Shares of Inox Wind Ltd climbed 10 per cent in Saturday's trade following a better-than-expected Q3 results, with in-line execution at 189MW. Buy Inox Wind stock, said Nuvama Institutional Equities as it suggested a target price of Rs 233 on the stock. The stock climbed 11.93 per cent to hit a high of Rs 188.45. Nuvama's target price suggests a 24 per cent upside over this price.
Nuvama said Inox Wind's revenue per MW was subdued at Rs 4.5 crore per MW due to low EPC sales, which was offset by higher operating profit margin at 22.7 per cent against estimate 17 per cent on product heavy mix.
"PAT beat estimate by 27 epr cent, adjusted for exceptional items (higher other income offset by one-off tax charge; exhibit 2, 3). Order inflow was soft at 231MW taking order book to 3.3GW. Guidance was retained at FY25/26 execution of 800MW/1200MW and 17 epr cent-plus OPMs," it said.
Nuvama said Inox Wind is one of only two wind-EPC suppliers in India, riding tailwinds of RTC, FDRE and C&I demand.
"We are tweaking FY25–27E, cutting realisation/MW, factoring lower EPC execution and inching up margin, yielding target price of Rs 223 at 30 times FY27E wind turbine generator EPS + DCF of O&M; ‘BUY’," it said.
For the quarter, Inox Wind's Ebitda margins were a healthy 22.7 per cent, aided by a greater mix of WTG supply while EPC-related installation costs will spill over to Q4FY25.
The management expects full-year Ebitda margins to be 17 per cent-plus. The company expects to maintain these margins through FY26–27E aided by execution ramp-up-led operating leverage and discontinuance of royalty payments to technology partner of Rs 0.6mn/MW by end-FY25E.
"Inox Wind firmed up execution in Q3 to 189MW (+81% YoY) albeit with a lower realisation/MW with revenue at INR9.1bn (estimate: INR10.6bn). The management maintained the execution guidance for FY25E/26E at 800MW/1,200MW, leaving a tall task of 331MW to be executed in Q4FY25. We are factoring in 800MW/1250MW/1800MW over FY25E/26E/27E," Nuvama said.
Nuvama said Inox Wind remains a key player in the C&I segment and benefits from a duopolistic market in wind EPC. It remained positive on the sector and Inox Wind but tweaked its FY25E–27 a bit, cutting realisation per MW estimate, factoring in lower EPC execution and inching up margins.