Inox Green Energy Services IPO envisages to raise Rs. 740 crone through a mix of Rs 370 crore via fresh issue, and Rs 370 crore through offer for sale. It is offering the shares in price band of Rs 61-65. Inox Green Energy Services Ltd., an arm of the Inox GFL Group and is involved in the operations and maintenance of wind turbine generators.

Bidding date11th Nov – 15th Nov’2022
Issue  Size₹740 Cr ( 370 cr fresh offer and OFS of 370 cr)
Issue Size  (shares )113846154
Face Value in Rs. 10
Bid Lot shares230
Price Band in Rs. 61-65
Issue Structure :
QIB75%
NIB25%
Retail10%,113 L shares, 74 Cr.
Applications for 1x Retail.5 lac

About Inox Green Energy Services

  • Inox Green Energy Services Ltd (“IGESL”) was incorporated on May 11, 2012.
  • I is a subsidiary of Inox Wind Ltd (“IWL”).
  • Inox Green Energy Services is one of the major wind power operation and maintenance (“O&M”) service providers within
    India. The company is engaged in the business of providing long-term O&M services for wind farm projects, specifically the provision of
    O&M services for wind turbine generators (“WTGs”) and the common infrastructure facilities on the wind farm which support the evacuation
    of power from such WTGs.
  • Inox Green Energy Services enjoys synergistic benefits as a subsidiary of IWL, which is principally engaged in the business of manufacturing WTGs and
    providing turnkey solutions by supplying WTGs and offering a variety of services including wind resource assessment, site acquisition,
    infrastructure development, EPC of WTGs, and, through Inox Green, providing long-term O&M services for wind power projects.
  • Pursuant to an exclusivity agreement between IWL and Inox Green Energy Services, the company provides exclusive O&M services for all WTGs sold by IWL
    through the entry of long-term O&M contracts between the WTG purchaser and themselves for terms which typically range between 5 to 20 years.
  • As of June 30, 2022, their O&M services portfolio consisted of an aggregate 2,792 MW of wind farm capacity and 1,396 WTGs.
  • Inox Green Energy Services has a dedicated onsite O&M team to provide 24/7 operation services for its customers’ wind farms to help ensure that their WTGs are generating the highest yield possible under prevailing weather conditions, as well as a dedicated Client Relationship Management team which provides its customers with a direct point-of-contact with the company.
  • The team operates the wind power plant’s infrastructure (which consists of the WTGs) and the power evacuation facilities. In particular, it is able to monitor and control the WTGs in real-time through the use of wind turbine SCADA (supervisory control and data acquisition system)

Anchor Book: Inox Green Energy Services IPO

  • Inox Green Energy allocated 5,12,30,769 shares to a total of 27 anchor investors. 45% of the IPO size was absorbed by the anchors. Inox Green Energy Services Ltd allotted a total of 76,92,120 shares to 5 domestic mutual fund schemes across 3 AMCs as part of anchor book. The mutual fund allocation represents 15.71% of the overall anchor allocation. Some top anchor investors listed below
Anchor Investor% of Anchor Book
Volrado Partners Fund9.01%
Authum Investment and Infrastructure7.51%
Dovetail India Fund7.51%
ICICI Prudential Multicap Fund6.01%
Saint Capital Fund6.01%
Eriska Investment Fund Ltd6.01%
Next Orbit Ventures Fund5.26%
Morgan Stanley Asia (Singapore)4.50%
Nomura Singapore Ltd4.50%
Winro Commercial India Ltd4.50%

Inox Green Energy Services IPO : Financials

Particulars / (₹ Cr)Q1FY23FY22FY21FY20
Revenue from Operations 61.79172.17172.25165.32
Revenue Growth (%) – -0.05%4.19% 
EBITDA as stated 18.93100.2677.2795.35
EBITDA Margin (%) as stated 29.97%52.70%41.48%55.39%
Profit/Loss Before Tax -15.59-4.71-32.342.77
Restated Profit/Loss for the period-11.58-93.2-153.52-52.26
Equity Share Capital 235.02235.02128.62116.21
Net worth 795806.6342.9696.54
Net Asset Value (₹) 33.8334.323.348.31

Salient Points: Inox Green Energy Services IPO

  • The IPO consists of a fresh issue aggregating Rs 370 crore and an offer for sale of 370 crore.
  • This is Inox Green Energy Services’ second attempt to go public.
  • The company had filed DRHP for IPO in Feb 2022 with the markets regulator Sebi but withdrew it later in late April without disclosing any reason.
  • Rs. 370 cr offer for sale (OFS) by listed promoter Inox Wind will trim its 94% stake to 56%.
  • Inox Green Energy Services concluded preferential allotment of equity shares of Rs 58 crore at Rs 80.64 a share in Dec 2021, in lieu of repayment of debt owed to the promoters on account of receipt of materials/services.
  • Inox Green has a 7 per cent market share in O&M portfolios
  • The company has recently sold 3 SPVs to Adani Green for Rs. 1 lakh each and 1 SPV to Torrent Power for Rs. 33 cr.

Concerns

  • Changes in government policies & regulations
  • Significant business dependence on the promoter company Inox wind
  • Poor project executions and operational weakness of the promoter company which continues to make loss.
  • Competitions from the OEMs.
  • Execution concerns related to Inox Wind Ltd

Inox Green Energy Services IPO: Assessment

  • Governments thrust on green is likely to help company’s growth.G
  • The primary objective of the IPO is to cut Debt.
  • The company has Rs.910 cr debt as of 30.6.22. Rs. 370 cr of the fresh issue will go for debt repayment.
  • OFS of Rs. 370 cr. promoter Inox Wind will bring down Inox winds net debt .
  • Inox Green Energy Services subsidiary Nani Virani Wind Energy Pvt. is engaged in renewable energy production. The company is looking to sell 50MW capacity for around Rs 300 crore in the current fiscal to further pare down its debt.
  • The company last year sold its EPC business to its promoter. The EPC business accounted for a significant portion of the losses incurred by the company in the last three years.
  • Company has a strong and diverse portfolio.
  • There is good visibility for future growth due to long-term O&M contracts & Govt. Policy.
  • The company provides exclusive O&M services for all wind turbine generators (WTGs) sold by Inox Wind.
  • In this segment, O&M services offered by the OEM dominated the market with up to 70% of market share. ISPs and renewable energy developers contributed to 20-25% and 5-10% respectively in FY21.
  • Some of the key OEMs offering services in the global market are GE, Siemens Gamesa Renewable Energy S.A, Vestas and Enercon GMBH.
  • Inox Green Energy Services has a stable annual income owing to long-term O&M contracts. It is the subsidiary of Inox Wind Ltd. which is part of the Inox GFL Group of companies.
  • THe company markets its O&M services in collaboration with and alongside Inox Wind Ltd, which markets its WTGs under the Inox GFL group brand. Through this process, it, together with IWL, participates in various tenders and bids rolled out by PSUs, IPPs and retail customers
  • As of June 30, 2022, Inox Wind Ltd had entered into binding contracts for the supply of 2 MW capacity WTGs with an aggregate capacity of 964 MW. Further, IWL had also received letters of intent, which are non-binding and therefore may not lead to execution of any form of binding contract, for its new 3.3 MW capacity WTGs with an aggregate capacity of 524.7 MW. . The expansion of IWL’s product offerings to include its new 3.3 MW capacity WTGs is expected to increase its market prominence and market share,
  • Timely execution of the orders by IWL will indirectly drive Inox Green Energy Services revenues.
  • Inox Green Energy’s capacity under O&M contract have grown at a low rate of 3% CAGR between FY20 to Q1FY23,
  • Parent company Inox Wind Ltd (IEL) has been incurring losses and has destroyed investors wealth.
  • Inox Green Energy Services has good margins in O&M business and once it get past it febt and subsidary issues, it is lekly to be profitable. Ho[owever valuation being demanded are quite streched.

I have not yet decided to apply for Inox Green Energy IPO. The company’s fortunes are related to performance of wind sector & its parent Inox Wind Ltd. I may put in a small application on Day 3 if there is good response from QIB Investors.

Inox Green Energy Services IPO: Apply or Not (My view Only)

Risk : Moderate
Expected Reward : Low Profit / Loss
Listing Gains : Not sure. Current GMP ~ in single digits
Hold for Medium Term: Valuations streched but good tailwinds for sector
Subscription : Expected to be moderate.
Above are my views only. Please do your own diligence.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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