You are on page 1of 28

Initiating Coverage | 1 July 2015

Sector: Capital Goods

Inox Wind

Favorable winds
Satyam Agarwal (; +91 22 3982 5410
Amit Shah (; +91 22 3029 5126

Inox Wind

Inox Wind: Favorable winds
Page No.
Investment summary .......................................................................................... 3
Wind energy sector at inflexion point .......................................................... 4-8
INXW: Prepped for rising wind capacity installation ................................. 9-13
Expect 65% earnings CAGR over FY15-17 .................................................. 14-16
Initiating coverage with Buy rating ........................................................... 17-18
Risks and concerns ...................................................................................... 19-20
Company background ....................................................................................... 21
Board of directors ....................................................................................... 22-23
Operating metrics ............................................................................................. 24
Financials and valuations ........................................................................... 25-26

Prices as on 1 July 2015

Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on, Bloomberg, Thomson Reuters, Factset
and S&P Capital.

1 July 2015


8 91.Cap. Lower Royalty expense.453 BSE Sensex 28. (INR) 64. 1 July 2015 3 . Expect 65% earnings CAGR over FY15-17: We expect INXW to report 44% revenue CAGR over FY15-17.5 7.3GW in FY15 to 4-5GW in medium term. Buy. Improved logistics and supply chain benefits. largely supported by volume growth of 28% and realization improvement of 8%. Margin expansion to be supported by various initiatives including New product launch. driven by 44% revenue CAGR and improvement in realization.9 M. and robust return ratios (RoE of 28% and RoCE of 32% in FY17E). Driven by strong earnings growth and debt repayment.1 11.0 13.9/1.4 8.6 11. re-rating imminent Stock Info Bloomberg INXW IN Equity Shares (m) n 221. Backed by its strong revenue and earnings growth. (INR b) / (USD b) 84. with ~25% market share. We believe INXW is suitably placed and expect it to clock sales of 825MW in FY16 and become the number-1 player.3 RoCE (%) 19. etc.2GW in FY13. INXW is well positioned to benefit from the wind market revival.3 21.2 Valuations P/E (x) P/BV (x) EV/EBITDA (x) Shareholding pattern (%) As on Promoter Mar-15 85.1 8.2GW in FY12 to 1.7 FII Others 3. We believe a re-rating is imminent. Initiating coverage with Buy rating: INXW is well positioned to benefit from the huge opportunity India’s wind power segment presents. with ~25% market share.2 32. (4) strategically located manufacturing units. Our target price of INR543 (15x FY17E EPS of INR36) implies 28% upside.0 104.7 Wind energy sector at inflexion point: The wind energy sector in India had witnessed a sharp fall in capacity addition from 3.4 n EBITDA 4.5 127. 6.6 29.3 52-Week Range (INR) 495/385 1.2 FII includes depository receipts INXW – prepped for rising wind capacity installation: In FY16.1 32. Operating profit is likely to witness 58% CAGR over FY15-17. led by margin expansion of 330bp during the period. Earnings should grow at a CAGR of 65% over FY15-17.8 28. we initiate coverage with a Buy rating.1 31.3GW 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). However. renewable energy is now a key focus area for the government. We believe there are multiple tailwinds that will help drive the size of the Indian wind energy market from 2. and (5) established execution track record.8 32. (3) ready pipeline of project sites.Inox Goods Wind Initiating Coverage | Sector: Capital Inox Wind S&P CNX 8.3 36.6 3.6 4. supported by (1) strong relationships with IPPs. led by withdrawal of accelerated depreciation (AD) and generation-based incentives (GBI) in March 2012. EPS (INR) EPS Gr.8 15.2 102.1 56. (2) technology partnerships with global leaders.4 27. (%) BV/Sh.7 6.7 11. we expect RoE to improve to 28% and RoCE to 32% in FY17. we expect INXW to clock sales of 825MW and become the number-1 player. we expect INXW to deliver 28% volume growth. Improved Realizations.4 Adj PAT 3. 12 Rel.021 CMP: INR425 TP: INR543 (+28%) Buy Favorable winds Expect 65% earnings CAGR over FY15-17.0 6. We expect its revenue to grow at a CAGR of 44% and earnings to grow at a CAGR of 65% over FY15-17. Over FY15-17.6 RoE (%) 20. Financial Snapshot (INR Billion) Y/E March 2015 2016E 2017E Net Sales 27.1 46. Recent duty benefits.6 DII 3. Per (%) n -3/-/- Wind energy presents a strong growth opportunity with the markets likely to expand from 2.6 8. 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).

However. 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). reintroduced in Mar 2013 and notified in Sep 2013 § INR0. (c) inclusion of renewable generation obligation (RGO) in the Electricity Act. renewable energy is now a key focus area for the ruling BJP-led government. We believe there are multiple tailwinds that will help drive the size of the Indian wind energy market from 2. We expect the Indian wind market size to grow from 2. 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 2022.2GW in FY13.3GW in FY15 to 4-5GW in medium term. MOSL 1 July 2015 4 . Captive demand Generation Based Incentives (GBI) § Withdrawn in Mar 2012.0.Inox Wind Wind energy sector at inflexion point Multiple tailwinds. (d) untapped wind power potential of 100GW (CWET study). (b) finalization of feed-in tariff and regulatory support provided by state governments. and (e) long-term opportunities arising from offshore wind power installation and repowering of old WTG sites. up from Rs. led by withdrawal of accelerated depreciation (AD) and generation-based incentives (GBI) in March 2012.2GW in FY12 to 1. 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. backed by fiscal and regulatory incentives (AD and GBI). 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.62 cr/MW for 4-10th year 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. market size to double over FY15-22 n n n The wind energy sector in India had witnessed a sharp fall in capacity addition from 3.50/unit incentive to generators with a cap of INR1 cr/MW.3GW in FY15 to 4-5GW in medium term.

incentives like accelerated depreciation (AD-introduced in 1990) and gross generation incentives (GBI. 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. These states are expected to witness traction and will play a critical role to achieve the aggregate target of 4-5GW per annum. we expect Indian wind market size to grow from 2. With reinstallation of these incentives in 2014. Gujarat. down from 3GW addition in FY12.introduced in 2009) were introduced.Inox Wind Exhibit 2: Wind Financing Policy’s evolution Source:Industry Reports. Successful inclusion and implementation of the RGO norms can help the wind market to expand from 2. 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. whereby conventional power plant developers would be obligated to generate ~10% power from renewable energy sources.3GW in FY15 to 4-5GW in medium term. which led to slump in wind energy installation and FY13/FY14 saw a muted average addition of 1.9GW per annum. however these initiatives were withdrawn in 2012. Telangana. 1 July 2015 5 . Madhya Pradesh.3GW in FY16E to 4-5GW per annum in the medium term.5 per kilowatt-hour to attract investment. Some have also increased wind power tariffs by 2-15% to attract investments. Andhra Pradesh. They play a key role in land allocation for the wind sites. MOSL To spur growth in renewable energy sector. Maharashtra and Karnataka have provided preferential tariff over and above MNRE’s GBI of INR0. evacuating power and providing grid connectivity to the power generated from the wind sites. 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).

45 WPD 251-300w/m2:3. Tamil 1 July 2015 6 .06 WPD 301-400/m2:4.68 WPD 251-300w/m2:5. Maharashtra and Gujarat have policies that eliminate or reduce value-added tax (VAT) for wind turbine components. Jodhpur and Barmer 5.62 4.91 4.8 5.71 for 10 years Tariff cap of 5.12 (for projects in Jaisalmer.7 4.80 CUF22% 5.25 WPD 201-250w/m2:5.71 for 10 years Reduced or no VAT: Several states including Tamil Nadu.0 WPD 201-250w/m2:4.92 4.5% to 5% 5.31 WPD>400/m2:3. MOSL Wheeling and banking: For wind power.00 WPD 301-400/m2:4.15 WPD 201-250w/m2:5.21.81 WPD 251-300w/m2:5.64 CUF30% 3.88 CUF20% 5. escalation of 5.51 WPD >200w/m2:5.01 WPD 300-400w/m2:4.5% (West Bengal).80 WPD 301-400/m2:3. Of the total wind energy fed to the grid in a financial year.Inox Wind Exhibit 3: Preferential Feed in tariff (FIT) provided by states State Andhra Pradesh Gujarat Chattishgarh Gujarat Haryana J&K Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttarakhand Uttar Pradesh West bengal FiT (INR/KWh) 4.15 WPD >200w/m2:6.50% 5% 5% Source: Company.87 CUF32% 3.18 WPD>400w/m2:3.77 5.38 (for others) 3. Exhibit 4: VAT benefit provided to attract investments in states State Tamil Nadu Karnataka Gujarat Maharashtra VAT rates Reduced VAT from 14.2 4. Karnataka. 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 7.05 WPD>400/m2:2.7 WPD 250-300w/m2:5.27 CUF25% 4.80 3.48 5.17 WPD>400/m2:3.92 WPD 200-250w/m2:5.

MOSL According to the Centre for Wind Energy Technology (C-WET). Madhya Pradesh Government revenue land use permission at INR1/-(token) premium per year (as per circular No. land to harness up to a maximum of 200mw of wind power initially. India has the potential to install over 100. The conversion charges (private land to industrial use) will be 10% of charges levied for industrial purposes under the relevant rules.961 910 1.931 5.788 Installed Capacity 913 3.005 5.050 5. Major projects get delayed mainly on account of delays in land acquisition.685 8.394 22.549 35 567 4. F-16-3-93-VII-2A.311 5. India has significant untapped wind potential Source: Company. Strong evacuation infrastructure promotes investments in wind power.10% of DLC rates. if available Maharashtra Developer/Investor can be allotted Government barren land (permissible for industrial use). India has explored only 22% of its wind power potential. MOSL 1 July 2015 7 .260 489 1.370 3. After commissioning of 100 MW capacity Wind farms in 1st stage in the allocated Govt. land.071 5. Exhibit 5: Land facilitation policy State Land Facilitation Policy Rajasthan Government land at concessional rates -. at declared windy sites.000MW of wind turbines at 80meters hub height.374 14. implying an untapped wind power potential of 78GW./MW. with maximum allocation of 5 Hect. F-6-53-2011-VII-Nazool.394 14. the Government may allocate land for another 100 MW capacity Wind Farms. Land facilitation policy: State governments like Rajasthan. Based on C-WET estimates. 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 5.439 5. Madhya Pradesh and Gujarat have formalized land facilitation policies to expedite wind energy projects.Company.497 10.833 49. The application from the developers for Government land will be considered on a first-cum-first-served basis.591 13.053 7.Inox Wind Nadu allows 5% and Karnataka 2% as banked energy that can be accessed any time during the financial year.152 161 534 137 1. on lease basis with 30 yrs agreement Andhra Pradesh Each eligible developer may be allocated available Govt.609 35.462 Source: C-WET. A part of this fund is used to create infrastructure for grid connectivity with proposed wind farms.581 2.593 790 837 920 2. This indicates strong longterm business opportunity for domestic WTG manufacturers. or revenue wasteland / GEDA land.384 5. Green cess fund: The Maharashtra Energy Development Agency (MEDA) has created a green cess (tax) fund. dated 08-08-2011) Gujarat WTGs may be set up on private land.130 102. dated 06-09-2010 and No.

Preliminary assessments indicate that the coastlines of Tamil Nadu (Rameshwaram and Kanyakumari) and Gujarat have reasonably high offshore wind potential. India’s current repowering potential is estimated at ~2. 1 July 2015 8 . 2012A). 2011A). which has several aging (older than 15 years) wind farms located in wind-rich districts.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. is a state with high repowering potential. the US and the Netherlands are at the forefront of the repowering movement. though this is yet to be corroborated by other studies (MNRE. Currently.760MW (GWEC. but there are several practical challenges (involving land ownership. or to achieve better grid integration or higher energy yield could be another big business opportunity in India. 2013E). Offshore wind energy offers a strong business opportunity for INXW. which hinder the realization of this potential. Gamesa is the first company to implement a wind repowering project in India. 2013). Germany. “Project Avatar” in Tamil Nadu in 2011 (MNRE. Denmark. Tamil Nadu. Repowering: Repowering low-capacity and aging wind turbines to improve efficiency. A recent study conducted by WISE estimates Tamil Nadu’s offshore wind potential at 127GW at 80 meters height. A separate study estimates that India has the potential to develop 350GW of offshore wind energy (PIB. lack of supporting state policies or economic incentives). which aims to deploy wind farms within territorial waters (12 nautical miles).

Inox Wind INXW: Prepped for rising wind capacity installation To become number-1 player. Its balanced business model helps INXW to optimally utilize its organizational resources. private. 80% of the wind energy projects are executed on turnkey basis. including with respect to wind farm security Support for registration for renewable energy certificates (REC). supported by (1) strong relationships with IPPs. is equally focused on turnkey solutions and WTG supplies. Well-balanced. site acquisition. erection and commissioning. monthly billing and other support Source: Company. Procurement and Construction n n n n n Operation and Maintenance n n n n Post commissioning Support n n 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. (4) strategically located manufacturing units. 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. generation based incentives (GBI) and clean development mechanism (CDM) Dedicated customer relationship management for customers’ daily generation report. as wind power developers do not have in-house capabilities to undertake project development on a large scale. including preventive maintenance of WTGs. 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. MOSL 1 July 2015 9 . Project execution on EPC basis can severely constrain organizational bandwidth. and (5) established execution track record. Inox Wind Infrastructure Services Limited (IWISL) and Maruti-Shakti India Limited (MSEIL). WTG supplies constitute 52%. with 25% market share n n In FY16. (3) ready pipeline of project sites. INXW’s business model. Exhibit 7: Complete solution provider to customers Wind Farm Identification n n n n Power Evacuation n n n Infrastructure Development n n Support for all government approvals n n Engineering. and long-term operation and maintenance of wind power projects. (2) technology partnerships with global leaders. 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. with ~25% market share. INXW provides turnkey solutions together with its wholly-owned subsidiaries. Its services include wind resource assessment. INXW is well positioned to benefit from the wind market revival. While turnkey solutions contribute 48% of its orderbook. infrastructure development. we expect INXW to clock sales of 825MW and become the number-1 player. however. differentiated business model In India.

000 1. even for several MNC PE funds / IPPs setting up wind power projects in India. Suzlon Energy Limited Vestas Wind Technology India Pvt. Ltd.580MW under development Plans to have 1.000 1. INXW’s order book stood at 1.500/ Suzlon Energy 1. ReGen Powertech Pvt.178MW. MOSL Exhibit 8: Key WTG manufacturers in India with installed capacity of ~10GW Company Gamesa Wind Turbine Private Limited GE India Inox Wind Ltd.Inox Wind INXW has focused on the IPP segment and is the preferred partner for 8 of the top10 IPPs in India.000 Source: MOSL. Ltd. Company Strong order book.000 AMSC.V. We expect INXW to deliver 825MW in FY16 and 950MW in FY17.800/2. Installed Capacity (MW) Product Range (KW) Technology tie-up Gamesa 1.000 Vestas Wind WinWinD. VENSYS 750 1.600 1100 2.000MW installed capacity by 2017 Source: Company.500 WindFin B.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 1.500 800/850/2. ready pipeline of project sites provide comfort As of March 2015. INXW is among the top-2 players in India. Encouraged by the enabling government policies. Kenersys India Pvt. WinWinD Power Energy Pvt. Gujarat. INXW has access to project sites in Rajasthan. Andhra Pradesh.500 3. In the equipment supply business.000MW installed capacity by 2017 Plans to have 1.081 Comments 450MW pipeline to be commissioned in 2015 270MW under construction. Ltd. Robust order book and ready pipeline of project sites provides comfort on the revenue visibility front.650/1.700 600/1.000 GE 450 1. Given INXW’s relationships with the IPPs.Austria Kenersys 400 2. while the size of this segment is 15% for the WTG industry.350/1. several IPPs have firmed-up strong capacity addition plans. 1. which makes available strong ready infrastructure to provide turnkey solutions. Leitner Shiram Manufacturing Ltd. Maharashtra and Madhya Pradesh suitable for the installation of an aggregate capacity of 4.000 250 1. 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 MW 500 145 525 200 1. The order book includes executed binding contracts for 825MW and term sheets (or letters of intent) for 432MW.402MW. Also. 1 July 2015 10 . Ltd. Its successful IPO has improved INXW’s profile as a serious player.250/1. The government is encouraging renewable energy projects and targets to have an installed capacity of 60GW by 2022. comprising 614MW for the supply and erection of WTGs and 564MW for the supply of WTGs. This should drive greater acceptance and also enable the company to match market pricing against a new entrant’s strategy of offering discounts. Focus on IPPs and timely project execution has helped INXW to develop strong relationships with the IPPs.500/1. it is targeted to contribute 30% to INXW’s revenue in FY16. we believe it is in a sweet spot.

Technology tie-ups ensure that INXW has access to latest technology and also saves on R&D cost.162 13% 12% 87% 88% FY14 FY15 30% 36% 70% 64% FY16E FY17E 630 100% 14 FY11 120 FY12 100% 100% 198 FY13 FY14 FY15 FY11 FY12 FY13 Source: MOSL. INXW is required to purchase ECS manufactured by AMSC or its affiliates.194 Gujarat 430 Gujarat 164 Madhya Pradesh 285 Madhya Pradesh 634 Andhra Pradesh 20 Maharashtra 300 Andhra Pradesh Total 2. Rotor blade sets: INXW has a non-exclusive perpetual license from WINDnovation Engineering Solutions GmbH. MOSL Source: Company.355 Rajasthan 1.s.Inox Wind Exhibit 9: Order book composition – FY15 Exhibit 10: Project pipeline of 4. Gearboxes and generators: INXW procures gearboxes from DHHI (China) and Wikov Industry a. 52% 1. (Czech Republic).312 Source: Company. Electronic control system (ECS): As per the terms of license from AMSC. In addition. In August 2014. Globally. 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. over 15GW of aggregate production capacity operates on AMSC technology. n n n n 1 July 2015 WTG technology: INXW has licensed the technology to manufacture 2MW WTGs in India from AMSC Austria. Company Source: MOSL. 48 % Supply of WTG. 11 . Germany. MOSL Exhibit 11: Robust order inflow led by finalization of orders Exhibit 12: Turnkey segment sales to reduce.090 Total 20 2. INXW has a non-exclusive license to manufacture 2MW WTGs worldwide based on AMSC’s proprietary technology. which helps to keep its cost structure lean. INXW and AMSC amended the agreement to cover all 2MW WTGs with rotor diameters between 85 meters and 120 meters. improving from IPPs organizational bandwidth to increase volumes Turnkey Sales (%) Order inflow (MW) Equipment Sales (%) 1. and generators from Emerson Industrial Automation and ABB India.4GW Wind Sites under acquisition process (MW) Acquired Wind sites (MW) Rajasthan Supply and Erection. and has an exclusive and perpetual license in India.

Maharashtra and Madhya Pradesh. several IPPs have firmed-up strong capacity addition plans. It has a license from AMSC for the production and sale of 2MW WTGs in India based on AMSC’s proprietary technology. Given INXW’s relationships with the IPPs. MOSL Back-to-back warranty tie-ups with suppliers obviate provision requirement INXW outsources raw material and components that it does not manufacture inhouse. On completion.Inox Wind Strategically located manufacturing units ensure efficient cost structure INXW manufactures the key components for WTGs in-house. 1 July 2015 12 . where there is good potential for wind energy production. and attractive margins. adjacent to a highway to facilitate easier handling during transportation to wind sites and sea ports. INXW gets warranties from component and raw material suppliers against deficient performance and resultant liabilities. Expansion at MP. The more easily transportable nacelles and hubs are manufactured in Himachal Pradesh. It sources a portion of the towers required for WTGs from Fedders Lloyd Corporation. The existing rotor blade and tower manufacturing facilities are located at Rohika in Gujarat. we believe it is in a sweet spot. INXW is putting up a new integrated manufacturing facility at Barwani. 800 rotor blade sets. This customer profile shift augurs well for INXW. It is the preferred partner for 8 of the top-10 IPPs in India. 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. Madhya Pradesh to produce nacelles and hubs. It has split its manufacturing activities to ensure cost-efficiency. It also purchases ECS manufactured by AMSC or its affiliates for all WTGs based on AMSC technology. This location is also close to states like Rajasthan. 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). Gujarat. This is close to projects in Madhya Pradesh (MP) and Rajasthan. total capacity would be 950 nacelles and hubs. coupled with capacity augmentation at Gujarat would lead to a near doubling of capacity to 1. as its business model is focused on the IPP segment rather than the accelerated depreciation (AD) market. rotor blade sets and towers.6GW by the end of FY16. Encouraged by enabling government policies. which gives INXW certain tax incentives. cost-effective logistics. Focus on IPPs and timely project execution has helped INXW to develop strong relationships with the IPPs. which ensures cost competitiveness. Exhibit 13: Doubling manufacturing capacity to 1.6GW by end FY16 Installed Annual Production Capacity Post Proposed Expansion 550 550 - 400 Madhya Pradesh - 400 Towers Madhya Pradesh - 300 Rotor blade sets Gujarat 256 400 Towers Gujarat 150 300 Component(s) Plant Location Nacelles and Hubs Himachal Pradesh Nacelles and Hubs Madhya Pradesh Rotor blade sets Source: Company. and 600 towers.

MOSL Operation and maintenance business provides interesting opportunities As of December 2014. The equipment supplier retains O&M on 100% of the projects and the business has gross margins of 50-55%. 742MW produced and sold by INXW were under operation. operation and maintenance (O&M) provides interesting opportunities. MOSL 13 . MOSL 1 July 2015 39 159 FY14 FY15 374 FY16E 594 FY17E FY18E FY19E Source: Company. 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) O& MRevenue (INR M) Installed base (MW) 2.044MW.802 2.212 913 274 FY15 FY16E FY17E Source: Company. We expect the O&M business revenue to scale up from INR39m in FY14 to INR594m in FY17 (147% CAGR). We expect the contribution of O&M to increase meaningfully post the two-year warranty. Given its cumulative supplies of 1. The typical cost for O&M stands at ~INR1m/MW per annum.Inox Wind Exhibit 14: Shift in project size and customer profile in India <10 MW 2 3 7 17 10-25MW 25 5 19 25-50MW 15 74 73 >50MW 12 24 40 23 21 60 23 41 15 2009 2010 2011 2012 2013 Source: Company. and 312MW had been supplied but not yet erected and commissioned.428 1.516 154 318 FY13 150 468 FY14 742 774 1. 84MW had been erected but not commissioned.

6 FY15 FY16E 11.9 41.0 7. Management expects margin expansion to be supported by factors like (i) increase in sales of Rotor 100 metre blades (150bp). (iv) gains from lower special additional duty 1 July 2015 14 .6 Realization-EPC (INR M) Revenue (INR M) 73 Growth-YoY % 70 48 6.589 15. MOSL Operating profit to post 58% CAGR over FY15-17. led by volume CAGR of 28% and 8% increase in realization.Inox Wind Expect 65% earnings CAGR over FY15-17 Return ratios to improve We expect INXW to report 44% revenue CAGR over FY15-17. led by 330bp margin expansion during the period. we expect RoE to improve to 28% and RoCE to 32% in FY17.352 22 FY16E FY17E 27. largely supported by volume growth of 28% and realization improvement of 8%. n n n Expect revenue CAGR of 44% over FY15-17 We expect revenue to grow at a CAGR of 44% over FY15-17.5 45.6 FY13 11. Operating profit is likely to witness 58% CAGR over FY15-17. and by reduction of discounts.098 56. which provides 15% higher energy efficiency with 5% increase in cost. (ii) improved supply chain/logistics. leading to lower discounts on pricing (100bp). Operating margin would expand to 20.1% in FY17. Driven by strong earnings growth and debt repayment.0 42. 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. Growth in realization would be driven by increase in sales of the new Rotor 100 product. (iii) improved market perception.9 73 47. MOSL Exhibit 19: Revenue mix to move in favor of newly introduced 100 metre WTG (INR B) 93 metre 100 metre 113 Metre EPC O&M 60 50 40 30 20 10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Source: Company. led by margin expansion of 330bp during the period. better cost absorption. etc (130bp).7 FY14 11. MOSL Source: Company.099 FY15 Source: Company.6 FY17E 10. led by margin expansion We expect operating profit to witness 58% CAGR over FY15-17.668 FY13 FY14 46.

1) FY2013 FY2014 (3.574 FY2015 FY2016E Source: Company.3) (5.1% in FY17E. Inox has to pay fixed royalty per WTG for the first 450 WTGs with rotor diameters of 93.3 FY2017E 1.Inox Wind (100bp).3 meters and 100 meters. MOSL FY2017E Source: Company. MOSL 1 July 2015 (4) FY2013 FY2014 FY2015 FY2016E FY2017E Source: Company. We expect INXW’s NWC.7 improvement in Net cash (INR b) 2 196 165 148 148 (2) (1.659 -10. We conservatively model margin to increase from 16.2 161 0.2 7. 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. that it produce.3 metre product. MOSL 15 .0) FY2015 (4) FY2016E FY2017E Source: Company.8 20. and the first 245 WTGs with rotor diameters of 113 meters.3) (0. Lower Royalty payment is primarily on account of extinction of royalty payment on the 93.9 18.1 14. (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.9 FY2015 FY2016E 8.354 4.3 11. and (v) lower royalty expense (50bp).2 8.9% in FY15 to 20.762 FY2013 FY2014 31.2 14. and the bargaining power of equipment manufacturers is increasing.0 NWC (days) 7. NWC normalization would drive meaningful improvement in cash flows from operations.2) (3) (1. as net working capital (NWC) for the industry has deteriorated meaningfully since FY13. MOSL Cash flows from operations as well as free cash flows to turn positive from FY16 Historically.6 89. Collapse of the accelerated depreciation (AD) market had resulted in an increase in the bargaining power of IPPs.6 Operating Profit Net Profit Margin 16.2 Growth YoY % 159.965 1.1 13.1 11. which had peaked at 196days in FY15 to normalize at 148 days in FY17. INXW has witnessed negative cash flow from operations on account of elongated working capital cycle.9) (3. This is because the AD market is picking up again. the willingness of banks to fund RE projects is increasing.4 FY2013 FY2014 10. 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.

We expect RoE and RoCE to improve to 28% and 32%. 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 27 172 33 4 237 FY14 63 165 34 10 272 FY15 15 150 90 5 290 FY16E 15 140 88 3 258 FY17E 15 140 88 3 246 79 9 1 89 148 3 145 98 12 1 112 161 3 158 76 10 7 94 196 196 80 6 7 93 165 165 85 6 7 98 148 148 Source: Company. led by strong earnings growth and debt repayment.Inox Wind Return ratios to improve We expect return ratios to improve. MOSL 1 July 2015 16 . Exhibit 24: Robust return ratios led by strong earnings and debt repayment RoCE RoE 51 33 31 21 30 29 FY2013 18 19 FY2014 FY2015 32 28 FY2016E FY2017E Source: Company. respectively in FY17.

8 14.668 27. non availability of adequate power banking facilities.298 FY15 NA FY12 NA FY13 NA FY14 NA FY15 NA FY12 -4. Backed by strong revenue and earnings growth and robust return ratios (RoE of 28% and RoCE of 32% in FY17). Even in most of the mature markets.5 Source: Bloomberg.9 379 433 19. as SEBs have generally been reluctant to purchase expensive source of power. MOSL 17 . a key competitor.099 NA 18.7 Gamesa Corp Tecnologica SA 4.375 3.589 15.0 20.8 11. Challenges like poor investments in evacuation infrastructure.4 -10. etc are yet to be decisively addressed.273 2.704 13. led by changes in government policy.7 NA 10.6 18.1 78 100 26.759 4.610 FY14 35.280 56.3 18. could become aggressive.636 3.7 2. Our target PER of 15x is lower than Industrials / Capital Goods players like L&T (22x FY17E). etc and is constrained by the following factors: n INXW’s earnings are prone to volatility.830 7.9 Nordex SE Vestas Wind Systems A/S 1 July 2015 17.1 -14. backing down in peak generation season.847 FY13 11. Exhibit 26: Exhibit 26: Key financials of WTG players in India Revenue (INR m) EBIDTA Margin (%) PAT Margin (%) Gamesa FY12 22.3 NA 0.3 in FY16E (up 104%) and INR36 in FY17E (up 33%).4 -118.9 -51. non-compliance to RPO obligations. the industry has not demonstrated a secular growth characteristic. we initiate coverage on the stock with Buy rating and target price of INR543 (15x FY17 EPS of INR36).3 Xinjiang Goldwind Science & Te 8. We expect INXW to report EPS of INR27.370 8.3b in FY17 (up 22%).2 577 600 19.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 2022.032 12. INR56. had been impacted by constrained financial position and post the recent fund infusions by DSA / sale of Senvion.270 48.951 NA 3. MOSL Exhibit 27: Key financial comparison for global WTG players (USD m) Company Name MCap Revenue EBITDA Margin (%) PAT PE (x) EV/EBIDTA (x) CY15E CY16E CY15E CY16E CY15E CY16E CY15E CY16E CY15E CY16E 2.2 9.1 -48.5 13.6 5. We expect INXW to post revenue of INR46.047 7.0 FY14 1.9 NA 14.4 FY13 -19. n Health of SEB finances remain the key concern.831 16. given the characteristics of the wind sector that has historically witnessed large swings in capacity additions.2 8.018 2.9 10.4 -53. Challenges in land acquisition could also be a constraining factor to industry growth.411 8.9 Inox Wind Source: Company.656 3.731 8.2 -1. We expect INXW to report not just strong revenue growth but also report far superior earnings growth.5 12.8 7. n SUEL.9 7.4 -3.1b in FY16 (up 70%).2 16.4 NA Suzlon 100.515 5.2 9.9 9.9 19.030 32.8 -0.1 7.4 10.4 16.6 11.8 198 235 23.6 FY15 NA Vestas 17. and WTG demand revival led by fiscal and regulatory incentives provided by central and state government. TMX (28x FY17E).

970 15.450 7.892 2.099 20.660 -29.746 18.330 3.216 4.898 146 334 0 1.570 252 415 85 21.521 955 56 84.919 7.107 164 FY15 27.964 318 468 742 33 39 159 Source: Company.007 19% -52% -80% 23% -14% -27% 36% -3% -17% 28% 16% 12% 31% 23% 22% 27% 19% 18% 23% 11% 11% 25% 17% 17% 1.422 76 1.410 -1.690 0 -20.718 204 4.330 15.405 8.690 4.326 -13.470 13.854 89 116 1.923 1.920 36.351 12.280 -24.750 -23.650 Installed (MW) O&M Revenues (INR M) 11.550 14.376 10.030 63.307 3.850 -34.591 -8.541 7.100 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 (%) 1 July 2015 Suzlon Wind FY13 32.731 12.418 4 1.485 330 330 53 13.700 29.858 3.278 1.380 17.103 9. MOSL 18 .720 454 442 76 34.346 152 1.870 2.390 0 0 1.760 FY11 719 518 202 38 46 0 118 10 128 39 88 44 45 54 FY12 6.772 13.753 549 1.318 FY12 100.760 -12.194 1.Inox Wind Exhibit 28: Comparision of Inox Wind with Suzlon (INR m) INR M FY11 91.520 0 6.730 578 578 50 24.131 2.India Realization (INRM/MW) Revenues (INR M) 1.460 13.322 FY14 56.746 -29.290 -38.536 1.583 1.740 -11.120 8.110 10.440 32% 2% 1% 36% 8% 6% WTG Sales (MW) .514 623 3.360 4.110 -10.697 610 2.318 1.520 3.320 -40.896 17.738 388 460 1.629 0 4.012 1.537 250 384 644 1.347 6.270 43.890 430 6.575 143 4.124 8.540 6.962 0 1.830 31.220 Inox Wind FY13 FY14 10.589 15.098 13.552 14.500 -20.290 14 14 120 120 198 198 54 9.745 -16.874 15.630 13.430 722 403 59 42.762 48 91 2.090 17.280 26.750 59.668 7.980 2.330 0 -8.950 -8.850 14.503 1.270 18.151 0 -13.890 2.151 3.890 FY15 48.488 -10.965 1.160 6.161 58 91.

5 acres. the industry would require ~80. However. Further. the grid does not have sufficient spare capacity to evacuate ever-increasing amount of wind power.5b and are projected to reach INR116b by 2014-15.Inox Wind Risks and concerns Capital-intensive nature of the industry The WTG business in India requires high working capital. this is again time-consuming. therefore. one needs clearances from authorities if the land is in proximity to a protected area or forest.7-6/kWh is relatively high compared with predominantly coal-based conventional power (Rs3. Non-availability of grid connectivity Inadequate grid infrastructure is another key issue that needs to be addressed urgently. SEBs’ weak financial condition might deter them from purchasing expensive wind power and thus impact wind power demand in future. To achieve annual capacity addition of 4GW. 264 225 271 211 206 221 226 239 319 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 752 645 1. Change in regulatory policies In the past. aggregate SEB losses in 2011-12 were around INR63.051 230 FY99 FY13 200 FY98 1. Even for the available privately-owned land. Any such adverse policy changes in future can impact the business. this is evident from the fact that setting up a 1MW wind farm typically requires INR40m of working capital.5/kWh). Across most states with significant wind potential. change of land use status from agricultural to non-agricultural is time-consuming. According to Power Finance Corporation. The state distribution utilities are.000 acres of land every year. SEBs’ weak financial health might impact wind power demand State electricity boards (SEBs) and government distribution companies own nearly 95% of the distribution network. withdrawal of accelerated depreciation (AD) and generation-based incentives (GBI) led to a sharp decline in wind energy capacity addition. reluctant to accept more wind power generation and tend to prefer thermal power generation.024 140 FY97 FY12 113 FY96 FY11 88 FY95 FY10 61 FY94 537 51 FY93 FY09 46 FY92 Exhibit 29: Commercial losses up sizably from FY08 (INR b) Source: Company. The cost of generating wind power at Rs3. 1 July 2015 19 . 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. this won’t be easy as land availability for wind farms is a contentious issue in most states. of which actual used is 2.

0% 0. However.8% 4.0% 4.0% Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Source: MOSL.0% 3. inducting a strategic partner and refocusing on the Indian market.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.0% 7.4% Achieved FY15 10.0% 3. There exists intense competition in the WTG segment.0% 14. Exhibit 30: Top Five players command 87% of market in FY15 100. Suzlon has taken several steps to put its house in order by selling stakes in non-core business.8% RPO Target FY14 9.5% 10.0% 5. state electricity regulatory commissions (SERCs) are obligated by law to buy a certain percentage of electricity from renewable energy sources.4% 2. Post its recent restructuring and liquidity infusion.0% 7. Company RPO compliance might remain weak Under the Renewable Purchase Obligation (RPO). with linear increase of 1% annually till 2020 to achieve the NAPCC target of 15%.8% 5.5% Source: MOSL. The guidelines issued in 2010 by Central Electricity Regulatory Commission (CERC) recommended a standardized RPO target of 5% in every state. 1 July 2015 20 .7% 3.0% 7. it will again attempt to achieve its earlier market share.0% 7. Exhibit 31: State-wise RPO Compliance data TN Karnataka Rajasthan Gujarat Maharashtra Andhra Pradesh Uttar Pradesh Madhya Pradesh Punjab FY13 9. For any failure due to defective supply or workmanship.0% 6.0% 17. Also.0% 20.5% 2.0% 10.4% 7. claims for damages brought by third parties could be substantial and could have material adverse effect on the company.0% 40.0% 6.5% 4.8% 5.0% Vestas RRB Wind World Suzlon Regen Inox Others Gamesa 80.0% 60. Industry Data No provisioning for warranties INXW provides its customers warranties against defective components and workmanship during the defect liability period. Suzlon has historically been the market leader with ~50% market share.5% 4.0% 8.0% 8. which is generally two years. 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.5% 8.0% 7.5% 8.8% 1.8% 3. In the last few months. INXW undertakes free repair or replacement. SERCs specify targets for respective states based on the renewable energy potential.

Order book as at December 2014 stood at 1. refrigerants. and towers. and long-term operation and maintenance (O&M) of wind farms. with a market share of 7% in FY14. INXW manufactures two different WTG models with 2MW rating: n Rotor diameter of 93 meters with hub height of 80 meters n Rotor diameter of 100 meters with hub height of 80 / 92 meters INXW has a 100% subsidiary. Company 1 July 2015 21 . and has a project site pipeline of 4GW. rotor blade sets. land acquisition. including wind studies. chemicals.Inox Wind Company background Inox Wind (INXW).258MW. About Inox Group: The Inox Group commenced operations in 1923 and currently operates in industrial gases. renewable energy and entertainment sectors. hubs. power evacuation. engineering plastics. cryogenic engineering. which does project development in respect of wind power projects. an Inox Group company. and manufactures key components of WTGs – nacelles. site infrastructure development. is India’s fourth-largest wind turbine generator (WTG) manufacturer. The Group employs over 8.044MW (including 312MW yet to be erected). Exhibit 32: Existing and upcoming manufacturing facilities of Inox wind Source: MOSL. energy assessments. INXW commenced operations in March 2010. erection and commissioning. The Group has two publicly-listed companies – Gujarat Fluorochemicals and Inox Leisure. Inox Wind Infrastructure Services. and cumulative installations/supplies stood at 1.000 people at more than 100 business units in India. It provides turnkey solutions for wind farm projects through its wholly-owned subsidiaries. statutory approvals.

CDM and wind energy businesses. aged 56 years. procurement and operations in international and domestic industries. Non-Executive Director Mr Deepak Asher. Non-Executive Director Mr Siddharth Jain. 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. He has been instrumental in Inox Group’s diversification into the cinema. Whole time Director Mr Devansh Jain. He holds a bachelor’s degree in Chemical Engineering from the Indian Institute of Technology. is a Non-Executive Director. Baroda. Mr Siddharth Jain. He has completed a double major degree in Economics and Business Administration from Carnegie Mellon University. Mr Rajeev Gupta. aged 36 years. He has been associated with the Inox Group for over 25 years. aged 28 years. Pittsburgh.Inox Wind Board of directors Mr Deepak Asher. He has been spearheading Inox Group’s foray into the wind energy sector. project management. USA. 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. 1 July 2015 22 . He has completed his bachelor’s degree in Mechanical Engineering from the University of Michigan – Ann Arbor. a Thai group and Lurgi India Private Limited. He has more than five years’ experience in the wind industry in various capacities. France. sales. Delhi and has over 32 years’ experience in corporate planning. He is on the National Council of Indian Wind Power Association and is Honorary Secretary of Indian Wind Turbine Manufacturers Association. aged 56 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. with technology sourced from AMSC. He was involved in setting up GFL’s chemical complex at Dahej and production plants for Aditya Birla group. TOA Group of Companies. Whole time Director Mr Rajeev Gupta. is a Non-Executive Director. is a Whole time Director. subsidiary of Lurgi AG. is a Whole time Director. a German engineering company. 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 Jain has been instrumental in setting up manufacturing plants in Himachal Pradesh and in Gujarat. USA and holds a Master’s degree in Business Administration from INSEAD. He has over six years of work experience in various management positions. He has a bachelor’s degree in Commerce and a bachelor’s degree in Law from Maharaja Sayajirao University. Mr Devansh Jain. business and project development.

Advocates. Independent Director Ms Bindu Saxena aged 56 years. Petrochemicals and Oil & Gas industries as a member of the Indian Institute of Chemical Engineers. Dr S Rama Iyer. She has over 25 years of experience as Corporate Attorney. Adani Power Limited and PCI Limited. Mr Jain Senior Partner at Shanti Prashad & Co. Mr Shanti Prashad Jain. He received the ‘Distinguished Alumnus Award’ from Indian Institute of Technology. He holds a bachelor’s degree in Commerce from Rajasthan University and a bachelor’s degree in Law from Agra University. is an Independent Director. He is former Chairman and Managing Director of NTPC Limited. She is an Advocate and a Partner at the law firm. Presently. He is a fellow member of the Institute of Chartered Accountants of India. New Delhi. 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. He was also the Chairman of the Standing Conference of Public Enterprises (SCOPE) for the period 2003-05. He is also a Member on the Advisory Board of Axis Infrastructure Fund. Project and Enterprise management in the Chemicals. She has completed her bachelor’s in Commerce and in Law from Lucknow University. is an Independent Director. Independent Director Mr Shanti Prasad Jain. New Delhi. aged 75 years. He has headed the CII’s ‘National Committee on Energy’.Inox Wind Mr Chandra Prakash Jain. Chartered Accountants. Mumbai. Audit Advisory Board of the Comptroller & Auditor General of India. He is a Chemical Engineer from Jadhavpur University and received a master’s degree and his PhD from Indian Institute of Technology.. 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. He has over five decades of experience in Design Engineering. He has been a past member of the Standing Technical Advisory Committee of the Reserve Bank of India. Swarup & Company. with experience of commercial transactions and projects in India and overseas. is an Independent Director. 1 July 2015 23 . He has also participated in the Senior Executive Program of London Business School. United Kingdom. aged 69 years. he is also an Independent Director on the boards of IL&FS Energy Development Company Limited. Independent Director Dr S Rama Iyer aged 75 years. Ms Bindu Saxena. Mumbai in 1996. is an Independent Director. Independent Director Mr Chandra Prakash Jain.

485 1.7% FY15 1.8% 71.058 (1.0% Revenues WTG Sale of services other operating income Revenues.3% 10.2% 330 66.079 4.4% 578 75.2% 21.428 10.178 218.2% 1.743 4.1% Net Debt (INR m) 2.883 85 56.162 84.1% 49.031 -11.133 94 48.6% 11.8% 20.5% 1.668 13.098 37.709) 148 3 145 161 3 158 196 0 196 165 0 165 148 0 148 Core NWC (Days) Customer Advances Reported NWC (Days) 1 July 2015 630 218.469 2.4% 1.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 370 198 198 FY16E 1.384 17.516 2.188 15.756 182 26.622 17.125 11.093 75 46.352 45.9% 324.3% 825 42.9% 80.4% 19.3% 13. % YoY WTG Sale of services Other operating income EBIDTA % 18.0% 44.2% Realizations (INR M/MW) WTG OMS 48 7 42 12 43 8 45 11 48 12 Cumulative Installed (MW) 318 468 742 1.589 9.2% 950 15.5% 25.8% 92.772 2.8% 73.3% 22.730 1.130 8.2% 24 .8% 71.2% -58.0% 18.940 24.7% FY17E 1.2% 17.010 94 15.

352 22.02 7.964 2.535 24.294 423 1.265 13.381 11.0) 2015 27.944 1.544 816 3.872 202 0. Creditors Other Liabilities Net Current Assets Application of Funds 1.278 5.278 304 5.574 16.313 6.0 6.151 14.779 4.011 2.354 20.0 12.772 206 1.051 104.788 4.589 7.614 8.891 927 23.367 404 11.894 18.301 1.154 2.965 18.919 2014 2000 2.629 4.567 10.520 26.750 209 26.035 Balance Sheet Y/E March Share Capital Reserves Net Worth Minority Interest Loans Deferred Tax Liability Capital Employed 2013 400 2.104 1.300 21.011 2015 2219 12.029 32.131 384 1.651 791 2.566 41 0.2 2016E 46.6 1.02 16 12.536 33 2.040 317 1.407 1.8 157 280 575 7.895 795 5.370 9.2 40.50 0 28.707 7.044 608 3.964 129.586 429 15.996 8.099 73.1 1.964 119 2.290 (14.667 1.002 15 1.745 11.210 7.564 2.1 (INR Million) 2017E 56.677 22.722 255 450.096 73 2.347 549 1.704 23.107 28.278 4.316 21.257 Gross Fixed Assets Less: Depreciation Net Fixed Assets Capital WIP Investments Goodwill Curr.668 48.209 13.573 1.964 124.257 4.290 1.919 2.217 571 7.0 8.503 2014 15.098 70.955 3.029 32.030 449 4.200 209 23.0 20.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.7 (INR Million) 2017E 2219 26. Consolidated PAT Change (%) 1 July 2015 2013 10.720 352 6.2) 1. Assets Inventory Debtors Cash & Bank Balance Loans & Advances Other Current Assets Current Liab.354 2.728 300 46. & Prov.6 48 89 388 1.051 6.582 151 10.962 1.044 3.962 5.123 2.731 250 644 1.029 8.245 .45 -3.120 6.582 2.555 2.8 2.503 1.147 13.659 18.9 2.769 195 6.662 1.779 2016E 2219 18.326 6.781 10.503 1.500 209 35.437 300 34.1 173 350 613 10.051 104.1 6.322 (12.692 11.007 35.035 25 .024 31.911 24.297 5.078 20.9 143 204 623 0 3.1 91 116 460 15 1.1 33.7 8.

2 51.6 7.6 20.6 0.091) .3 1.8 28.3 Profitability Ratios (%) RoE RoCE 50.2 37.3 28.6 Valuation (x) P/E EV/EBITDA EV/Sales Price/Book Value 11.293 116 460 334 (2.6 30.3 64.6 11.Inox Wind Financials and valuations Ratios Y/E March Basic (INR) Adj EPS Cash EPS Book Value 1 July 2015 2013 2014 2015 2016E 2017E 37.3 0.6 6.2 29.300 0 (3.970) 7.8 21.120 1.535 (1.2 1.8 140 15 85 1.517 1.1 4.536 89 314 287 (2.1 3.8 19.450) 575 (4. EO Items 2013 1.358) (498) 64 (434) (186) 450 264 (1.8 27.244) 662 662 (Inc)/Dec in FA Investment in liquid assets CF from Investments (1.193 1.848) 1 (1.3 5.4 14.6 19.911 (6.5 36.5 165 63 98 1.789 460 0 1. (Days) Asset Turnover (x) 172 27 79 1.210) (1.358) (0) (1.2 21.862) (1.565 375 0 2.210) 2014 1.047 73 7.021 7.243) 750 613 (5) Inc/Dec of Cash Add: Beginning Balance Closing Balance (375) 390 15 58 15 73 7.6 15.635 623 10.208 (INR Million) 2017E 10.389) (854) 15 (870) 2015 3.7 64.3 10.8 127.9 6.6 39.847) (500) (500) (Inc)/Dec in Debt Less : Interest Paid Dividend Paid CF from Fin.9 31.6 Leverage Ratio Debt/Equity (x) 1.5 91.692 6.9 28.428) 7.962 280 575 1. Activity 2.361 10.3.6 3.300) 2016E 7.7 8.021 26 .6 11.120 (5.8 32.564 350 613 2. Incl.6 2.9 17.1 Turnover Ratios Debtors (Days) Inventory (Days) Creditors.692 8.1 150 15 80 1.6 178 17 76 1.0 5.8 73.3 0.4 13.3 32.084 (3.4 2.891 204 623 927 (7.2 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.

Inox Wind NOTES 1 July 2015 27 .

if necessary. The price and value of the investments referred to in this material and the income from them may go down as well as up. This report is for personal information of the selected recipient/s and does not construe to be any investment. and buy or sell the securities or derivatives thereof of companies mentioned herein. use. 2014. or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt and its affiliates are a full-service. MOSt and its affiliated company(ies). MOSt generally prohibits its analysts. Before acting on any advice or recommendation in this material. costs. Level 9. and such use and interpretation have not been reviewed by the third party. competitive factors and firm revenues Disclosure of Interest Statement § Analyst ownership of the stock § Served as an officer. persons. This research report does not constitute an and http://economictimes. director. investors should consider whether it is suitable for their particular circumstances and.S. financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this report. Such research analyst may not be associated persons of the U.nseindia. Additionally.. Prabhadevi. future returns are not guaranteed and a loss of original capital may occur. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). investment horizon. covered in the report and may be distributed by it and/or its affiliated company(ies). Securities Exchange Act of 1934. Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. While we would endeavor to update the information herein on reasonable basis. as amended from time to time. invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. as amended (the "Exchange Act") and interpretations thereof by the U.16 Collyer Quay. persons reporting to analysts. integrated investment banking. not be treated as endorsement of the views expressed in the report. The research professionals responsible for the preparation of this document may interact with trading desk personnel. expenses that may be suffered by the person accessing this information due to any errors and delays. investor client Contact : (+65) 68189233 / 65249115 Office Address : 21 (Suite 31). is prohibited. however. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. publication. and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein. and investors may realize losses on any investments. and no part of the compensation of the research analyst(s) was. outstanding positions and trading volume. as amended (the"1934 act") and under applicable state laws in the United States. Most and it’s associates may have managed or co-managed public offering of securities. For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India.S. The research analysts. MOSL has entered into a chaperoning agreement with a U. applying and interpreting information. This report is intended for distribution to institutional investors. any brokerage and investment services provided by MOSL. Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. brokerage and financing group. MOSIPL. at any time. fitness for a particular purpose. Also there may be regulatory. In reviewing these materials. including the products and services described herein are not available to or intended for U. Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U. Investment Advisers Act of 1940. financial situations. Motilal Oswal Securities Limited (MOSL) is not a registered broker . act as principal in. Our research professionals may provide input into our investment banking and other business selection processes. markets or developments referred to in the document. have a long or short position in.indiatimes. risk profiles. This report does not constitute a personal recommendation or take into account the particular investment objectives. and therefore may at times have different contrary views on stocks sectors and markets. Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report MOSt and/or its affiliates and/or employees may have interests/positions. damages. MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer. MOSt has incorporated a Disclosure of Interest Statement in this document. and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. investment management. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors. ("MOSIPL").S. any express or implied warranty of any kind. Accordingly. This Report is not intended to be a complete statement or summary of the securities. director or employee INOX WIND No No A graph of daily closing prices of securities is available at www. regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. as opposed to focusing on a company's fundamentals and. dissemination or copying (either whole or partial) of this information. and non-infringement. the "Acts). MOSt and/or its affiliates are under no obligation to update the information. their directors and employees and their relatives may.Singapore 04931 1 July 2015 Motilal Oswal Securities Ltd Motilal Oswal Tower. may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company. MOSt or any of its affiliates or employees do not provide. The recipients of this report should rely on their own 28 . however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s). (a) from time to time. if any. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors.S. In addition MOSL is not a registered investment adviser under the U. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. you should be aware that any or all of the foregoing among other things. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Kadambari Balachandran Email : kadambari. may give rise to real or potential conflicts of interest. or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. Sayani Road. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business. including quality of research. regarding any matter pertaining to this report. INH000000412 There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues.. is. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives. in the absence of specific exemption under the Acts. strategists. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data. may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. including without limitation the implied warranties of merchantability.S. as amended (the "Advisers Act" and together with the 1934 Act. country or any jurisdiction. or research associates principally responsible for preparation of MOSt research receive compensation based upon various under the U. or needs of individual clients. Securities Exchange Act of 1934. For U. Past performance is not a guide for future performance. as such. stock picking. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from. No. and therefore. legal or taxation advice to you. registered broker-dealer.S.Disclosures Inox Wind This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s). as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289). etc. The information contained herein is based on publicly available data or other sources believed to be reliable. compliance. availability or use would be contrary to law. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. Mumbai 400 025 Phone: +91 22 3982 5500 E-mail: reports@motilaloswal. In reliance on the exemption from registration provided by Rule 15a-6 of the U. sales personnel and other parties for the purpose of Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state. may have received compensation for investment banking or merchant banking or brokerage services.S. traders. This should. may not match with a report on a company's fundamental analysis. and under applicable state laws in the United States. This document must not be acted on or relied on by persons who are not major institutional investors. where such distribution.S. SEBI Reg. Our salespeople.balachandran@motilaloswal. information and/or opinions provided by that third party either publicly or through a subscription service. seek professional advice. Unauthorized disclosure. or advisory board member of any companies that the analysts cover. Motilal Oswal Securities International Private Limited. any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses. To enhance transparency. public appearances and trading securities held by a research analyst account. as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement. We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department.S. registered broker-dealer. and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein.