Buy Inox Wind Ltd for the Target Rs 92 by Motilal Oswal Financial Services Ltd
Weak 1Q; stronger momentum in 2H
* Inox Wind (IWL) missed our revenue est. by 15% at INR8.1b. EBITDA of INR1.5b came in 18% below our est., with an EBITDA margin of 19% (vs. 22%/16% in 1QFY26/4QFY26)- in line with our estimate. Adjusted PAT came in at INR0.4b, 48% below estimates.
* Key things we liked about the result:
1) The group's renewable arm, INOX Clean Energy, is expected to add ~3GW of renewable capacity annually, with wind accounting for ~25-30% of this mix – a potential ~0.75–0.9GW annual execution opportunity for INOX Wind and subsidiaries INOX Green/IRSL on O&M/EPC
2) of the 9.3GW of renewable capacity awarded in India through tenders in 1QFY27, standalone wind projects accounted for 2.35GW (~25%), reflecting healthy demand for wind capacity
3) NCLT approval for the acquisition of Wind World India (~4.5GW) is expected to unlock meaningful synergies, with integration expected to complete by 2QFY27.
* Key monitorables:
1) Ability to meet FY27 revenue growth guidance of 75% YoY, given 1QFY27 delivered only ~8% of the full-year target
2) Trajectory of new order inflows, particularly third-party orders, and execution ramp-up.
* Cut FY27/FY28 revenue estimates by 8%/10%: We reduce our FY27/FY28 revenue estimates by 8%/10% as we estimate deliveries to be lower at 1.1GW/1.3GW in FY27/28.
Highlights of the 1QFY27 performance
* The order book stood at ~4.4GW (including the MOU with Inox Clean or its subsidiaries), providing 24–36 months of execution visibility.
* The order book comprises ~59% equipment supply and ~40% turnkey projects (excluding orders from InoxGFL Group entities and considering only third-party orders).
* The 4X wind turbine prototype remains on track for installation in Aug'26, with commercial launch targeted by FY26-end.
*INOX Clean Energy is expected to add ~3GW RE capacity annually, with ~25–30% wind, translating into a potential 0.75–0.9GW annual opportunity for INOX Wind (equipment), INOX Green (O&M), and IRSL (EPC).
* NCLT approved the acquisition of Wind World India's ~4.5GW wind O&M portfolio, with transaction completion expected in 2QFY27.
* IRSL is evaluating expansion into higher-value manufacturing, including transformers and power electronics, to broaden its product portfolio beyond EPC
Valuation and view
* Based on a valuation multiple of 20x FY28E EPS, we arrive at our TP of INR92. We reiterate our BUY rating on attractive valuations.
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