The issue consists of a fresh equity sale worth Rs 370 crore and an offer for sale of the same amount from its parent company, Inox Wind. Investors can make a minimum bid of 230 equity shares and then its multiple thereof.
Here’s what brokerages are saying:
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The company recorded losses in the last two fiscals, the government’s thrust on green energy will aid in the company’s growth, said Reliance Securities.
“The strong and diverse portfolio, favourable national policy support, visibility for future growth, support of long-term O&M contracts and backing by parent company Inox Wind are key positives, while valuation seems pricey based on the current financial position,” said Reliance Securities.
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“Inox Green Energy has a strong and diverse existing portfolio base with an established track record. Also, favourable national policy support and visibility for future growth is working for the company. Company with reliable cash flow supported by long-term O&M contracts with high credit quality counterparties is supported and promoted by its parent company, IWL,” said Hem Securities.
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The valuation of Inox Green looks reasonable, considering the nature of its business and the comparative margin profiles. Inox green has much better EBITDA margins than its global peers, said KR Choksey Research.
“We are cautious on the company’s order book as most of its contracts are from its parent. We are optimistic considering the consistent track record of the company, strong parentage, government initiatives to push the renewable sector and also expect the financials to improve with reducing debt on the books,” it added with a ‘subscribe’ rating.
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At a higher price band, the company is demanding an EV/Sales multiple of 13.6x (based on FY22 sales), which seems to be on the higher side considering the return ratios, said Choice Broking.
The macros of the wind energy segment are improving after the regime change and pandemic-led restrictions. With a massive capacity addition target over the next five years, the target market for the O&M services would expand, it added with a ‘subscribe with caution’ rating.
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Inox Green has a 7% market share in O&M portfolios and has an opportunity for inorganic growth through the acquisitions of inactive players. The O&M contracts are long-term contracts with price clauses which provide long-term revenue visibility, said Arihant Capital.
“Inox green is expected to clear the debt which will reduce the interest cost substantially and improve bottom levels. The issue is valued at an EV/EBITDA of 22x based on FY22 EBITDA,” it added with a ‘subscribe for the Long term’ rating.
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“Its dependence on the parent company for most O&M contracts may lead to muted growth in future order inflows. The total debt on the books was at Rs 900 crore, though the management expects to become net debt free in the coming period through (IPO proceeds and selling an SPV), we see uncertainty on this and future profitability,” ICICI Direct said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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