INOX Wind

(vkagrawal) #169

March 2018 Result & Investor Presentation.


(PadivalsMarketMusings) #170

@kauban does it makes sense to invest at the current price points?. Looks reasonably priced / undervalued at the moment - assuming other drivers kickin (debt reduction, receivable reduction etc.), sort of makes sense to get in / average out.

Also, what is the time frame for the current 950 mw of order book to flow through the P&L?.

(kauban) #171

Hi @PadivalsMarketMusing,

Its difficult for me to answer that question for you. All I can see is that the industry vols are set to multiply significantly, not just from last year’s levels, but also materially from previous years. However there are other factors at play as well - margin pressure, technology (very importantly), market share (overall, not just for auction based capacity, but PSU’s and captive power producers). Also as I heard in the Inox call, the execution of the vols is not going to happen overnight, so if you have the patience and a horizon of at least a few years till the target of 60GW is met, then its worth investigating. I do not know for sure if the pain is over price wise at least.

(phreak) #172

Few improvements

  1. PGCIL ruling against bay squatting is an improvement
  2. Receivables have come down by 1000 Cr for Inox Wind. This is good for the sector as the receivables were piling up post good FY17.
  3. Inox Wind has reduced debt and NWC has improved as well

Overall the balance sheet looks quite good. Other risks still remain with execution but I suspect its all in the price at this point.

950 MW order book but it remains to be seen how much they can execute in Q1, FY18 - I don’t think it will be much considering SECI-I might get executed only in Q2. And in all of FY19, they may not execute more than this 300MW (FY18 was 172MW so its still a good improvement) if they cannot execute SECI-2 order as well in FY19. Another negative PAT quarter could do some more harm to the share price but valuing INOX Wind by just their assets,

EV - 3500 Cr

Inventory - 929 Cr
Cash - 45 Cr
Bank Balance - 81 Cr
Property, Plant and Equipment - 955 Cr

Overall about 2000 Cr of solid assets

Add receivables - 1338 Cr (This was 2300 Cr last year and formed over 60% of book value)

Total = 3350 Cr out of EV of 3500 Cr which isn’t bad.

Concerns - This company has never generated FCF in its lifetime.

OFS was successful at Rs.116 and the promoter was able to sell his stake to bring down holding from 85% to 75% which is a positive since it shows investors’ interest.

I think there are more positives now than there have been in the last several quarters. However the company may not be out of the woods yet completely. These are just my random thoughts on the company and I think it could make a good asset/turnaround play.

(sjain_13) #173

Dear All

Pls speak to people in wind industry before investing in Inox. Investors are not too comfortable with their technology. Few of their turbines were damaged last year.

So far they have been able to only tie up 50 MW of their auction win with Adani. Do find out if any of their old IPP clients are willing to place repeat orders? Winning capacities under auction means nothing if you are not able to sell these onwards to IPPs or raise debt and equity finance. Debt finance is anyways difficult now with PSU banks not lending proactively and Pvt banks nor having much interest in project finance + renewable financing.

I am part of renewable energy sector and have been speaking to wind industry professionals. Happy to receive views from other esteemed. Members who get to speak to wind energy professionals (other than Inox)

Disc: Studying the opportunity in renewables and not invested

(sjain_13) #174

Came across interesting info in results of Sanghvi Movers. They have an order book from Suzlon, Vestas, GE, Gamesa. Interestingly they have not mentioned INOX. When everyone else is placing orders for cranes with SML, why is Inox not doing the same. Either, they have other crane suppliers (possible but strange as everyone else has placed orders with SML and it is the largest) or SML forgot to add their name or they do not have projects to implement (just auctioned capacity waiting for tie-ups with IPP investors)

(Rushil) #175

Inox Wind auditor quits, cites ‘time constraints’

Don’t know what to make of this.

(Shivan Sarvaiya) #176

8fdd638f-50fc-4051-81c3-6281fcf6f8be.pdf (635.1 KB)

The clarification from the company is out. This seems to be a case different from the likes of Manpasand, Vakrangee, Atlanta, etc.

Also the saving grace here is that the same auditor is continuing with other group companies Guj. Fluro n Inox Leisure

(Dhiraj Dave) #177

Discl: Not invested

The another way to look at same information is why auidtor is not having time only for “Inox wind” when it is fine work with other companies in the group? The reason cited “Time constraint” can easily be met by hiring new resources from auditor side.

Having said, just reading too much from auditor resignation is also not correct in my opinion. One need to look business, management and valuation in totality before taking any decision. While Auditor resignation is significant event, it may not necessarily mean problem in company, in my opinion.

(Shivan Sarvaiya) #179

@dd1474 Sir. Thank you for the reply. The press release mentions that auditors do not want to continue the audit in north part of India. The other 2 group companies are in the western part. I guess it would be due to logistics issues.

‘‘IWL was P&A’s only statutory audit in North India, and hence it was physically and logistically difficult for P&A to continue with this audit’’.

(Shivan Sarvaiya) #180

Spoke to the company IR.

Mr Deepak Asher, Inox Grp Director and Head-Corp Finance, will be on CNBC tomorrow at 815 am, ETNow tomorrow at 830 am and Bloomberg Quint tomorrow at 12 noon, to address the issue of Inox Wind auditor change.

(venkat) #181

Also don’t know what to make of this. See the link.

Things don’t add up. You have management claiming orders for 950 mw and on the other hand, you have wage arrears.

(vkagrawal) #182

That is a true question that why they have wage arrears? They are claiming that they have reduced their receivables greatly in last one year but other side they have not paid to their employees. I think question on this area should also be asked to management in AGM/Quarterly meetings.

(onlish2014) #183

“Things don’t add up. You have management claiming orders for 950 mw and on the other hand, you have wage arrears.” - wages are paid out of cash while order book only implies revenue pipeline (which may materialize only in future and only partially).

Discalimer: above remark is general and not specific to Inox 's balance sheet situation.

(venkat) #184

I agree with your assessment that wages are paid out of cash. But as per Investor presentation and management concall, receivables level down by Rs.1000 crores, Debt levels reduced drastically with consequent reduction in finance cost. Both are good signs. Company could have used the cash flow to clear the wage arrears and avoided the negative publicity.

Dis - invested in Inox !!!

(vkagrawal) #185

exactly that’s what I was trying to say. also if you see the Q-4 2018 result the employee cost per quarter is about 23cr which is very less compare to what receivable they have reduced.
Disclosure: I have invested in Inox wind’s shares.