Amongst the four quarters of any financial year, the first quarter (Apr-Jun) is always the weakest quarter for Inox Wind Ltd in terms of Reported Revenues & Profits. The primary reason for this being the huge number of orders that get booked during the last quarter (Jan-Mar) of the previous financial year. A substantial portion of the orders Billed during Jan-Mar quarter generally get physically executed only in the following quarter or two. That is the main reason behind lower number of orders getting Billed during Q1 & Q2 of any financial year for a company like Inox Wind Ltd. The secondary reason could also be the fact that Investors await for fresh fiscal announcements related to Wind Power Tariffs by various State Governments, before placing fresh orders in the new fiscal year.
Inox Wind Ltd. reported a sharp 31% drop in Total Income and 80% drop in Net Profit for the Q1-FY'17. Is this something the Investors need to worry about?? I don't think it is. Remember that Inox Wind Ltd had Billed orders worth over Rs.1800 crores for around 400 MW of WTGs, during Q4-FY'16. At the same time Inox Wind received fresh orders for another 360 MW during that quarter to finish the year with a strong Order Book of around 1100 MW. Even though Order for 400 MW were Billed during Q4-FY'16, the physical EPC work for a substantial portion of those orders must have been executed during Q1-FY'17. The same in reflected in the quantity of Blades & Towers produced by the company during Q1-FY'17. As per Inox Wind's Investor Presentation, the company produced Blades for 198 MW and Towers for 148 MW, both of which are substantially higher than the same produced during Q1-FY'16. The company produced lower quantity of Nacelles & Hubs as it was sitting on substantial Inventory of the same. After this adjustment, the company claims that the Inventory mismatch between the quantity of Blades, Towers and Nacelles & Hubs has been reduced to a good extent.
Even in terms of Order Inflows, Q1-FY'17 was pretty good for Inox Wind. The company received further Orders for 184 MW, which got added to it's March'16-end Order Book of 1104 MW. The company Billed orders for only 48 MW during Q1-FY'17, which was the main reason for lower Reported Total Income and Net Profit numbers. At June'16-end, Inox Wind is sitting on an Order Book for 1240 MW, which is to be executed over the next 12-15 months. We can safely expect the Total number of Orders Billed/Executed during the current fiscal to be higher than the approximate 800 MW done during FY'16. I am expecting Inox Wind to report a minimum growth of 15% over FY'16 numbers and this expectation could prove to be highly conservative by the end of the year. At the same time, the Management team of Inox Wind is under pressure from various Analyst/Investor Groups to curtail it's Net Working Capital requirement. The Management is already taking steps for the same and we could see more positive developments on this front in the coming quarters. The Interest Cost of about Rs.38 crores for Q1-FY'17 suggests that the Net Debt (including Working Capital Loans) for Inox Wind is comfortably under Rs.1500 crores, which according to me is Not an alarming number at all for a company which is growing at a handsome pace and posting T-T-M EBITDA of around Rs.700 crores or more.
Coming to Valuations, the share price of Inox Wind has continued to correct over the last month of so and is currently trading below the Rs.180 mark. At this price the company's Market Cap stands at less than Rs,4000 crores, which I think is peanuts valuation, unless something terrible is about to happen to the company's business prospects. I certainly don't think that's the case with Inox Wind. Just as Warren Buffet says: "Be Greedy in the market when everyone else is Scared". Currently everyone is running scared of Inox Wind's shares. I think it's time for genuine Investors to be Greedy.
[ Click here for Quarterly & T-T-M Results sheet of Inox Wind Ltd. ]
Inox Wind Ltd. reported a sharp 31% drop in Total Income and 80% drop in Net Profit for the Q1-FY'17. Is this something the Investors need to worry about?? I don't think it is. Remember that Inox Wind Ltd had Billed orders worth over Rs.1800 crores for around 400 MW of WTGs, during Q4-FY'16. At the same time Inox Wind received fresh orders for another 360 MW during that quarter to finish the year with a strong Order Book of around 1100 MW. Even though Order for 400 MW were Billed during Q4-FY'16, the physical EPC work for a substantial portion of those orders must have been executed during Q1-FY'17. The same in reflected in the quantity of Blades & Towers produced by the company during Q1-FY'17. As per Inox Wind's Investor Presentation, the company produced Blades for 198 MW and Towers for 148 MW, both of which are substantially higher than the same produced during Q1-FY'16. The company produced lower quantity of Nacelles & Hubs as it was sitting on substantial Inventory of the same. After this adjustment, the company claims that the Inventory mismatch between the quantity of Blades, Towers and Nacelles & Hubs has been reduced to a good extent.
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Even in terms of Order Inflows, Q1-FY'17 was pretty good for Inox Wind. The company received further Orders for 184 MW, which got added to it's March'16-end Order Book of 1104 MW. The company Billed orders for only 48 MW during Q1-FY'17, which was the main reason for lower Reported Total Income and Net Profit numbers. At June'16-end, Inox Wind is sitting on an Order Book for 1240 MW, which is to be executed over the next 12-15 months. We can safely expect the Total number of Orders Billed/Executed during the current fiscal to be higher than the approximate 800 MW done during FY'16. I am expecting Inox Wind to report a minimum growth of 15% over FY'16 numbers and this expectation could prove to be highly conservative by the end of the year. At the same time, the Management team of Inox Wind is under pressure from various Analyst/Investor Groups to curtail it's Net Working Capital requirement. The Management is already taking steps for the same and we could see more positive developments on this front in the coming quarters. The Interest Cost of about Rs.38 crores for Q1-FY'17 suggests that the Net Debt (including Working Capital Loans) for Inox Wind is comfortably under Rs.1500 crores, which according to me is Not an alarming number at all for a company which is growing at a handsome pace and posting T-T-M EBITDA of around Rs.700 crores or more.
Coming to Valuations, the share price of Inox Wind has continued to correct over the last month of so and is currently trading below the Rs.180 mark. At this price the company's Market Cap stands at less than Rs,4000 crores, which I think is peanuts valuation, unless something terrible is about to happen to the company's business prospects. I certainly don't think that's the case with Inox Wind. Just as Warren Buffet says: "Be Greedy in the market when everyone else is Scared". Currently everyone is running scared of Inox Wind's shares. I think it's time for genuine Investors to be Greedy.
[ Click here for Quarterly & T-T-M Results sheet of Inox Wind Ltd. ]
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