Inox Wind: Expect 65% earnings CAGR over FY15-17; re-rating imminent

Inox Wind

Initiating Coverage | Sector: Capital Goods

Inox Wind

BSE Sensex

28,021

S&P CNX

8,453

CMP: INR425

TP: INR543 (+28%)

Buy

Favorable winds

Expect 65% earnings CAGR over FY15-17; re-rating imminent

Stock Info

Bloomberg

Equity Shares (m)

M.Cap. (INR b) / (USD b)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

INXW IN

221.9

84.9/1.3

495/385

-3/-/-

Financial Snapshot (INR Billion)

Y/E March

2015 2016E 2017E

Net Sales

27.1 46.1 56.4

EBITDA

Adj PAT

EPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

RoE (%)

RoCE (%)

Valuations

P/E (x)

P/BV (x)

EV/EBITDA (x)

31.8

6.6

21.1

15.6

4.6

11.4

11.7

3.3

8.2

4.6

3.0

13.4

64.8

20.6

19.2

8.7

6.1

27.3

11.4

8.0

36.2

32.7

28.3

32.1

Wind energy presents a strong growth opportunity with the markets likely to

expand from 2.3GW in FY15 per annum to 4-5GW per annum in the medium term,

aided by restoration of accelerated depreciation (AD) and generation-based

incentives (GBI).

We believe INXW is suitably placed and expect it to clock sales of 825MW in FY16

and become the number-1 player, with ~25% market share. Over FY15-17, we

expect INXW to deliver 28% volume growth.

Earnings should grow at a CAGR of 65% over FY15-17, driven by 44% revenue

CAGR and improvement in realization. We believe a re-rating is imminent. Buy.

102.0 104.1

29.8

32.8

91.5 127.6

Wind energy sector at inflexion point:

The wind energy sector in India had

witnessed a sharp fall in capacity addition from 3.2GW in FY12 to 1.2GW in

FY13, led by withdrawal of accelerated depreciation (AD) and generation-based

incentives (GBI) in March 2012. However, renewable energy is now a key focus

area for the government, which has ambitious plans to set up an installed

capacity base of 60GW in the wind energy segment by 2022 (vs 23GW as at end

FY15). We believe there are multiple tailwinds that will help drive the size of the

Indian wind energy market from 2.3GW in FY15 to 4-5GW in medium term.

INXW – prepped for rising wind capacity installation:

In FY16, we expect INXW

to clock sales of 825MW and become the number-1 player, with ~25% market

share. INXW is well positioned to benefit from the wind market revival,

supported by (1) strong relationships with IPPs, (2) technology partnerships with

global leaders, (3) ready pipeline of project sites, (4) strategically located

manufacturing units, and (5) established execution track record.

Expect 65% earnings CAGR over FY15-17:

We expect INXW to report 44%

revenue CAGR over FY15-17, largely supported by volume growth of 28% and

realization improvement of 8%. Operating profit is likely to witness 58% CAGR

over FY15-17, led by margin expansion of 330bp during the period. Margin

expansion to be supported by various initiatives including New product launch,

Improved logistics and supply chain benefits, Lower Royalty expense, Improved

Realizations, Recent duty benefits, etc. Driven by strong earnings growth and

debt repayment, we expect RoE to improve to 28% and RoCE to 32% in FY17.

Initiating coverage with Buy rating:

INXW is well positioned to benefit from the

huge opportunity India’s wind power segment presents. We expect its revenue

to grow at a CAGR of 44% and earnings to grow at a CAGR of 65% over FY15-17.

Backed by its strong revenue and earnings growth, and robust return ratios (RoE

of 28% and RoCE of 32% in FY17E), we initiate coverage with a

Buy

rating. Our

target price of INR543 (15x FY17E EPS of INR36) implies 28% upside.

Shareholding pattern (%)

As on

Promoter

DII

FII

Others

FII includes depository receipts

Mar-15

85.6

3.7

3.5

7.2

1 July 2015

Inox Wind

Wind energy sector at inflexion point

Multiple tailwinds; market size to double over FY15-22

The wind energy sector in India had witnessed a sharp fall in capacity addition from

3.2GW in FY12 to 1.2GW in FY13, led by withdrawal of accelerated depreciation (AD)

and generation-based incentives (GBI) in March 2012.

However, renewable energy is now a key focus area for the ruling BJP-led government,

which has ambitious plans to set up an installed capacity base of 60GW in the wind

energy segment and 100GW in the solar segment by 2022.

We believe there are multiple tailwinds that will help drive the size of the Indian wind

energy market from 2.3GW in FY15 to 4-5GW in medium term.

An enabling environment is in place

There are multiple factors supporting India’s wind energy segment: (a) the central

government’s ambitious plans (60GW of wind energy capacity by 2022), backed by

fiscal and regulatory incentives (AD and GBI), (b) finalization of feed-in tariff and

regulatory support provided by state governments, (c) inclusion of renewable

generation obligation (RGO) in the Electricity Act, (d) untapped wind power

potential of 100GW (CWET study), and (e) long-term opportunities arising from

offshore wind power installation and repowering of old WTG sites. We expect the

Indian wind market size to grow from 2.3GW in FY15 to 4-5GW in medium term.

Exhibit 1:

Favorable regulatory changes to boost wind energy investment

Accelerated Depreciation (AD)

Overview and Policy

Withdrawn in Mar 2012, reintroduced in Jul 2014 and notified in

September 2014

Impact:

Brings back SME interest, Captive demand

Withdrawn in Mar 2012, reintroduced in Mar 2013 and notified

in Sep 2013

INR0.50/unit incentive to generators with a cap of INR1 cr/MW,

up from Rs.0.62 cr/MW for 4-10th year

Generation Based Incentives (GBI)

Impact:

IPPs to focus on setting up new capacities

Access to low cost funding

National Clean Energy cess doubled to INR200/mt

This Fund to be used for GBI, low cost funding and green

corridors

Impact:

Higher corpus available to facilitate growth

Mandatory CSR (Renewable)

Under new Companies Act, eligible companies have to spend 2%

of its average net profit on CSR activities

Renewable energy / WTG qualifies under mandatory CSR spend

Impact:

Demand from Corporates / PSUs to strengthen

Renewable Purchase Obligation

Distribution companies are required to procure a percentage of

all electricity from renewables

Impact: Aids to meet the renewable energy sourcing target of 15%

by 2020

Other incentives

Fast tracking of implementation of Green Corridor will address

evacuation constraints

Long term funding to infrastructure projects (up to 25 years)

4% SAD on parts and RM for WTG manufacturing removed

Source: Company, MOSL

1 July 2015

Inox Wind

Exhibit 2:

Wind Financing Policy’s evolution

Source:Industry Reports, MOSL

To spur growth in renewable energy sector, incentives like accelerated depreciation

(AD-introduced in 1990) and gross generation incentives (GBI- introduced in 2009)

were introduced; however these initiatives were withdrawn in 2012, which led to

slump in wind energy installation and FY13/FY14 saw a muted average addition of

1.9GW per annum, down from 3GW addition in FY12. With reinstallation of these

incentives in 2014, we expect Indian wind market size to grow from 2.3GW in FY15

to 4-5GW in medium term.

Inclusion of RGO norms in

Electricity Act to increase

demand for renewable

power installation

The Power Ministry plans to amend the Electricity Act to introduce renewable

generation obligation (RGO), whereby conventional power plant developers would

be obligated to generate ~10% power from renewable energy sources. Successful

inclusion and implementation of the RGO norms can help the wind market to

expand from 2.3GW in FY16E to 4-5GW per annum in the medium term.

State governments also encouraging wind energy

State governments hold the key for successful implementation of the central

government’s ambitious capacity installation plan of 60GW. They play a key role in

land allocation for the wind sites, evacuating power and providing grid connectivity

to the power generated from the wind sites. States have provided incentives over

and above the central government’s sops to attract investments in wind energy.

Key incentives provided by states

Feed-in tariff:

Several states like Rajasthan, Madhya Pradesh, Gujarat, Andhra

Pradesh, Telangana, Maharashtra and Karnataka have provided preferential tariff

over and above MNRE’s GBI of INR0.5 per kilowatt-hour to attract investment. Some

have also increased wind power tariffs by 2-15% to attract investments. These states

are expected to witness traction and will play a critical role to achieve the aggregate

target of 4-5GW per annum.

1 July 2015

Inox Wind

Exhibit 3:

Preferential Feed in tariff (FIT) provided by states

State

Andhra Pradesh

Gujarat

Chattishgarh

FiT (INR/KWh)

4.7

4.15

WPD >200w/m2:6.25

WPD 201-250w/m2:5.68

WPD 251-300w/m2:5.00

WPD 301-400/m2:4.17

WPD>400/m2:3.91

4.15

WPD 201-250w/m2:5.81

WPD 251-300w/m2:5.06

WPD 301-400/m2:4.31

WPD>400/m2:3.88

CUF20% 5.80

CUF22% 5.27

CUF25% 4.64

CUF30% 3.87

CUF32% 3.62

4.2

4.77

5.92

WPD 200-250w/m2:5.7

WPD 250-300w/m2:5.01

WPD 300-400w/m2:4.18

WPD>400w/m2:3.92

4.48

5.8

5.12 (for projects in Jaisalmer, Jodhpur and Barmer

5.38 (for others)

3.51

WPD >200w/m2:5.0

WPD 201-250w/m2:4.45

WPD 251-300w/m2:3.80

WPD 301-400/m2:3.05

WPD>400/m2:2.80

3.21; escalation of 5.71 for 10 years

Tariff cap of 5.71 for 10 years

Gujarat

Haryana

J&K

Karnataka

Kerala

Madhya Pradesh

Maharashtra

Orissa

Punjab

Rajasthan

Tamil Nadu

Uttarakhand

Uttar Pradesh

West bengal

Reduced or no VAT:

Several states including Tamil Nadu, Karnataka, Maharashtra

and Gujarat have policies that eliminate or reduce value-added tax (VAT) for wind

turbine components.

Exhibit 4:

VAT benefit provided to attract investments in states

State

Tamil Nadu

Karnataka

Gujarat

Maharashtra

VAT rates

Reduced VAT from 14.5% to 5%

5.50%

Source: Company, MOSL

Wheeling and banking:

For wind power, wheeling charges (paid to the distribution

company to use transmission infrastructure to send power from offsite locations)

for different states are in the range of 2% (Madhya Pradesh and Maharashtra) to

7.5% (West Bengal). Of the total wind energy fed to the grid in a financial year, Tamil

1 July 2015

Inox Wind

Nadu allows 5% and Karnataka 2% as banked energy that can be accessed any time

during the financial year.

Green cess fund:

The Maharashtra Energy Development Agency (MEDA) has created

a green cess (tax) fund. A part of this fund is used to create infrastructure for grid

connectivity with proposed wind farms. Strong evacuation infrastructure promotes

investments in wind power.

Land facilitation policy:

State governments like Rajasthan, Madhya Pradesh and

Gujarat have formalized land facilitation policies to expedite wind energy projects.

Major projects get delayed mainly on account of delays in land acquisition.

Exhibit 5:

Land facilitation policy

State

Rajasthan

Land Facilitation Policy

Government land at concessional rates -- 10% of DLC rates, with maximum allocation of 5 Hect./MW.

The conversion charges (private land to industrial use) will be 10% of charges levied for industrial purposes under the

relevant rules.

Madhya Pradesh

Gujarat

Maharashtra

Government revenue land use permission at INR1/-(token) premium per year (as per circular No. F-16-3-93-VII-2A,

dated 06-09-2010 and No. F-6-53-2011-VII-Nazool, dated 08-08-2011)

WTGs may be set up on private land, or revenue wasteland / GEDA land, if available

Developer/Investor can be allotted Government barren land (permissible for industrial use), at declared windy sites, on

lease basis with 30 yrs agreement

Each eligible developer may be allocated available Govt. land to harness up to a maximum of 200mw of wind power

initially. After commissioning of 100 MW capacity Wind farms in 1st stage in the allocated Govt. land, the Government

may allocate land for another 100 MW capacity Wind Farms. The application from the developers for Government land

will be considered on a first-cum-first-served basis.

Andhra Pradesh

India has significant untapped wind potential

Source: Company, MOSL

According to the Centre for Wind Energy Technology (C-WET), India has the

potential to install over 100,000MW of wind turbines at 80meters hub height,

implying an untapped wind power potential of 78GW. Based on C-WET estimates,

India has explored only 22% of its wind power potential. This indicates strong long-

term business opportunity for domestic WTG manufacturers.

Exhibit 6:

Potential v/s currently installed capacity (MW)

State / UTs

Andhra Pradesh

Gujarat

Jammu & Kashmir

Karnataka

Kerala

Madhya Pradesh

Maharashtra

Odisha

Rajasthan

Tamil Nadu

Uttarakhand

Uttar Pradesh

Others

Total

Installable Potential

@50 m

@80 m

5,394

14,497

10,609

35,071

5,311

5,685

8,591

13,593

790

837

920

2,931

5,439

5,961

910

1,384

5,005

5,050

5,374

14,152

161

534

137

1,260

489

1,833

49,130

102,788

Installed Capacity

913

3,581

2,549

567

4,370

3,053

7,394

22,462

Source: C-WET,Company, MOSL

1 July 2015

Inox Wind

Offshore and Repowering to be long-term demand drivers

Offshore wind:

The Ministry of New and Renewable Energy (MNRE) issued a draft

policy for the development of offshore wind energy in 2013, which aims to deploy

wind farms within territorial waters (12 nautical miles). Preliminary assessments

indicate that the coastlines of Tamil Nadu (Rameshwaram and Kanyakumari) and

Gujarat have reasonably high offshore wind potential. A recent study conducted by

WISE estimates Tamil Nadu’s offshore wind potential at 127GW at 80 meters height,

though this is yet to be corroborated by other studies (MNRE, 2013E). A separate

study estimates that India has the potential to develop 350GW of offshore wind

energy (PIB, 2013). Offshore wind energy offers a strong business opportunity for

INXW.

Repowering:

Repowering low-capacity and aging wind turbines to improve

efficiency, or to achieve better grid integration or higher energy yield could be

another big business opportunity in India. Currently, Germany, Denmark, the US and

the Netherlands are at the forefront of the repowering movement. India’s current

repowering potential is estimated at ~2,760MW (GWEC, 2012A), but there are

several practical challenges (involving land ownership, lack of supporting state

policies or economic incentives), which hinder the realization of this potential. Tamil

Nadu, which has several aging (older than 15 years) wind farms located in wind-rich

districts, is a state with high repowering potential. Gamesa is the first company to

implement a wind repowering project in India, “Project Avatar” in Tamil Nadu in

2011 (MNRE, 2011A).

1 July 2015

Inox Wind

INXW: Prepped for rising wind capacity installation

To become number-1 player, with 25% market share

In FY16, we expect INXW to clock sales of 825MW and become the number-1 player,

with ~25% market share.

INXW is well positioned to benefit from the wind market revival, supported by (1)

strong relationships with IPPs, (2) technology partnerships with global leaders, (3)

ready pipeline of project sites, (4) strategically located manufacturing units, and (5)

established execution track record.

Well-balanced, differentiated business model

In India, 80% of the wind energy projects are executed on turnkey basis, as wind

power developers do not have in-house capabilities to undertake project

development on a large scale. INXW’s business model, however, is equally focused

on turnkey solutions and WTG supplies. While turnkey solutions contribute 48% of

its orderbook, WTG supplies constitute 52%. Its balanced business model helps

INXW to optimally utilize its organizational resources. Project execution on EPC basis

can severely constrain organizational bandwidth.

INXW provides turnkey solutions together with its wholly-owned subsidiaries, Inox

Wind Infrastructure Services Limited (IWISL) and Maruti-Shakti India Limited

(MSEIL). Its services include wind resource assessment, site acquisition,

infrastructure development, erection and commissioning, and long-term operation

and maintenance of wind power projects.

Exhibit 7: Complete solution provider to customers

Wind Farm Identification

Wind resource assessment to identify suitable site for a wind farm and physical assessment of the site

Energy assessment of the site

Identification of land including revenue, private, forest and tribal land

Approach road and logistic feasibility

Study of power evacuation options at site

Finalization of evacuation grid substation based on load flow study and capacity

Land or light of way for the transmission line

Development and construction of infrastructure for wind farm

Land development to enable installation of WTGs

Assist the customer in connection with obtaining statutory approvals necessary to install and operate the

wind farm and common infrastructure facilities including the sub-station and transmission lines

Provide support in connection with power purchase agreements and wheeling and banking agreements

with state distribution companies

Construction of WTG tower foundations

Supply, erection and installation of turbines

Construction and installation of a unit sub-station and switch yard at each WTG

Installation of an energy meter to measure electricity generated

Pre-commissioning and commissioning of WTGs

24/7 operation and maintenance of WTGs and wind farms, including preventive maintenance of WTGs,

unit sub-stations and common infrastructure facilities including sub-station and transmission lines

Maintain spares and consumables for operation and maintenance of turbines

Installation of supervisory control and data acquisition for order management

Provide various manpower, including with respect to wind farm security

Support for registration for renewable energy certificates (REC), generation based incentives (GBI) and

clean development mechanism (CDM)

Dedicated customer relationship management for customers’ daily generation report, monthly billing and

other support

Source: Company, MOSL

Power Evacuation

Infrastructure Development

Support for all government

approvals

Engineering, Procurement

and Construction

Operation and Maintenance

Post commissioning Support

1 July 2015

Inox Wind

INXW has focused on the IPP segment and is the preferred partner for 8 of the top-

10 IPPs in India. Focus on IPPs and timely project execution has helped INXW to

develop strong relationships with the IPPs. The government is encouraging

renewable energy projects and targets to have an installed capacity of 60GW by

2022. Encouraged by the enabling government policies, several IPPs have firmed-up

strong capacity addition plans. Given INXW’s relationships with the IPPs, we believe

it is in a sweet spot.

Its successful IPO has improved INXW’s profile as a serious player, even for several

MNC PE funds / IPPs setting up wind power projects in India. This should drive

greater acceptance and also enable the company to match market pricing against a

new entrant’s strategy of offering discounts. In the equipment supply business,

INXW is among the top-2 players in India; while the size of this segment is 15% for

the WTG industry, it is targeted to contribute 30% to INXW’s revenue in FY16.

Exhibit 7:

Future plans of key IPPs in India

Key Players

Renew Energy

Continuum Wind

Mytrah Energy Limited

Bharat Light and power

CLP India

Tata Power

Hero Future Energies Pvt

500

145

525

200

1,081

Comments

450MW pipeline to be commissioned in 2015

270MW under construction,580MW under development

Plans to have 1,000MW installed capacity by 2017

Plans to have 1,000MW installed capacity by 2019

263MW of wind power plant are under construction

471 469MW wind energy assets under construction across the world

78 Plans to have 1,000MW installed capacity by 2017

Source: Company, MOSL

Exhibit 8:

Key WTG manufacturers in India with installed capacity of ~10GW

Company

Gamesa Wind Turbine Private Limited

GE India

Inox Wind Ltd.

Kenersys India Pvt. Ltd.

Leitner Shiram Manufacturing Ltd.

ReGen Powertech Pvt. Ltd.

Suzlon Energy Limited

Vestas Wind Technology India Pvt. Ltd.

WinWinD Power Energy Pvt. Ltd.

Installed Capacity

(MW)

Product Range

(KW)

Technology

tie-up

Gamesa

1,500

800/850/2,000

450

1,500/1,600

1100

2,000 AMSC- Austria

Kenersys

400

2,000

250

1,350/1,500 WindFin B.V.

VENSYS

750

1,500

3,700 600/1,250/1,500/ Suzlon Energy

1,000 1,650/1,800/2,000 Vestas Wind

WinWinD,

1,000

Source: MOSL, Company

Strong order book, ready pipeline of project sites provide comfort

As of March 2015, INXW’s order book stood at 1,178MW, comprising 614MW for

the supply and erection of WTGs and 564MW for the supply of WTGs. The order

book includes executed binding contracts for 825MW and term sheets (or letters of

intent) for 432MW. Also, INXW has access to project sites in Rajasthan, Gujarat,

Andhra Pradesh, Maharashtra and Madhya Pradesh suitable for the installation of

an aggregate capacity of 4,402MW, which makes available strong ready

infrastructure to provide turnkey solutions. Robust order book and ready pipeline of

project sites provides comfort on the revenue visibility front. We expect INXW to

deliver 825MW in FY16 and 950MW in FY17.

1 July 2015

Inox Wind

Exhibit 9:

Order book composition – FY15

Exhibit 10:

Project pipeline of 4.4GW

Acquired Wind sites (MW)

Rajasthan

Supply and

Erection, 48

Gujarat

Supply of

WTG, 52%

Madhya Pradesh

Andhra Pradesh

1,355

430

285

Wind Sites under acquisition

process (MW)

Rajasthan

Gujarat

Madhya Pradesh

Maharashtra

Andhra Pradesh

Total

2,090

Total

1,194

164

634

300

2,312

Source: Company, MOSL

Exhibit 11:

Robust order inflow led by finalization of orders

Exhibit 12:

Turnkey segment sales to reduce, improving

from IPPs

organizational bandwidth to increase volumes

Order inflow (MW)

1,162

13%

630

100%

FY11

120

198

100%

87%

88%

70%

64%

12%

30%

36%

Turnkey Sales (%)

Equipment Sales (%)

FY12

FY13

FY14

FY15

FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

Source: MOSL, Company

Technology tie-ups help save on R&D cost

INXW has entered into technology tie-ups with global players to source key

components of the WTG equipment. Technology tie-ups ensure that INXW has

access to latest technology and also saves on R&D cost, which helps to keep its cost

structure lean.

WTG technology:

INXW has licensed the technology to manufacture 2MW

WTGs in India from AMSC Austria, and has an exclusive and perpetual license in

India. In August 2014, INXW and AMSC amended the agreement to cover all

2MW WTGs with rotor diameters between 85 meters and 120 meters. In

addition, INXW has a non-exclusive license to manufacture 2MW WTGs

worldwide based on AMSC’s proprietary technology. Globally, over 15GW of

aggregate production capacity operates on AMSC technology.

Electronic control system (ECS):

As per the terms of license from AMSC, INXW is

required to purchase ECS manufactured by AMSC or its affiliates.

Rotor blade sets:

INXW has a non-exclusive perpetual license from

WINDnovation Engineering Solutions GmbH, Germany.

Gearboxes and generators:

INXW procures gearboxes from DHHI (China) and

Wikov Industry a.s. (Czech Republic), and generators from Emerson Industrial

Automation and ABB India.

1 July 2015

Inox Wind

Strategically located manufacturing units ensure efficient cost structure

INXW manufactures the key components for WTGs in-house, which ensures cost

competitiveness, cost-effective logistics, and attractive margins. It has split its

manufacturing activities to ensure cost-efficiency. The existing rotor blade and

tower manufacturing facilities are located at Rohika in Gujarat, adjacent to a

highway to facilitate easier handling during transportation to wind sites and sea

ports. This location is also close to states like Rajasthan, Gujarat, Maharashtra and

Madhya Pradesh, where there is good potential for wind energy production. The

more easily transportable nacelles and hubs are manufactured in Himachal Pradesh,

which gives INXW certain tax incentives.

INXW is putting up a new integrated manufacturing facility at Barwani, Madhya

Pradesh to produce nacelles and hubs, rotor blade sets and towers. This is close to

projects in Madhya Pradesh (MP) and Rajasthan. Expansion at MP, coupled with

capacity augmentation at Gujarat would lead to a near doubling of capacity to

1.6GW by the end of FY16. On completion, total capacity would be 950 nacelles and

hubs, 800 rotor blade sets, and 600 towers.

Exhibit 13:

Doubling manufacturing capacity to 1.6GW by end FY16

Component(s)

Nacelles and Hubs

Rotor blade sets

Towers

Rotor blade sets

Towers

Plant Location

Himachal Pradesh

Madhya Pradesh

Gujarat

Installed Annual

Production Capacity

550

256

150

Post

Proposed Expansion

550

400

300

400

300

Source: Company, MOSL

Back-to-back warranty tie-ups with suppliers obviate provision requirement

INXW outsources raw material and components that it does not manufacture in-

house. It sources a portion of the towers required for WTGs from Fedders Lloyd

Corporation. It has a license from AMSC for the production and sale of 2MW WTGs

in India based on AMSC’s proprietary technology. It also purchases ECS

manufactured by AMSC or its affiliates for all WTGs based on AMSC technology.

INXW gets warranties from component and raw material suppliers against deficient

performance and resultant liabilities.

Shift in customer profile from individuals to IPPs augurs well for INXW

The average wind installation size in India has been increasing with the shift in

customer base from individuals (AD market) to IPPs (GBI market). The average

project size has increased from 2MW in 2009 to 7MW in 2013. Project size of 50MW

and above is becoming the norm for IPPs in India. This customer profile shift augurs

well for INXW, as its business model is focused on the IPP segment rather than the

accelerated depreciation (AD) market. It is the preferred partner for 8 of the top-10

IPPs in India. Focus on IPPs and timely project execution has helped INXW to

develop strong relationships with the IPPs. Encouraged by enabling government

policies, several IPPs have firmed-up strong capacity addition plans. Given INXW’s

relationships with the IPPs, we believe it is in a sweet spot.

1 July 2015

Inox Wind

Exhibit 14:

Shift in project size and customer profile in India

<10 MW

10-25MW

25-50MW

>50MW

2009

2010

2011

2012

2013

Source: Company, MOSL

Operation and maintenance business provides interesting opportunities

As of December 2014, 742MW produced and sold by INXW were under operation,

84MW had been erected but not commissioned, and 312MW had been supplied but

not yet erected and commissioned. Given its cumulative supplies of 1,044MW,

operation and maintenance (O&M) provides interesting opportunities. We expect

the contribution of O&M to increase meaningfully post the two-year warranty. The

equipment supplier retains O&M on 100% of the projects and the business has gross

margins of 50-55%. The typical cost for O&M stands at ~INR1m/MW per annum. We

expect the O&M business revenue to scale up from INR39m in FY14 to INR594m in

FY17 (147% CAGR).

Exhibit 15:

Robust 82% CAGR expected in installed base over

Exhibit 16:

O&M revenue to increase exponentially as

FY15-17E

installed base increases

WTG comissioned (MW)

Installed base (MW)

2,428

1,516

742

274

774

913

FY16E

FY17E

FY14

159

FY15

374

594

O& MRevenue (INR M)

2,802

1,212

154

318

150

468

FY13

FY14

FY15

FY16E

FY17E

FY18E

FY19E

Source: Company, MOSL

1 July 2015

Inox Wind

Expect 65% earnings CAGR over FY15-17

Return ratios to improve

We expect INXW to report 44% revenue CAGR over FY15-17, largely supported by

volume growth of 28% and realization improvement of 8%.

Operating profit is likely to witness 58% CAGR over FY15-17, led by margin expansion

of 330bp during the period.

Driven by strong earnings growth and debt repayment, we expect RoE to improve to

28% and RoCE to 32% in FY17.

Expect revenue CAGR of 44% over FY15-17

We expect revenue to grow at a CAGR of 44% over FY15-17, led by volume CAGR of

28% and 8% increase in realization. Growth in realization would be driven by

increase in sales of the new Rotor 100 product, which provides 15% higher energy

efficiency with 5% increase in cost, and by reduction of discounts.

Exhibit 17:

Improvement in realization led by increase in sales

Exhibit 18:

Revenue to witness 44% CAGR over FY15-17 led by

of new product Rotor 100

volume growth and better realization

Realization-WTG (INR M/MW)

47.9

41.6

42.9

Realization-EPC (INR M)

45.0

47.5

Revenue (INR M)

56,352

Growth-YoY %

6.6

11.7

7.6

11.0

11.6

10,589

15,668

FY14

27,099

46,098

FY13

FY14

FY15

FY16E

FY17E

FY13

FY15

FY16E

FY17E

Source: Company, MOSL

Exhibit 19:

Revenue mix to move in favor of newly introduced 100 metre WTG (INR B)

93 metre

FY11

FY12

FY13

FY14

FY15

FY16E

FY17E

100 metre

113 Metre

EPC

O&M

Source: Company, MOSL

Operating profit to post 58% CAGR over FY15-17, led by margin expansion

We expect operating profit to witness 58% CAGR over FY15-17, led by 330bp margin

expansion during the period. Operating margin would expand to 20.1% in FY17.

Management expects margin expansion to be supported by factors like (i) increase

in sales of Rotor 100 metre blades (150bp), (ii) improved supply chain/logistics,

better cost absorption, etc (130bp), (iii) improved market perception, leading to

lower discounts on pricing (100bp), (iv) gains from lower special additional duty

1 July 2015

Inox Wind

(100bp), and (v) lower royalty expense (50bp). Inox has to pay fixed royalty per WTG

for the first 450 WTGs with rotor diameters of 93.3 meters and 100 meters, and the

first 245 WTGs with rotor diameters of 113 meters, that it produce. Lower Royalty

payment is primarily on account of extinction of royalty payment on the 93.3 metre

product. We conservatively model margin to increase from 16.9% in FY15 to 20.1%

in FY17E, (expansion of 330bps) to factor in i)increase in competitive intensity with

Suzlon getting aggressive post financial restructuring ii) INXW does not make

warranty provision as against 3% provision made by SUEL.

Exhibit 20:

Margins to expand primarily on account of cost

Exhibit 21:

Operating profit to witness 58% CAGR over

efficiencies

FY15-17

Operating Profit Margin

18.6

11.2

14.2

8.4

FY2013

FY2014

10.9

13.1

14.2

1,965

FY2015

FY2016E

FY2017E

FY2013

-10.3

1,762

FY2014

8,659

4,574

FY2015

FY2016E

Net Profit Margin

18.8

20.1

89.3

31.1

11,354

Operating Profit

159.6

Growth YoY %

16.9

FY2017E

Source: Company, MOSL

Cash flows from operations as well as free cash flows to turn positive from

FY16

Historically, INXW has witnessed negative cash flow from operations on account of

elongated working capital cycle, as net working capital (NWC) for the industry has

deteriorated meaningfully since FY13. Collapse of the accelerated depreciation (AD)

market had resulted in an increase in the bargaining power of IPPs. We expect

INXW’s NWC, which had peaked at 196days in FY15 to normalize at 148 days in

FY17. This is because the AD market is picking up again, the willingness of banks to

fund RE projects is increasing, and the bargaining power of equipment

manufacturers is increasing. NWC normalization would drive meaningful

improvement in cash flows from operations.

Exhibit 22:

Cash flow to improve led by normalization of

Exhibit 23:

NWC to normalize with

working capital cycle

receivables cycle

Cash flow from operation (INR b)

Free cash flow (INR b)

4.2

0.7

(1.2)

(1.3)

(0.9)

(5.1)

FY2013

FY2014

(3.3)

(3.0)

FY2016E

FY2017E

7.0

7.2

161

148

(2)

(3)

(4)

FY2013

FY2014

FY2015

FY2016E

FY2017E

(4)

NWC (days)

improvement in

Net cash (INR b)

196

165

148

FY2015

Source: Company, MOSL

1 July 2015

Inox Wind

Return ratios to improve

We expect return ratios to improve, led by strong earnings growth and debt

repayment. We expect RoE and RoCE to improve to 28% and 32%, respectively in

FY17.

Exhibit 24:

Robust return ratios led by strong earnings and debt repayment

RoCE

FY2013

FY2014

RoE

FY2015

FY2016E

FY2017E

Source: Company, MOSL

Exhibit 25:

NWC to improve led by better receivable cycle management

NWC (Days)

Inventories

Debtors Excluding Retention money

Loans and Advances

Other Current Assets

Total Current Assets

Creditors

Current Liabilities (excl Cust Adv)

Provisions

Total Current Liabilities

Core NWC

Retention Money

Customer Advances

Reported NWC

FY13

172

237

148

145

FY14

165

272

112

161

158

FY15

150

290

196

FY16E

140

258

165

FY17E

140

246

148

Source: Company, MOSL

1 July 2015

Inox Wind

Initiating coverage with Buy rating

Target price of INR543 implies 28% upside

We believe INXW is well positioned to benefit from the WTG demand arising from

the government’s ambitious target to install 60GW capacity from wind energy by

2022, and WTG demand revival led by fiscal and regulatory incentives provided by

central and state government. We expect INXW to post revenue of INR46.1b in FY16

(up 70%), INR56.3b in FY17 (up 22%). We expect INXW to report not just strong

revenue growth but also report far superior earnings growth. We expect INXW to

report EPS of INR27.3 in FY16E (up 104%) and INR36 in FY17E (up 33%). Backed by

strong revenue and earnings growth and robust return ratios (RoE of 28% and RoCE

of 32% in FY17), we initiate coverage on the stock with

Buy

rating and target price of

INR543 (15x FY17 EPS of INR36).

Our target PER of 15x is lower than Industrials / Capital Goods players like L&T (22x

FY17E), TMX (28x FY17E), etc and is constrained by the following factors:

INXW’s

earnings are prone to volatility,

given the characteristics of the wind

sector that has historically witnessed large swings in capacity additions, led by

changes in government policy. Even in most of the mature markets, the industry

has not demonstrated a secular growth characteristic.

Health of SEB finances

remain the key concern, as SEBs have generally been

reluctant to purchase expensive source of power. Challenges like poor

investments in evacuation infrastructure, backing down in peak generation

season, non availability of adequate power banking facilities, non-compliance to

RPO obligations, etc are yet to be decisively addressed. Challenges in land

acquisition could also be a constraining factor to industry growth.

SUEL, a key competitor,

had been impacted by constrained financial position

and post the recent fund infusions by DSA / sale of Senvion, could become

aggressive.

Exhibit 26:

Exhibit 26: Key financials of WTG players in India

Revenue (INR m)

Gamesa

Vestas

Suzlon

Inox Wind

FY12

22,847

17,515

100,030

FY13

11,610

5,047

32,280

10,589

FY14

35,298

7,951

56,270

15,668

FY15

48,830

27,099

FY12

3.7

7.9

EBIDTA Margin (%)

FY13

2.6

-51.1

18.6

FY14

5.3

-14.4

11.2

FY15

-3.4

16.9

FY12

-4.4

0.8

-10.4

PAT Margin (%)

FY13

-19.0

-0.2

-118.4

14.2

FY14

1.6

-1.4

-53.1

8.4

FY15

-48.7

10.9

Source: Company, MOSL

Exhibit 27:

Key financial comparison for global WTG players (USD m)

Company Name

Nordex SE

Vestas Wind Systems A/S

Gamesa Corp Tecnologica SA

Xinjiang Goldwind Science & Te

MCap

2,018

11,370

4,656

8,375

Revenue

CY15E

2,273

8,731

3,759

3,636

CY16E

2,411

8,704

4,032

3,831

EBITDA Margin (%)

CY15E

8.2

13.8

12.5

16.3

CY16E

9.1

14.2

12.8

18.9

PAT

CY15E

577

198

379

CY16E

100

600

235

433

PE (x)

CY15E

26.0

19.6

23.9

19.9

CY16E

20.9

18.8

19.9

EV/EBIDTA (x)

CY15E

9.1

7.9

10.2

CY16E

7.8

7.7

9.3

17.4

16.5

13.5

Source: Bloomberg, MOSL

1 July 2015

Inox Wind

Exhibit 28:

Comparision of Inox Wind with Suzlon (INR m)

INR M

Revenues

Less: COGS

Gross Profit

Employee Expenses

Other expenses

Exchange (Loss) / Gain

EBITDA

Other Income

EBIDTA incl Other Income

Depreciation

EBIT

Interest Expense

PBT

Adjusted PAT

Gross Margin (%)

EBIDTA Margin (%)

EBIT Margin (%)

WTG Sales (MW)

- India

Realization (INRM/MW)

Revenues (INR M)

Installed (MW)

O&M Revenues (INR M)

FY11

91,750

59,700

29,405

8,746

18,962

1,697

610

2,307

3,410

-1,103

9,488

-10,591

-8,318

32%

1,521

955

84,650

11,541

7,100

FY12

100,030

63,920

36,110

10,270

18,890

430

6,520

3,890

2,630

13,740

-11,110

-10,440

36%

1,583

1,161

91,570

13,124

8,460

Suzlon Wind

FY13

32,280

26,160

6,120

8,330

15,980

2,500

-20,690

4,280

-24,970

15,320

-40,290

-38,220

19%

-52%

-80%

252

415

21,430

13,376

10,850

FY14

56,270

43,351

12,919

7,874

15,870

2,326

-13,151

3,745

-16,896

17,850

-34,746

-29,890

23%

-14%

-27%

722

403

42,720

14,098

13,550

FY15

48,830

31,380

17,450

7,470

13,360

4,950

-8,330

3,760

-12,090

17,660

-29,750

-23,760

36%

-3%

-17%

454

442

34,290

14,552

14,540

FY11

719

518

202

118

128

28%

16%

12%

FY12

6,216

4,318

1,898

146

334

1,418

1,422

1,346

152

1,194

1,007

31%

23%

22%

120

6,107

164

Inox Wind

FY13

FY14

10,589

15,668

7,731

12,131

2,858

3,537

250

384

644

1,390

1,965

1,762

2,012

1,854

116

1,923

1,738

388

460

1,536

1,278

1,503

1,322

27%

19%

18%

198

9,485

23%

11%

330

13,730

FY15

27,099

20,347

6,753

549

1,629

4,575

143

4,718

204

4,514

623

3,892

2,964

25%

17%

578

24,772

318

468

742

159

Source: Company, MOSL

1 July 2015

Inox Wind

Risks and concerns

Capital-intensive nature of the industry

The WTG business in India requires high working capital; this is evident from the fact

that setting up a 1MW wind farm typically requires INR40m of working capital.

Change in regulatory policies

In the past, withdrawal of accelerated depreciation (AD) and generation-based

incentives (GBI) led to a sharp decline in wind energy capacity addition. Any such

adverse policy changes in future can impact the business.

Non-availability of grid connectivity

Inadequate grid infrastructure is another key issue that needs to be addressed

urgently. Across most states with significant wind potential, the grid does not have

sufficient spare capacity to evacuate ever-increasing amount of wind power. The

state distribution utilities are, therefore, reluctant to accept more wind power

generation and tend to prefer thermal power generation.

SEBs’ weak financial health might impact wind power demand

State electricity boards (SEBs) and government distribution companies own nearly

95% of the distribution network. According to Power Finance Corporation,

aggregate SEB losses in 2011-12 were around INR63.5b and are projected to reach

INR116b by 2014-15. The cost of generating wind power at Rs3.7-6/kWh is relatively

high compared with predominantly coal-based conventional power (Rs3.5/kWh).

SEBs’ weak financial condition might deter them from purchasing expensive wind

power and thus impact wind power demand in future.

Exhibit 29:

Commercial losses up sizably from

FY08 (INR

Source: Company, MOSL

Non-availability of land can act as a deterrent for WTG industry

The wind energy business is land intensive—2MW of turbines require 40 acres of

land, of which actual used is 2.5 acres. To achieve annual capacity addition of 4GW,

the industry would require ~80,000 acres of land every year. However, this won’t be

easy as land availability for wind farms is a contentious issue in most states. Even for

the available privately-owned land, change of land use status from agricultural to

non-agricultural is time-consuming. Further, one needs clearances from authorities

if the land is in proximity to a protected area or forest; this is again time-consuming.

1 July 2015

Inox Wind

Competitive intensity

The WISE Report estimates the aggregate WTG manufacturing capacity in India at

12GW as of August 2014 and expects the Indian wind power market to witness

annual installations of 3-5GW over the coming years. There exists intense

competition in the WTG segment. In the last few months, Suzlon has taken several

steps to put its house in order by selling stakes in non-core business, inducting a

strategic partner and refocusing on the Indian market. Suzlon has historically been

the market leader with ~50% market share. Post its recent restructuring and

liquidity infusion, it will again attempt to achieve its earlier market share.

Exhibit 30:

Top Five players command 87% of market in FY15

100.0%

80.0%

60.0%

40.0%

20.0%

0.0%

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

Source: MOSL, Company

Vestas

RRB

Wind World

Suzlon

Regen

Inox

Others

Gamesa

RPO compliance might remain weak

Under the Renewable Purchase Obligation (RPO), state electricity regulatory

commissions (SERCs) are obligated by law to buy a certain percentage of electricity

from renewable energy sources. The guidelines issued in 2010 by Central Electricity

Regulatory Commission (CERC) recommended a standardized RPO target of 5% in

every state, with linear increase of 1% annually till 2020 to achieve the NAPCC target

of 15%. However, many SEBs are actually not complying with the renewable

portfolio obligations—given their poor financial health—and a few SERCs have also

lowered the non-solar RPO obligation owing to the difficulty of the states in meeting

the earlier targets. SERCs specify targets for respective states based on the

renewable energy potential.

Exhibit 31:

State-wise RPO Compliance data

FY13

9.0%

6.4%

7.0%

7.8%

4.8%

3.4%

2.8%

RPO Target

FY14

9.0%

7.0%

8.5%

4.8%

5.0%

4.7%

3.4%

Achieved

FY15

10.0%

17.0%

10.0%

14.0%

7.5%

10.0%

8.0%

7.5%

8.5%

4.8%

5.0%

5.5%

2.0%

6.0%

3.0%

3.8%

1.5%

Source: MOSL, Industry Data

Karnataka

Rajasthan

Gujarat

Maharashtra

Andhra Pradesh

Uttar Pradesh

Madhya Pradesh

Punjab

No provisioning for warranties

INXW provides its customers warranties against defective components and

workmanship during the defect liability period, which is generally two years. For any

failure due to defective supply or workmanship, INXW undertakes free repair or

replacement. Also, claims for damages brought by third parties could be substantial

and could have material adverse effect on the company.

1 July 2015

Inox Wind

Company background

Inox Wind (INXW), an Inox Group company, is India’s fourth-largest wind turbine

generator (WTG) manufacturer, with a market share of 7% in FY14. INXW

commenced operations in March 2010, and manufactures key components of WTGs

– nacelles, hubs, rotor blade sets, and towers. It provides turnkey solutions for wind

farm projects through its wholly-owned subsidiaries, and has a project site pipeline

of 4GW. Order book as at December 2014 stood at 1,258MW, and cumulative

installations/supplies stood at 1,044MW (including 312MW yet to be erected).

INXW manufactures two different WTG models with 2MW rating:

Rotor diameter of 93 meters with hub height of 80 meters

Rotor diameter of 100 meters with hub height of 80 / 92 meters

INXW has a 100% subsidiary, Inox Wind Infrastructure Services, which does project

development in respect of wind power projects, including wind studies, energy

assessments, land acquisition, site infrastructure development, power evacuation,

statutory approvals, erection and commissioning, and long-term operation and

maintenance (O&M) of wind farms.

About Inox Group:

The Inox Group commenced operations in 1923 and currently

operates in industrial gases, engineering plastics, refrigerants, chemicals, cryogenic

engineering, renewable energy and entertainment sectors. The Group has two

publicly-listed companies – Gujarat Fluorochemicals and Inox Leisure. The Group

employs over 8,000 people at more than 100 business units in India.

Exhibit 32:

Existing and upcoming manufacturing facilities of Inox wind

Source: MOSL, Company

1 July 2015

Inox Wind

Board of directors

Mr Deepak Asher, Non-Executive Director

Mr Deepak Asher, aged 56 years, is a Non-Executive Director. He has a bachelor’s

degree in Commerce and a bachelor’s degree in Law from Maharaja Sayajirao

University, Baroda. He is a fellow member of the Institute of Chartered Accountants

of India and is also an associate member of the Institute of Cost and Works

Accountants of India. He has been associated with the Inox Group for over 25 years.

He is the founder President of the Multiplex Association of India and was awarded

the Theatre World Newsmaker of the Year Award in the year 2002 for his

contribution to the cinema exhibition industry. He has been instrumental in Inox

Group’s diversification into the cinema, CDM and wind energy businesses.

Mr Devansh Jain, Whole time Director

Mr Devansh Jain, aged 28 years, is a Whole time Director. He has completed a

double major degree in Economics and Business Administration from Carnegie

Mellon University, Pittsburgh, USA. He has over six years of work experience in

various management positions. He has been spearheading Inox Group’s foray into

the wind energy sector. He is on the National Council of Indian Wind Power

Association and is Honorary Secretary of Indian Wind Turbine Manufacturers

Association. Mr Jain has been instrumental in setting up manufacturing plants in

Himachal Pradesh and in Gujarat, with technology sourced from AMSC. He has been

awarded the “Wind Power Man of the Year 2012-13” for development of integrated

wind power supply chain and project development capacity in the country by

Renewable World.

Mr Siddharth Jain, Non-Executive Director

Mr Siddharth Jain, aged 36 years, is a Non-Executive Director. He has completed his

bachelor’s degree in Mechanical Engineering from the University of Michigan – Ann

Arbor, USA and holds a Master’s degree in Business Administration from INSEAD,

France. He has over ten years of work experience in various management positions

in the Inox Group and is currently looking after new project developments at Inox

Air Products Limited.

Mr Rajeev Gupta, Whole time Director

Mr Rajeev Gupta, aged 56 years, is a Whole time Director. He holds a bachelor’s

degree in Chemical Engineering from the Indian Institute of Technology, Delhi and

has over 32 years’ experience in corporate planning, business and project

development, project management, sales, procurement and operations in

international and domestic industries. He was involved in setting up GFL’s chemical

complex at Dahej and production plants for Aditya Birla group, TOA Group of

Companies, a Thai group and Lurgi India Private Limited, subsidiary of Lurgi AG, a

German engineering company. He has more than five years’ experience in the wind

industry in various capacities.

1 July 2015

Inox Wind

Mr Chandra Prakash Jain, Independent Director

Mr Chandra Prakash Jain, aged 69 years, is an Independent Director. He holds a

bachelor’s degree in Commerce from Rajasthan University and a bachelor’s degree

in Law from Agra University. He is a fellow member of the Institute of Chartered

Accountants of India. He is former Chairman and Managing Director of NTPC

Limited. He was also the Chairman of the Standing Conference of Public Enterprises

(SCOPE) for the period 2003-05. He has been a past member of the Standing

Technical Advisory Committee of the Reserve Bank of India, Audit Advisory Board of

the Comptroller & Auditor General of India. He has headed the CII’s ‘National

Committee on Energy’. Presently, he is also an Independent Director on the boards

of IL&FS Energy Development Company Limited, Adani Power Limited and PCI

Limited. He is also a Member on the Advisory Board of Axis Infrastructure Fund.

Mr Shanti Prashad Jain, Independent Director

Mr Shanti Prasad Jain, aged 75 years, is an Independent Director. He is a fellow

member of the Institute of Chartered Accountants of India and has more than four

decades of experience as a Chartered Accountant and Direct Tax Consultant. Mr Jain

Senior Partner at Shanti Prashad & Co., Chartered Accountants, New Delhi.

Dr S Rama Iyer, Independent Director

Dr S Rama Iyer aged 75 years, is an Independent Director. He is a Chemical Engineer

from Jadhavpur University and received a master’s degree and his PhD from Indian

Institute of Technology, Mumbai. He has also participated in the Senior Executive

Program of London Business School, United Kingdom. He has over five decades of

experience in Design Engineering, Project and Enterprise management in the

Chemicals, Petrochemicals and Oil & Gas industries as a member of the Indian

Institute of Chemical Engineers. He received the ‘Distinguished Alumnus Award’

from Indian Institute of Technology, Mumbai in 1996. He has been awarded the

‘Achiever of the Year Award’ by the Chemtech Foundation in the year 2003 and the

‘Business Leader of the Year Award’ by the Chemtech Foundation in the year 2005.

Ms Bindu Saxena, Independent Director

Ms Bindu Saxena aged 56 years, is an Independent Director. She is an Advocate and

a Partner at the law firm, Swarup & Company, Advocates, New Delhi. She has

completed her bachelor’s in Commerce and in Law from Lucknow University. She

has over 25 years of experience as Corporate Attorney, with experience of

commercial transactions and projects in India and overseas.

1 July 2015

Inox Wind

Operating metrics

INR m

Closing order book (MW)

Y-o-Y growth

Order inflow (MW)

Y-o-Y growth

Execution (MW)

Y-o-Y growth

FY13

FY14

370

630

218.2%

330

66.7%

FY15

1,178

218.4%

1,162

84.4%

578

75.2%

FY16E

1,384

17.5%

1,031

-11.3%

825

42.7%

FY17E

1,622

17.2%

1,188

15.2%

950

15.2%

198

Realizations (INR M/MW)

WTG

OMS

Cumulative Installed (MW)

Revenues

WTG

Sale of services

other operating income

Revenues, % YoY

WTG

Sale of services

Other operating income

EBIDTA %

318

10,589

9,485

1,010

468

15,668

13,730

1,756

182

48.0%

44.8%

73.8%

92.8%

742

26,940

24,772

2,093

71.9%

80.4%

19.2%

-58.8%

17.0%

1,516

46,098

37,130

8,883

71.1%

49.9%

324.3%

13.3%

18.8%

2,428

56,352

45,125

11,133

22.2%

21.5%

25.3%

10.0%

20.1%

18.6%

11.2%

Net Debt (INR m)

Core NWC (Days)

Customer Advances

Reported NWC (Days)

2,743

148

145

4,469

161

158

2,079

196

4,058

165

(1,709)

148

1 July 2015

Inox Wind

Financials and valuations

Income Statement

Y/E March

Total Revenues

Change (%)

Raw Materials

Staff Cost

Other Expenses

EBITDA

% of Total Revenues

Other Income

Depreciation

Interest

Exceptional Items

PBT

Tax

Rate (%)

Adjusted PAT

Reported PAT

Change (%)

Adj. Consolidated PAT

Change (%)

Balance Sheet

Y/E March

Share Capital

Reserves

Net Worth

Minority Interest

Loans

Deferred Tax Liability

Capital Employed

Gross Fixed Assets

Less: Depreciation

Net Fixed Assets

Capital WIP

Investments

Goodwill

Curr. Assets

Inventory

Debtors

Cash & Bank Balance

Loans & Advances

Other Current Assets

Current Liab. & Prov.

Creditors

Other Liabilities

Net Current Assets

Application of Funds

2013

10,589

7,731

250

644

1,965

18.6

388

1,536

2.1

1,503

2014

15,668

48.0

12,131

384

1,407

1,745

11.1

116

460

1,245

- 45

-3.6

1,290

(14.2)

1,322

(12.0)

2015

27,099

73.0

20,347

549

1,629

4,574

16.9

143

204

623

3,891

927

23.8

2,964

129.9

2,964

124.2

2016E

46,098

70.1

33,651

791

2,996

8,659

18.8

157

280

575

7,962

1,911

24.0

6,051

104.1

6,051

104.1

(INR Million)

2017E

56,352

22.2

40,573

1,044

3,381

11,354

20.1

173

350

613

10,564

2,535

24.0

8,029

32.7

8,029

32.7

(INR Million)

2017E

2219

26,107

28,326

6,500

209

35,035

4,544

816

3,728

300

46,154

2,316

21,614

8,209

13,586

429

15,147

13,123

2,024

31,007

35,035

2013

400

2,555

2,955

3,769

195

6,919

1,772

206

1,566

0.02

7,895

795

5,002

1,964

119

2,582

2,278

304

5,313

6,919

2014

2000

2,278

4,278

5,582

151

10,011

2,040

317

1,722

255

450.02

12,354

2,707

7,096

2,030

449

4,788

4,217

571

7,567

10,011

2015

2219

12,151

14,370

9,200

209

23,779

2,294

423

1,872

202

0.50

28,667

1,265

13,210

7,120

6,720

352

6,962

5,662

1,300

21,704

23,779

2016E

2219

18,078

20,297

5,750

209

26,257

4,044

608

3,437

300

34,301

1,894

18,944

1,692

11,367

404

11,781

10,104

1,677

22,520

26,257

1 July 2015

Inox Wind

Financials and valuations

Ratios

Y/E March

Basic (INR)

Adj EPS

Cash EPS

Book Value

Valuation (x)

P/E

EV/EBITDA

EV/Sales

Price/Book Value

Profitability Ratios (%)

RoE

RoCE

Turnover Ratios

Debtors (Days)

Inventory (Days)

Creditors. (Days)

Asset Turnover (x)

Leverage Ratio

Debt/Equity (x)

Cash Flow Statement

Y/E March

PBT before EO Items

Add : Depreciation

Interest

Less : Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

EO Income

CF from Oper. Incl. EO Items

(Inc)/Dec in FA

Investment in liquid assets

CF from Investments

(Inc)/Dec in Debt

Less : Interest Paid

Dividend Paid

CF from Fin. Activity

Inc/Dec of Cash

Add: Beginning Balance

Closing Balance

2013

37.6

39.8

73.9

2014

6.6

7.2

21.4

2015

13.4

14.3

64.8

2016E

27.3

28.5

91.5

2017E

36.2

37.8

127.6

11.3

10.6

2.0

5.7

64.2

51.3

5.8

19.9

31.8

21.1

3.6

6.6

15.6

11.4

2.1

4.6

11.7

8.2

1.6

3.3

50.9

28.6

30.9

17.6

20.6

19.2

29.8

32.8

28.3

32.1

172

1.5

165

1.6

178

1.1

150

1.8

140

1.6

1.3

0.6

0.3

0.2

(INR Million)

2017E

10,564

350

613

2,535

(1,970)

7,021

(500)

750

613

(5)

6,517

1,692

8,208

2013

1,536

314

287

(2,862)

(1,210)

(1,358)

(0)

(1,358)

2,565

375

2,193

(375)

390

2014

1,293

116

460

334

(2,389)

(854)

(870)

(498)

(434)

1,789

460

1,361

2015

3,891

204

623

927

(7,091)

- 3,300

(3,300)

(186)

450

264

10,635

623

10,084

7,047

7,120

2016E

7,962

280

575

1,911

(6,244)

662

(1,848)

(1,847)

(3,450)

575

(4,243)

(5,428)

7,120

1,692

1 July 2015

Inox Wind

NOTES

1 July 2015

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