Inox Wind Ltd., which is a subsidiary of Gujarat Fluorochemicals Ltd., and is in the business of manufacturing & setting up of Wind Mills for it's clients, came out with an IPO in March'2015. During the IPO the shares of the company were issued at a price of Rs.325/- and the IPO was oversubscribed nearly 18-20 times. The shares started trading on NSE & BSE in April'2015 and the price hovered around the Rs.400 to 470 range for the initial few months. Inox Wind had reported an EPS of Rs.13.36 for FY'2015, which means the then share price enjoyed a P/E Ratio of over 30. The high P/E Ratio was perfectly fine considering the fact that the company was in a rapid growth phase having grown it's Total Income by over 70% and more than doubled it's Net Profit over FY'2014 numbers. But surprisingly the share price of Inox Wind has been on a steady decline since July'2015. Have a look at the price chart below:
We can see that after hitting a level of around Rs.470 in July'2015, Inox Wind's share dropped on a regular basis to hit a low of around around Rs.215 in the month of Feb-March'2016. Since then it has spent most of it's time in the Rs.220 to 250 range.
The reason why I am surprised with this kind of stock price movement is the fact that the company has done exceptionally well on the business growth front. Inox Wind did face severe capacity constraints during most part of FY'2016. But the company did manage to commission substantial additional capacity during the last quarter of FY'2016, which enabled it to post near 100% growth in Total Income and nearly 75% growth in Net Profit for Q4-FY'16. For the Full Year too, Inox Wind did very well with 64% growth in Total Income and 52% growth in Net Profit. Have a look at the charts alongside:
The charts show the Trailing-Twelve-Months progress made by Inox Wind between March'2014 and March'2016. The effect of the expanded capacity is clearly visible in the charts in terms of a notable spike in Total Income, EBITDA and Net Profit during March'16. The company too has managed to keep it's Debt under control and the Interest/EBITDA % number is proof of the same. The company's Interest Cost has remained well under 15% of it's EBITDA and now with the expanded capacity, it could drop even more.
The company is also sitting on substantial Order Book, which should keep it completely busy for the next 4-5 quarters, even if no new orders flow in. The good order book size alongwith fresh capacity should help the company post another good growth number for the current fiscal as well. My conservative expectations are that Inox Wind should be able to post a Total Income growth in excess of 25% for FY'2017 with a similar figure for the Net Profit.
Coming to Valuations, Inox Wind posted an EPS of Rs.20.36 for FY'2016. That means at the current share price of under Rs.220/-, Inox Wind trades at less than 11 times it's T-T-M EPS. This is pathetically low valuations for a profit-making company in the Renewable Energy space with substantial future business potential in a country which has set very aggressive targets to achieve for Renewable Energy production in the coming years. I think this is one Buy-and-Forget kind of stock with a 3 to 5 years view, especially at the current valuations.
[ Click here for Quarterly & T-T-M Results sheet of Inox Wind Ltd. ]
The reason why I am surprised with this kind of stock price movement is the fact that the company has done exceptionally well on the business growth front. Inox Wind did face severe capacity constraints during most part of FY'2016. But the company did manage to commission substantial additional capacity during the last quarter of FY'2016, which enabled it to post near 100% growth in Total Income and nearly 75% growth in Net Profit for Q4-FY'16. For the Full Year too, Inox Wind did very well with 64% growth in Total Income and 52% growth in Net Profit. Have a look at the charts alongside:
The charts show the Trailing-Twelve-Months progress made by Inox Wind between March'2014 and March'2016. The effect of the expanded capacity is clearly visible in the charts in terms of a notable spike in Total Income, EBITDA and Net Profit during March'16. The company too has managed to keep it's Debt under control and the Interest/EBITDA % number is proof of the same. The company's Interest Cost has remained well under 15% of it's EBITDA and now with the expanded capacity, it could drop even more.
The company is also sitting on substantial Order Book, which should keep it completely busy for the next 4-5 quarters, even if no new orders flow in. The good order book size alongwith fresh capacity should help the company post another good growth number for the current fiscal as well. My conservative expectations are that Inox Wind should be able to post a Total Income growth in excess of 25% for FY'2017 with a similar figure for the Net Profit.
Coming to Valuations, Inox Wind posted an EPS of Rs.20.36 for FY'2016. That means at the current share price of under Rs.220/-, Inox Wind trades at less than 11 times it's T-T-M EPS. This is pathetically low valuations for a profit-making company in the Renewable Energy space with substantial future business potential in a country which has set very aggressive targets to achieve for Renewable Energy production in the coming years. I think this is one Buy-and-Forget kind of stock with a 3 to 5 years view, especially at the current valuations.
[ Click here for Quarterly & T-T-M Results sheet of Inox Wind Ltd. ]
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