25% market share in the current round + 300MW from previous round.
550MW order book
SECI wants to conduct 1GW per quarter + state auctions of ~2 GW = 6GW mkt size.
If it maintains this share, then obviously cap utilisation goes back to previous levels, NPM normalises to say around 10%, after adjusting for the drop in IRR due to new tariff levels. Assuming roughly 5Cr per GW pricing (very rough approximation, could be wrong here), looks like there could still be an upside. esp, assuming that in the new scheme of things the overall economics, i.e. working capital cycle etc, significantly improves.
Risks? One thing I can think of, is that by winning the bids, although it guarantees orders, it will need to be able to find buyers so that it can do a BOT model. Otherwise it gets stuck with running the wind farm.
i know many people have quoted Inox's technology being inferior to that of its key competitors, which I agree. However, if it keeps winning the bids how does it matter? Maybe the IRR's will be lower for its farms leading to reduction in price of the WTG and lower margins. However the company repeatedly claims that they are the lowest cost manufacturers of WTG in the world. If that is true, then it could give it some ability to still protect margins against competition. My point is that price of the WTG could be a factor of PLF and the cost of manufacture. Having leadership in at least one of the dimensions could give some edge. Obviously a company which has both will have significant moat over others. But that could be some time away for Inox.
I am relatively new to investing, so still learning (from my own mistakes ! ). Pls excuse if I am grossly off the mark.
Disc: Invested for past 2 yrs in Inox, attracted originally by the clean(er) balance sheet compared to Suzlon, and misreading the working capital cycle completely.