INOX Wind

Govt. has come out with a fresh policy for repowering old wind mills below 2MW capacity. The compensation under the scheme is detailed Page 8 onwards. They want to target 25GW worth of old wind mills under this policy. If even 50% of the capacity comes forward for repowering, that can be a great further demand driver for Wind OEMs.

D4mHqmI5TydoiPXborrTnwJQ07jXbjaTKixr5Fe4iIayf3cMivzU5.pdf (854.7 KB)

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Hi All,

There is a good arbitrage opportunity (around 38%) available between the merger of Inox Wind (IWL) and IWEL (Inox Wind Energy Limited).

The Board has approved swap ratios for the proposed amalgamation as below: - 158 equity shares of face value of Rs. 10/- per share of IWL to be issued for every 10 equity shares of face value of Rs. 10/- per share of IWEL.

The CMP of IWL is around Rs. 394 which works out to Rs. 6225 per share of IWEL.

IWEL is currently trading at 4480 (put in t2t few days back and hence the volumes are low).

The rationale for this merger is the consolidation of wind energy business and streamlining of group structure and operations. The appointed date for the amalgamation is set as July 1, 2023.

Already 4 months passed since the board approved merger. So the approval might be around the corner.

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Any merger takes typically 15-18 months .

Things moving pretty fast :grinning:

Now the math is 125% Suzlon and 180% INOX, my ultimate goal of selling Suzlon and buying INOX has worked out pretty well

Demand is not a problem at all , total India capacity is like 10GW to 12GW in wind and central government yearly auction is itself 8GW per year on top of this we have demand from state, retail, PSU. The life of a wind mill is like 20yrs and what these guys are doing in repowering is extending the life by 5yrs, repowering is a headache nobody want to do, lets see.

The moment you see any wind player doing capex or any activity which increases the debt that would be the best time to sell them. My take can be wrong

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I understand from the article that the share swap ratio/proposal is applicable only for promoters and large institutional investors who infused capital into the co’ at various points in the recent past. The same would not be applicable to Retail Investors.

Does anyone know what is the case for retails investors? Or am i reading/understanding this wrongly? By the way, the IWEL shares also hitting upper ckts recently. Not sure if there will be any discount for IWL by the time it actually merges or if there will any premium is being paid by the investors of IWEL.

Its available for everyone and all the shareholders.

ICICI securities in its coverage last month for INOX wind, assumed order execution of 600 MW for FY 25. Seems to be lower than what I thought.

INOX is poised to see its earnings rebound with the execution of 600MW/850MW in FY25E/FY26E.

Source:

Mr. Devansh Jain’s recent interview where he shares tranaformation journey and way forward for Inox wind…

Good discussion. Must watch.

● Windpower is not an industry in which you can overnight invest in and come in. It’s a complex supply chain. Certification, design, testing, licence, credibility ( of turbine ) takes atleast 3 years to build.So, its 4-5 years journey before Anybody else comes in and takes market share.

● Foreign MNCs can’t compete with our cost structure. Inox wind has lowest cost structure in Wind industry.

● If FY 26 is 7-8 GW market, then we are priming ourself to be
1.5 - 2 GW player.

● planning to make inox green 10 GW O&M company (500 Cr. Ebitda)

● We can increase capacity within 8-9 months, if required.

Disc: Invested & biased

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Neither Suzlon nor Inox wind make turbines suitable for this.

That is fine but this is quite important to know. It is not like Suzlon and Inox can overnight decide to do these kind of big turbines (15 MW). It will take years of R&D and certifications. Hence I didn’t think the post was relevant in this thread. Happy to be corrected.

With the added context, it makes sense. Thanks!

In Earlier interviews Inox Wind’s Devansh Jain said, he may not be looking for Offshore Wind as they have enough work in onshore Projects… They are focusing on profitability, Cash flow generation but not focusing on exports or offahore wind Projects

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With the recent order win, are there any updated projections for FY25? 1500 MW over next 3-4 years would mean 375 MW per year additional.

In interviews management mentioned that, they are trying for inorganic growth also in O&M…so 6GW for Inox green may not translate in to similar growth for Inox wind

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Inox wind is having 60 percent in inox green, the numbers will reflect in consolidated figures

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Considering there is arbitrage opportunity in Inox wind energy ltd with 37% wrt inox wind, Why the buying is still there in Inox wind? Any inputs?

It is kind of a puzzler. Even DII FII stake has been increasing in Inox wind but not IWEL. The only explanation seems like IWEL having less liquidity. So while a fund can accumulate slowly, they sure can’t exit in a panic.

Disc: Holding IWEL.

~ order book of 2.6GW with large pipeline (if LOI of adani green is incuded then OB will be 3.1GW)
~ Current Capacity > 2.5GW (Sufficient land bank to install ~5000 MW capacity)
~ Owns 61% in inox green with Portfolio 3.2GW (Targeting to reach 6 GW portfolio by FY26)

Did anyone attend the earnings call and have any notes to share?

Q3FY24 Concall Notes :

Just beginning of the massive growth journey.
In India total current capacity : 45GW and plan is to add another 100GW over the next decade.

Current orderbook 2600MW.
About 350MW is for 2MW and rest is for 3.3MW.

Will be net debt free by H1 next year.
Interest bearing debt is 450-500cr.
Interest cost will be 30-35cr from Q4 excluding one off charges.
Even these 30crs will become zero in 3 quarters.

Signed agreement for 4MW wind turbines in India, will be commercially available in 2-3 years.

Company is gearing up for 1000MW annual execution.
Numbers will be significantly larger in FY25 and FY26 than the guidance.
Capacity is 2.5GW no need to expand unless we get closer to that number.
Focus is on profitability, historically have been 14-15% EBIT business barring FY17-23 and aiming to get there from FY25.

Expecting to get approval from NCLT in next 2-3 quarters for IWEL merger.

Please ignore any typos and points which I might have missed. Thanks.
Disclosure : Invested

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