Fund flows to help Inox Wind pare debt, speed up projects

On Wednesday, the company, which provides wind energy solutions, said in a press release that it has made preferential allotment to the promoter group at Rs 126 per share to raise Rs 150 crore. This and the conversion of compulsorily convertible preference shares to ordinary equity will increase their stake to 72% compared with 67.6% at the end of December 2021.

Apart from the promoters, investors including Samena Green, a green fund of investment group Samena Capital, and Kolkata based Lend Lease will together invest Rs 62.6 crore through preferential allotment, and another Rs 190 crore through convertible warrants at Rs 132 per share.

The company’s total borrowing was Rs 1,697 crore at the end of September 2021 compared with Rs 1,552 crore at the end of FY21. Of this, around Rs 800 crore was external debt while the remaining was from the group company (GFL) for setting up a wind power plant.

Inox Green Services, Inox Wind’s subsidiary for operations and maintenance, plans to raise around Rs 750 crore through an initial public offering (IPO). The IPO proceeds and the latest fund raising are likely to prune Inox Wind’s net debt by Rs 1,100-1,200 crore.

The company expects to turn net debt free by the end of this fiscal year. In the first nine months of FY22, its interest cost was Rs 200 crore, while revenue from operations was Rs 487 crore. The fund infusion will improve the company’s working capital implying better order execution. It had orders of 1,298 MW at the end of the December 2021 quarter. This provides a revenue visibility of Rs 7,000 crore in the next two years. The company has four plants to manufacture nacelles & hubs, blades and towers and a land bank to install around 5,000 MW of capacity.

The company executed about 100 MW orders in FY22 amid higher competition and delay in availability of green corridor of around 80MW projects. As a result, its market share fell to around 10% from the historical average of 10-15%. In the nine months to December 2021, it reported operating profit before depreciation and amortisation (EBITDA) of Rs 9.45 crore compared with an EBITDA loss of Rs 115.5 crore in FY21.

With rising demand for renewable energy, Inox Wind expects the industry wide execution to be around 2-3 GW in the current fiscal with the company’s share at around 400-500 MW. Typically, execution of one MW of wind power order generates revenue of Rs 5-6 crore implying a potential revenue of around Rs 3,000 crore for FY23 with an EBITDA margin of 8-10%. On Wednesday, the company’s stock closed 2.4% lower at Rs 116 on the BSE.