Company Snapshot:
The company is engaged in manufacturing of wind turbine Generator and other allied components and is one of India’s largest WTG manufacturers
Business Model:
1) Selling of WTG and allied Equipments
1) Selling of WTG and allied Equipments
2) Turnkey Projects
3) Operation & Maintenance
Capacity addition:
The company initially had a capacity of 800 MW and added another 300 MW of capacity in Q4 FY 15 (1100 MW). Expected to be enhanced by 1600 MW in 2016
WTG Model: WT2000DF (2 MW) has only 1 range (Ensures power generation in low wind conditions)
The company initially had a capacity of 800 MW and added another 300 MW of capacity in Q4 FY 15 (1100 MW). Expected to be enhanced by 1600 MW in 2016
WTG Model: WT2000DF (2 MW) has only 1 range (Ensures power generation in low wind conditions)
Industry structure: (Barriers to entry)
The Industry has a oligopolistic structure wherein top 5 players control the market, Inox winds is comparatively newer than its peers(Gamesa,Regen,Suzlon ,Vestas) and was started in 2009-10 but started its Business operations in real terms only from 2010-11 and already has around 12% of the market share which is commendable.
The Industry has a oligopolistic structure wherein top 5 players control the market, Inox winds is comparatively newer than its peers(Gamesa,Regen,Suzlon ,Vestas) and was started in 2009-10 but started its Business operations in real terms only from 2010-11 and already has around 12% of the market share which is commendable.
Business Model: (Recurring Model)
The Business model of the company is shifting from Turnkey to selling WTG and other equipments and is one of the main reason why the company will enjoy higher EBITDA margins .The Company used to cater mainly to its group companies in the beginning but now the company makes close to 99.9% of its revenue from catering to TPA
It is also a very important factor to note is that the company also will be responsible for operation,service & Maintenance of Windmills which it has commissioned (Turnkey) which means recurring revenues .And the Concall says that the company will enjoy high margins of 30-40% from that.
The Business model of the company is shifting from Turnkey to selling WTG and other equipments and is one of the main reason why the company will enjoy higher EBITDA margins .The Company used to cater mainly to its group companies in the beginning but now the company makes close to 99.9% of its revenue from catering to TPA
It is also a very important factor to note is that the company also will be responsible for operation,service & Maintenance of Windmills which it has commissioned (Turnkey) which means recurring revenues .And the Concall says that the company will enjoy high margins of 30-40% from that.
Technology Partner: (License)
The company has partnered with AMSC Windtec Austria which is one of the leading Technology players globally and had close to 15 GW installed across the world based on its technology with whom the company has a perpetual exclusive license to sell 2 MW WTG in India and non-exclusive license for export
The company has partnered with AMSC Windtec Austria which is one of the leading Technology players globally and had close to 15 GW installed across the world based on its technology with whom the company has a perpetual exclusive license to sell 2 MW WTG in India and non-exclusive license for export
Management Background:(Past track record)
Management has track record of running successful companies (Gujarat Fluoro-chemicals and Inox Leisure)
Strong Promoter holding 85.61%.
Management has track record of running successful companies (Gujarat Fluoro-chemicals and Inox Leisure)
Strong Promoter holding 85.61%.
Government Initiatives:
The new Modi government has set an ambitious target of 60000 MW and the current installed capacity is 22000 MW approx. (Hug gap to cover) Also Investment in Wind Initiatives has been tagged as CSR which adds to the benefits for this sector as 2% CSR spend is mandatory from April 1 2014
The new Modi government has set an ambitious target of 60000 MW and the current installed capacity is 22000 MW approx. (Hug gap to cover) Also Investment in Wind Initiatives has been tagged as CSR which adds to the benefits for this sector as 2% CSR spend is mandatory from April 1 2014
Accelerated Depreciation:
This means that a corporate which makes investment in a wind mill can write-off 80% depreciation in the first year which saves a lot of taxes (This initiative will further encourage Business Houses and also HNI’S and may boost the demand for WTG’s and allied components)
This means that a corporate which makes investment in a wind mill can write-off 80% depreciation in the first year which saves a lot of taxes (This initiative will further encourage Business Houses and also HNI’S and may boost the demand for WTG’s and allied components)
RPO: (Renewable Power Obligation)
According to this scheme every state government should have some component of its Electricity generated from Renewable source which adds to the advantage
According to this scheme every state government should have some component of its Electricity generated from Renewable source which adds to the advantage
Company Financial Highlights:
Sales Growth CAGR-5 YEARS = 148 %
Net Debt= 150 crores approx. (This Industry is very capital intensive and the health of a company’s balance sheet is considered very important, Balance sheet of Inox looks good)
FY 15 Sales =2709 crores
Solid Order Book: The Company has revenue visibility till FY 17 and is already sold out for FY 16
ROIC = 27-30% (FY 15)
ROE=32.6 % (FY 15)
The company has 700 crores of cash in its Balance sheet
YoY EPS Growth =124.1%
FY 15 D/E-=0.6
Sales Growth CAGR-5 YEARS = 148 %
Net Debt= 150 crores approx. (This Industry is very capital intensive and the health of a company’s balance sheet is considered very important, Balance sheet of Inox looks good)
FY 15 Sales =2709 crores
Solid Order Book: The Company has revenue visibility till FY 17 and is already sold out for FY 16
ROIC = 27-30% (FY 15)
ROE=32.6 % (FY 15)
The company has 700 crores of cash in its Balance sheet
YoY EPS Growth =124.1%
FY 15 D/E-=0.6
The company does a look a buy to us at current levels of 350-420.
