
FY2017E
Source: Company, MOSL
FY13
27
172
33
4
237
FY14
63
165
34
10
272
FY15
15
150
90
5
290
FY16E
15
140
88
3
258
FY17E
15
140
88
3
246
79
9
1
89
148
3
145
98
12
1
112
161
3
158
76
10
7
94
196
196
80
6
7
93
165
165
85
6
7
98
148
148
1 July 2015
16
Inox Wind
Gamesa
FY12
22,847
FY13
11,610
FY14
35,298
FY15
NA
FY12
NA
FY13
NA
FY14
NA
FY15
NA
FY12
-4.4
FY13
-19.0
FY14
1.6
FY15
NA
Vestas
17,515
5,047
7,951
NA
3.7
2.6
5.3
NA
0.8
-0.2
-1.4
NA
Suzlon
100,030
32,280
56,270
48,830
7.9
-51.1
-14.4
-3.4
-10.4
-118.4
-53.1
-48.7
NA
10,589
15,668
27,099
NA
18.6
11.2
16.9
NA
14.2
8.4
10.9
Inox Wind
Exhibit 27: Key financial comparison for global WTG players (USD m)
Company Name
MCap
Revenue
PAT
PE (x)
EV/EBIDTA (x)
CY15E
CY16E
CY15E
CY16E
CY15E
CY16E
CY15E
CY16E
CY15E
CY16E
2,018
2,273
2,411
8.2
9.1
78
100
26.0
20.9
9.1
7.8
11,370
8,731
8,704
13.8
14.2
577
600
19.6
18.8
7.9
7.7
4,656
3,759
4,032
12.5
12.8
198
235
23.9
19.9
10.2
9.3
8,375
3,636
3,831
16.3
18.9
379
433
19.9
Nordex SE
Vestas Wind Systems A/S
1 July 2015
17.4
16.5
13.5
Source: Bloomberg, MOSL
17
Inox Wind
FY12
100,030
63,920
36,110
10,270
18,890
430
6,520
0
6,520
3,890
2,630
13,740
-11,110
-10,440
32%
2%
1%
36%
8%
6%
1,521
955
56
84,650
Installed (MW)
O&M Revenues (INR M)
11,541
7,100
Revenues
Less: COGS
Gross Profit
Employee Expenses
Other expenses
Exchange (Loss) / Gain
EBITDA
Other Income
EBIDTA incl Other Income
Depreciation
EBIT
Interest Expense
PBT
Adjusted PAT
Gross Margin (%)
EBIDTA Margin (%)
EBIT Margin (%)
1 July 2015
Suzlon Wind
FY13
32,280
26,160
6,120
8,330
15,980
2,500
-20,690
0
-20,690
4,280
-24,970
15,320
-40,290
-38,220
Inox Wind
FY13
FY14
10,589
15,668
7,731
12,131
2,858
3,537
250
384
644
1,390
0
0
1,965
1,762
48
91
2,012
1,854
89
116
1,923
1,738
388
460
1,536
1,278
1,503
1,322
FY14
56,270
43,351
12,919
7,874
15,870
2,326
-13,151
0
-13,151
3,745
-16,896
17,850
-34,746
-29,890
FY15
48,830
31,380
17,450
7,470
13,360
4,950
-8,330
0
-8,330
3,760
-12,090
17,660
-29,750
-23,760
FY11
719
518
202
38
46
0
118
10
128
39
88
44
45
54
FY12
6,216
4,318
1,898
146
334
0
1,418
4
1,422
76
1,346
152
1,194
1,007
19%
-52%
-80%
23%
-14%
-27%
36%
-3%
-17%
28%
16%
12%
31%
23%
22%
27%
19%
18%
23%
11%
11%
25%
17%
17%
1,583
1,161
58
91,570
252
415
85
21,430
722
403
59
42,720
454
442
76
34,290
14
14
120
120
198
198
54
9,485
330
330
53
13,730
578
578
50
24,772
13,124
8,460
13,376
10,850
14,098
13,550
14,552
14,540
6,107
164
FY15
27,099
20,347
6,753
549
1,629
0
4,575
143
4,718
204
4,514
623
3,892
2,964
318
468
742
33
39
159
Source: Company, MOSL
18
Inox Wind
264
225
271
211
206
221
226
239
319
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
752
645
1,051
230
FY99
FY13
200
FY98
1,024
140
FY97
FY12
113
FY96
FY11
88
FY95
FY10
61
FY94
537
51
FY93
FY09
46
FY92
19
Inox Wind
Competitive intensity
The WISE Report estimates the aggregate WTG manufacturing capacity in India at
12GW as of August 2014 and expects the Indian wind power market to witness
annual installations of 3-5GW over the coming years. There exists intense
competition in the WTG segment. In the last few months, Suzlon has taken several
steps to put its house in order by selling stakes in non-core business, inducting a
strategic partner and refocusing on the Indian market. Suzlon has historically been
the market leader with ~50% market share. Post its recent restructuring and
liquidity infusion, it will again attempt to achieve its earlier market share.
Exhibit 30: Top Five players command 87% of market in FY15
100.0%
Vestas
RRB
Wind World
Suzlon
Regen
Inox
Others
Gamesa
80.0%
60.0%
40.0%
20.0%
0.0%
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Source: MOSL, Company
TN
Karnataka
Rajasthan
Gujarat
Maharashtra
Andhra Pradesh
Uttar Pradesh
Madhya Pradesh
Punjab
FY13
9.0%
6.4%
7.0%
7.8%
4.8%
3.4%
2.8%
RPO Target
FY14
9.0%
7.0%
7.0%
8.5%
4.8%
5.0%
4.7%
3.4%
Achieved
FY15
10.0%
17.0%
10.0%
14.0%
7.5%
10.0%
8.0%
7.5%
8.5%
8.5%
4.8%
5.0%
5.5%
2.0%
6.0%
3.0%
3.8%
1.5%
Source: MOSL, Industry Data
20
Inox Wind
Company background
Inox Wind (INXW), an Inox Group company, is Indias fourth-largest wind turbine
generator (WTG) manufacturer, with a market share of 7% in FY14. INXW
commenced operations in March 2010, and manufactures key components of WTGs
nacelles, hubs, rotor blade sets, and towers. It provides turnkey solutions for wind
farm projects through its wholly-owned subsidiaries, and has a project site pipeline
of 4GW. Order book as at December 2014 stood at 1,258MW, and cumulative
installations/supplies stood at 1,044MW (including 312MW yet to be erected).
INXW manufactures two different WTG models with 2MW rating:
n Rotor diameter of 93 meters with hub height of 80 meters
n Rotor diameter of 100 meters with hub height of 80 / 92 meters
INXW has a 100% subsidiary, Inox Wind Infrastructure Services, which does project
development in respect of wind power projects, including wind studies, energy
assessments, land acquisition, site infrastructure development, power evacuation,
statutory approvals, erection and commissioning, and long-term operation and
maintenance (O&M) of wind farms.
About Inox Group: The Inox Group commenced operations in 1923 and currently
operates in industrial gases, engineering plastics, refrigerants, chemicals, cryogenic
engineering, renewable energy and entertainment sectors. The Group has two
publicly-listed companies Gujarat Fluorochemicals and Inox Leisure. The Group
employs over 8,000 people at more than 100 business units in India.
Exhibit 32: Existing and upcoming manufacturing facilities of Inox wind
1 July 2015
21
Inox Wind
Board of directors
Mr Deepak Asher, Non-Executive Director
Mr Deepak Asher, aged 56 years, is a Non-Executive Director. He has a bachelors
degree in Commerce and a bachelors degree in Law from Maharaja Sayajirao
University, Baroda. He is a fellow member of the Institute of Chartered Accountants
of India and is also an associate member of the Institute of Cost and Works
Accountants of India. He has been associated with the Inox Group for over 25 years.
He is the founder President of the Multiplex Association of India and was awarded
the Theatre World Newsmaker of the Year Award in the year 2002 for his
contribution to the cinema exhibition industry. He has been instrumental in Inox
Groups diversification into the cinema, CDM and wind energy businesses.
1 July 2015
22
Inox Wind
1 July 2015
23
Inox Wind
Operating metrics
INR m
Closing order book (MW)
Y-o-Y growth
Order inflow (MW)
Y-o-Y growth
Execution (MW)
Y-o-Y growth
FY13
FY14
370
198
198
FY16E
1,384
17.5%
1,031
-11.3%
825
42.7%
FY17E
1,622
17.2%
1,188
15.2%
950
15.2%
48
7
42
12
43
8
45
11
48
12
318
468
742
1,516
2,428
10,589
9,485
1,010
94
15,668
13,730
1,756
182
26,940
24,772
2,093
75
46,098
37,130
8,883
85
56,352
45,125
11,133
94
48.0%
44.8%
73.8%
92.8%
71.9%
80.4%
19.2%
-58.8%
71.1%
49.9%
324.3%
13.3%
22.2%
21.5%
25.3%
10.0%
Revenues
WTG
Sale of services
other operating income
Revenues, % YoY
WTG
Sale of services
Other operating income
EBIDTA %
18.6%
11.2%
17.0%
18.8%
20.1%
2,743
4,469
2,079
4,058
(1,709)
148
3
145
161
3
158
196
0
196
165
0
165
148
0
148
1 July 2015
630
218.2%
330
66.7%
FY15
1,178
218.4%
1,162
84.4%
578
75.2%
24
Inox Wind
1 July 2015
2013
10,589
7,731
250
644
1,965
18.6
48
89
388
1,536
33
2.1
1,503
1,503
1,503
2014
15,668
48.0
12,131
384
1,407
1,745
11.1
91
116
460
15
1,245
- 45
-3.6
1,290
1,290
(14.2)
1,322
(12.0)
2015
27,099
73.0
20,347
549
1,629
4,574
16.9
143
204
623
0
3,891
927
23.8
2,964
2,964
129.9
2,964
124.2
2016E
46,098
70.1
33,651
791
2,996
8,659
18.8
157
280
575
7,962
1,911
24.0
6,051
6,051
104.1
6,051
104.1
(INR Million)
2017E
56,352
22.2
40,573
1,044
3,381
11,354
20.1
173
350
613
10,564
2,535
24.0
8,029
8,029
32.7
8,029
32.7
(INR Million)
2017E
2219
26,107
28,326
6,500
209
35,035
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest
Loans
Deferred Tax Liability
Capital Employed
2013
400
2,555
2,955
3,769
195
6,919
2014
2000
2,278
4,278
5,582
151
10,011
2015
2219
12,151
14,370
9,200
209
23,779
2016E
2219
18,078
20,297
5,750
209
26,257
1,772
206
1,566
41
0.02
7,895
795
5,002
15
1,964
119
2,582
2,278
304
5,313
6,919
2,040
317
1,722
255
450.02
16
12,354
2,707
7,096
73
2,030
449
4,788
4,217
571
7,567
10,011
2,294
423
1,872
202
0.50
0
28,667
1,265
13,210
7,120
6,720
352
6,962
5,662
1,300
21,704
23,779
4,044
608
3,437
300
34,301
1,894
18,944
1,692
11,367
404
11,781
10,104
1,677
22,520
26,257
4,544
816
3,728
300
46,154
2,316
21,614
8,209
13,586
429
15,147
13,123
2,024
31,007
35,035
25
Inox Wind
1 July 2015
2013
2014
2015
2016E
2017E
37.6
39.8
73.9
6.6
7.2
21.4
13.4
14.3
64.8
27.3
28.5
91.5
36.2
37.8
127.6
Valuation (x)
P/E
EV/EBITDA
EV/Sales
Price/Book Value
11.3
10.6
2.0
5.7
64.2
51.3
5.8
19.9
31.8
21.1
3.6
6.6
15.6
11.4
2.1
4.6
11.7
8.2
1.6
3.3
50.9
28.6
30.9
17.6
20.6
19.2
29.8
32.8
28.3
32.1
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
172
27
79
1.5
165
63
98
1.6
178
17
76
1.1
150
15
80
1.8
140
15
85
1.6
Leverage Ratio
Debt/Equity (x)
1.3
1.3
0.6
0.3
0.2
2013
1,536
89
314
287
(2,862)
(1,210)
(1,210)
2014
1,293
116
460
334
(2,389)
(854)
15
(870)
2015
3,891
204
623
927
(7,091)
- 3,300
0
(3,300)
2016E
7,962
280
575
1,911
(6,244)
662
662
(Inc)/Dec in FA
Investment in liquid assets
CF from Investments
(1,358)
(0)
(1,358)
(498)
64
(434)
(186)
450
264
(1,848)
1
(1,847)
(500)
(500)
(Inc)/Dec in Debt
Less : Interest Paid
Dividend Paid
CF from Fin. Activity
2,565
375
0
2,193
1,789
460
0
1,361
10,635
623
10,084
(3,450)
575
(4,243)
750
613
(5)
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
(375)
390
15
58
15
73
7,047
73
7,120
(5,428)
7,120
1,692
6,517
1,692
8,208
(INR Million)
2017E
10,564
350
613
2,535
(1,970)
7,021
7,021
26
Inox Wind
NOTES
1 July 2015
27
Disclosures
Inox Wind
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INOX WIND
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1 July 2015
28