Wind Energy Stock: With the new year, SAMVAT 2081 kick-started, brokerage Axis Securities is bullish on one wind energy stock. And it is not the behemoth Suzlon Energy, but instead midcap INOX Wind who recently delivered bonus shares of 3:1 earlier in 2024. Axis Securities is optimistic about INOX Wind because of its strong order book, execution capabilities, financial performance and value unlocking.
INOX Wind Share Price:
On November 1, 2024, Inox Wind shares stood at Rs 222.70 apiece after market hours of Muhurat Trading. It currently has a market cap of Rs 29,035.49 crore. The stock is near its 52-week high of Rs 262.10 apiece.
YTD, Inox Wind shares have zoomed by 70% on BSE, on the other hand, its rival Suzlon has advanced by 77%.
BUY Inox Wind Shares:
Axis Securities has recommended BUY on INOX Wind for a target price of Rs 270 per share. In its investment rationale, the brokerage highlighted 5 key pointers. These are:
1. India's power demand has been rising, with peak demand reaching 250 GW in May'24, marking a 12% increase YoY/MoM. The Central Electricity Authority (CEA) forecasts a peak demand requirement of 458 GW by FY32, necessitating capacity enhancements across thermal and renewable energy sources (RES). India aims to increase its renewable energy (RE) capacity to 500 GW by 2030 with an additional 75 GW of wind capacity requirement.
2. As of March 31, 2024, the company had a robust order book of 2,656 MW. It secured new orders of 210 MW (a repeat order from Hero Future Energies) in Q1FY25 and 401 MW in Q2FY25 (including 3 MW WTG orders and 200 MW from a C&I player). Following these new orders in the first five months of FY25, the company now holds its largest-ever order book of 2,917 MW.
3. The company has been improving its execution capabilities, achieving a 262% YoY growth in order execution in FY24, reaching 376 MW. It has set an execution target of 800 MW for FY25 and 1,200 MW for FY26, which may be revised upwards due to a substantial order book and additional orders expected (approximately 1 GW in the pipeline at various stages of discussion).
4. The company has provided EBITDA margin guidance of 14-15%. Operating leverage from increased orders, cost optimization, and an improved product mix (with 80-90% comprising 3 MW WTGs) could drive margins toward 16%-17%. Additionally, management anticipates a new stream of revenue from the hybridization of its substation assets and crane services. The company has initiated various value-unlocking initiatives. Its EPC projects arm, Recso Global, has approved a Rs 350 Cr equity raise from marquee investors. These funds will be utilized to scale up business offerings at Recso, allowing the company to capitalize on the strong tailwinds in the wind sector in India.
5. With a robust order book, strong execution capability, technological readiness, and net interest-free debt, along with the government's renewed focus on wind energy, Inox Wind is well-positioned to build on its growth momentum.
The brokerage expects the company's Revenue/EBITDA to grow by 83%/90% CAGR over FY24-FY27. It expects the PAT to reach Rs 1,399 Cr by FY27.
On the valuation, Axis Securities note said, "We recommend a BUY rating on the stock with a TP of Rs 270/share. We assign a target P/E multiple of 35x to our FY26 EPS estimate after adjusting for the minority stake in Inox Green Energy Services Ltd. and Resco Global (~7%)."
In 2024, Inox Wind delivered a bonus issue of a 3:1 ratio. On May 24, 2024, the company's shares turned ex-bonus for a 3:1 bonus. As per the ratio, the company delivered 3 new free shares as a bonus on the existing 1 equity share to eligible shareholders.
Inox Wind Limited (IWL) is India's leading wind energy solutions provider servicing IPPs, Utilities, PSUs & Corporate investors. IWL is a part of the US$ ~ 8 BN INOXGFL Group which has a legacy of over nine decades and is primarily focused on two business verticals - chemicals and renewable energy.
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