Can someone explain it to me why is the stock correcting inspite of showing such an impressive sales growth ?
Debt and receivables have gone up significantly.
as well this quarter results were bad, fell from last year.
-Thanks,
Disclosure : Invested
Devansh Jainâs interview on the Inox groupâs new venture Inox FMCG.
Is he getting replaced at Inox Wind? If not, then the divided attention is a concern.
One of his replies in the interview caught my attentionâŚ
When do you start looking at a new business from a group perspective?
Typically, we build a business when an existing business has matured, generating enough cash and there is no need to deploy that cash into that business.
In the case of INOX Wind, GFCL was generating a lot of cash from its chemical operations, so the intrinsic business of GFCL did not need this cash. So we thought of diversifying.
With carbon credits and all the writing on the wall, it was very clear: renewables is the future.
Inox Wind isnât exactly a cash generating business. Also, short term debt is still a debt.
Disclosure: Invested.
He is not exactly saying that Inox Wind had generated enough cash.
Look.[quote=âVIFL, post:88, topic:28â]
In the case of INOX Wind, GFCL was generating a lot of cash from its chemical operations, so the intrinsic business of GFCL did not need this cash. So we thought of diversifying.
[/quote]
He was pointing out the Inox Wind Subsidiary GFHL, a chemical company which of course, have an outstanding business model.
This business (GFHL) is generating cash, not IW.
Anyway, Devansh Jain had created an excellent corpus with all of the INOX diversified business Leisure, Wind, Chemicals etc and now, FMGC.
We can argue all day what he meant. He is obviously entitled to venture into a new business, & has been looking do so for quite some time - this is from Nov 2015 on Forbes
Heâs already looking for the next big opportunity. âI think Inox Wind
has reached a stage where it is very strong and the management team is
rock solid. It is virtually on autopilot. So now I am trying to figure
out whatâs going to be the next avenue for me to build on,â he says.
As an investor of Inox Wind, I would prefer to hear more from the CEO & CFO of Inox Wind in the future, especially in the concalls. After all they are the ones having to deal with the major concerns of receivables, working capital cycle & short term debt.
The reason Iâm cribbing about the short term debt is, a considerable chunk of the current order book are turnkey projects where the cash flows are likely to be lumpy.
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On the contrary, Inox Wind is the subsidiary of Gujarat Fluorochemicals Ltd.
Iâm now a bit concerned, I assumed he would remain committed to IW till it resolves debt cycle issues. If you look at it the other way, GFL owns around 65% IW, and solely that is the promoter group. And the Inox Family owns only 60% of GFL. To summarize, Inox parent promoters own roughly 40% of IWind.
This leakage of ownership down the line reduces the ownership and commitment. I have reduced the investment in this due to this lack of response.
Inox Wind Consolidated Q2 Results & balance sheet. http://www.inoxwind.com/wp-content/uploads/2016/10/IWLCONSOLQ2.pdf
I donât know how much IND-AS is responsible for it, but compared to the Balance sheet on 31st Mar 2016,
the receivables hasnât gone down at all (It has in fact gone up by 4 Cr); Short term borrowing has gone up by a further 256 Cr. The earnings presentations claims âSignificant traction seen in collection of Receivables in Q2â.
Earnings Presentation: http://www.moneycontrol.com/stocks/reports/inox-wind-earnings-presentation-5276821.html
A few things which caught my eye in the earnings presentation:
- Majority of new orders are backed by Letters of Credit (LCs)
- Order Book= 1,416 â 70 = 1,346 MW. 70 MW Order removed from Order Book due to financial issues at customer end. Whatâs the possibility of more such cancellations?
- Tower Manufacturing can be Outsourced depending on the location of the project being executed. Will the margins take a further hit in that case?
If someone listened to the concall, I request them to post an update.
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3019803.pdf (335.6 KB) Hdfc securities view
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The stock getting to a TP of 400+ is unlikely in the near to medium term. Iâll be more than glad if Iâm proved wrong.
Let me rephrase. The stock doesnât deserve to trade at 400+ levels in the near to medium term.
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Can anyone please provide access to conference call notes. Would love to read them!
Thanks,
Navneet
Lets watch how the story unfolds. Its a really futuristic and trending business, its just the cash from sales thats not coming in
Management had been claiming for long to reduce âreceivable daysâ however nothing visible so far⌠Hope H2 current FY we see some improvement there âŚ
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INOX group sells its wind farming business in four states .
http://m.thehindubusinessline.com/companies/inox-exits-wind-farming/article9576032.ece
This is from Analyst call transcript of INOX WIND
Suyesh Kapoor: Sir, my first question is regarding this article which has come in ET Now a few days before regarding Mr. Narain Karthikeyan;he will invest Rs. 1,200 crores in Inox Wind Farm. So if you can please give you views, is it is possible, if it is legally permitted to give your view, if you can please give your view, sir?
Devansh Jain: I am sorry, we do not comment on market rumors. And in any case the supposed article spoke about Inox Renewables;the company we are dealing with over here is Inox Wind. So honestly,we have no comments on Inox Renewables.
I guess this may not have any impact on INOX Wind
Well there is nothing much in detail on the IRL website. The following article talks about the group wanting to focus on the âcore business, including wind turbine manufacturingâ
Although, not very sure what effect it would have on Inox Windâs stock performance. As of now it is up close to 5%
Interesting read
The above article woud be of interest to investors in Suzlon as well .
Not sure if its ok to post the same link on two topics
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Keralaâs largest wind farm to come online in 10 days.
As per the article , the WTG was supplied by Inox wind at price of 7.5 cr / MW
Total 11 WTGâs of 2MW each installed in first phase
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What was the reason for the big 8% upmove today? Doesnât seem to be sectoral tailwinds as Suzlon hasnât budged. Any idea?
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