(niranjant) #62

Three points to be highlightedL

That’s the view even I’m having. AMSC is a proxy for INOX with 63% of its revenue coming from there, as of now!

Gujarat Fluorochemicals Limited
Guj Fluorochemicals has not moved an inch over the same period even though 70% of its market capitalisation is due to INOX Wind.


My understanding is that Suzlon is past its worst time and has a well wisher of a promoter!. However it is still not “Well Funded”. . Moreover, they are not in the same market as INOX is. Atleast they weren’t till now!. Wind Power market has a number of sub clusters: IPP, Corporate, PG companies…

(Rajeev M. Parashar) #63

Do you think Suzlon can gain an advantage over rivals in winning bids through their idea of a Hybrid Farm (Wind+Solar)? Or the contract parameters/weather requirements for Wind and Solar are too different to combine at one place?


Does anyone have any idea as to why Q1 results aren’t out yet? Almost a month behind last year’s schedule. In my experience, delayed news is always bad news…

(niranjant) #65

This is worrisome! :frowning:

(aditya yadav) #66

Since from this Quarter it has been mandated for companies to shift their accounting policies to IND-AS. The deadline has been extended to 15th september , applicable only for this quarter.

(Rajeev M. Parashar) #67

@Sowmay makes his case for Inox Wind.

(paresh.sarjani1) #68

Annual Report Quick Analysis…
30% Compounded Annual Growth in Capacity Addition likely till 2022…
(60GW total wind energy target in India (26 is already accomplished… 34GW to be added in next 5 years and actually it would be 50GW because year by year commissioning is more than targets in Renewable energy sector…)
Assumption: 30% Market Share…in Wind Energy Segment…on an Average (which is right now 23%)…'t .

1000 Rs in 2022 shouldn’t be bad for this…

Annual Report -


Have a read (Devansh Jain is confident on growth):

Disclaimer: Invested.

(Rajeev M. Parashar) #70

It is natural the day hybrid policy does come in; we simply need to import solar panels and put them up on the same sites, which we control the common infrastructure for.

Let’s hope he isn’t underestimating the optimization required for effective installation of Solar Panels.

(navneet.daga) #71

Sorry to be asking a very stupid question this late in the discussion. But what is the business model of Inox. Does it work like a project execution (EPC) company where it sets up the wind farm and gets paid for the wind turbines and the installation part and then hands it over to other companies to run. Or does it actually continue to own wind farms and generate electricity and sell it to the government based on the current price. Also what are the different revenue streams in case it is the former:

  1. Project execution and installation
  2. Repair and Maintenance (AMC)?

Asking this to understand if there are continuous revenue streams post the project has been executed or just one time payment!

Thanks for your help in clarifying such trivial issues!

P.S: Very small exposure as of now (< 1% of the product portfolio) but looking to add more at these valuations.

(Rajeev M. Parashar) #72

I’m sure people like @niranjant & @Sowmay can give you a more accurate/in-depth reply.

My understanding is Inox Wind doesn’t own wind farms for the sake of selling electricity to the govt.

They supply components to EPC clients or do EPC on their own for their clients. For EPC, they do have long term repair and maintenance contracts.

They own land banks in various states to set up Wind Farms for their clients.


This is the information outsourced from their official site -

Inox Wind Limited works on 2 business models:

  • Turnkey Solution

In this model, Inox takes care of all the aspects related to development of wind power project from concept to commissioning including operation and maintenance . This includes wind studies, energy assessment, land acquisition, site infrastructure development, power evacuation, statutory approvals, supply of WTG, erection and commissioning and long term operation and maintenance of the wind farms.

  • Equipment Supply Model

In this model, Inox supplies the WTG and other associated equipments to customers for erection on sites owned by them. The rest of the project development work, which includes wind studies, energy assessment, land acquisition, site infrastructure development, power evacuation, statutory approvals, etc. is in the customers’ scope. Erection and commissioning and long term operation and maintenance of the wind farms remains in Inox’s scope. Civil works could either be in Inox’s scope or the customers’ scope, on a case to case basis.


Bad quarter results:

However, order book of the company is very high - The company had an order book of 1.24 gigawatt as of June 2016. - which is very high. Looks like the company will sustain for next 4 years without getting any extra orders.

The company is consistently receiving many recurring order which is something good for the long-term sustainability of business.

The company is getting complex day by day. Many positivities with many negativities.

Employee expenses rose 54 percent in the quarter, and finance costs climbed by 75 percent. Costs are rising leading to low margins.

But this increment is good if it occurs due to growth. And looks like same is the case with INOX WIND.

Infrastructure Services Ltd (Inox subsidiary) did an aquitision of an investment firm.

One thing which I think is good for Inox Wind is that the management keeps updating about their operations to media time to time.

Might be company will be having deflated price in the short run. Long term looks bright to me.

Have a read (must read it):

What’s your take?

Disc: Invested.

(Alphin) #75

On a broader look the operational metrics of wind industry has the following similarities with the airline industry.

  1. High capital expenditure requirement before even starting to get the revenues.

  2. High fixed costs due to idling of the investments.

  3. No pricing power as there is high competition for the cheapest supplier.

  4. Technology based , so any new technology developed by a competitor will leave its investment on technology redundant.

Apart from the mentioned facts following negatives also concern Wind Energy companies.

  1. Dependent on goverment policies and Electricity boards.

  2. It doesnt decrease carbon footprint as the material required for the windfarm itself and then running the windfarm on a reliable basis cause a lot of carbon is mentioned that due to the unreliable nature of wind energy, the traditional power plants cannot be run at lower capacities to save on carbon emissions. Hence going forward governmnet may actually discourage wind farms.

Alll in all : Inox may be a good company but its in the wrong buisness. its just a matter of time before a company in this sector goes bankrupt.

On the positive side: indian OMC’s to invest in renewable energy.

However how much of these materialize remains to be seen.

(Rajeev M. Parashar) #76

Intermittent Renewables Can’t Favorably Transform Grid Electricity (H/T Value Investing World).

Applies more to the Power Surplus Countries, but the Grid Integration problems does apply to India.

(Rajeev M. Parashar) #77

Inox Wind 2016 Annual Report

(VB) #78

Notes from the Q1 FY17 Con Call

You can find their earnings presentation here, which really gives most of the numbers in detail. So I have refrained from discussing them again. Please feel free to add any points that I might have missed.

  1. The management maintains its full year guidance of 20-25% growth, with Inox expected to install 900-1000MW wind mills. They hope to maintain their market share at 25%(expect Indian market to be at 4.0-4.5GW this year).

  2. Expect EBITDA margins to increase going forward due to the taller wind mills and economies of scale.

  3. This quarter was majorly focused towards reducing their working cap by clearing their inventory backog. (though the overall inventory and receivables numbers remain the same as last quarter)The aim is to reduce overall working capital to Rs1,600cr. There will be a lot of commissioning happening in Q2, which should see strong cash flow into the company.

  4. Receivables:- The aim is to get the overall receivables to Rs1,400cr by the end of the year. As mentioned on several occasions in the past, they maintain that the high receivables are due to 2 reasons- mismatch in the production of all the turbine components, and the lag between production and commissioning. Point 1 should not be faced due to new facilities coming on board, but point 2 will still need time to rectify since more states will be announcing their tariff in this quarter.
    The problem of high receivables was also because some producers just refused to pay up due to PPA issues. Around 500-600MW of turbines installed in Gujarat did not have PPAs signed since the state tariff was not decided at that time. With the Gujarat tariff being announced at the end of August, we can expect payments soon and this should lead to a quantum decrease in receivables.
    Some customers do not follow the part payments after each step of installation inspite of contractual obligations, as they wait till the entire turbine is commissioned. Keeping this in mind, Inox has decided to back up all future orders with LCs.
    In Maharashtra, around 900MW of wind mills are still without PPAs due to a tussle with the government. Inox has only 40MW out of these 900MW and only 20cr is blocked here.

  5. Key balance sheet figures as of June 2016:- Equity- 1915cr, LT debt- 52cr, ST debt- 1900cr, cash-550cr.

  6. 1GW of wind projects are going to auctioned by the government this year, along the same lines as solar auctions(more details in the company presentation).

  7. Approximate expected business by state this year:- 50% Gujarat, 20% AP, 9% Karnataka, 15% MP, 5% Rajasthan.

  8. 500MW turbines remain uncommissioned for the company. For this FY, the orders have more or less been tied up and orders for next year can be expected from Q4.

  9. There are some delays in payment by the government to the IPPs, but the IPPs have already factored in this delay in their models and the IRR does not change by more than 0.5% due to this.

  10. Offshore wind mills will still take a long time to be practical in India as the costs associated with it are too high and countries only do this when they are out of land to build mills.

(Rajeev M. Parashar) #79

Point 4 on receivables is scary. I’m assuming you listened to the concall (I don’t see the transcript on the website). How did the management sound? Confident or hesitant while answering the analysts’ questions?

Ideally, companies should live-stream the concalls like a podcast for the benefit of investors. Not that difficult/expensive.

(Kumar Saurabh) #80

I would suggest anyone interested in Inox to go through Dr. Vijay Malik’s blog and read about self-sustainable Growth Rate concept. I felt SSGR should be a key criteria for long term investments and this is a sector which does not seem to be fit in that regard as SSGR would be questionable in long term. My view is only from long term financial sustainability of business on its own cashflows.

(VB) #81

Hi Rajeev,
Yes, I listened to the concall. The receivables scenario is indeed a concern. Personally, I think it should not be that big of an issue from a one year perspective and the market seems to have priced in this concern.
If you have ever heard Devansh Jain speak(any management call or concall), you will notice that he is always confident. Hence you cannot really make any conclusion from his voice.

Disclosure: Invested