Multibagger: Penny stock Inox Wind soars 1324% in 4 years; what should investors do now?

In the past twelvemonth alone, Inox Wind has continued to present multibagger returns, with a singular surge of 256 percent. However, successful 2024 year-to-date (YTD), the banal has experienced periods of correction and volatility, registering a humble summation of 13.5 percent.

The banal has besides witnessed a diminution of 3.5 percent successful June, extending losses from a 6.3 percent autumn successful May. Despite the caller correction, home brokerage location Axis Securities has initiated sum connected the upwind vigor banal with a ‘buy’ telephone and a people terms of ₹182, implying a imaginable upside of implicit 28 percent.

"With the interest-bearing indebtedness coming down to zero, robust bid book, technological readiness, and execution capableness on with the government’s renewed absorption connected upwind capableness additions, we delegate a people P/E aggregate of 30x connected our FY26 EPS estimate. We further set it for the promoter’s money infusion and a number involvement successful the Inox Green Energy Services Ltd. to get astatine our TP of ₹185/share and initiate the sum with a BUY rating," said the brokerage.

Inox Wind is simply a afloat integrated upwind vigor solutions provider. The institution is engaged successful the concern of manufacturing and selling upwind turbine generators (WTGs). It besides provides erection, procurement, and commissioning (EPC), operations and attraction (O&M), and communal infrastructure facilities services for WTGs and upwind workplace improvement services.

According to Axis, pursuing the promoter infusion, Inox Wind Limited (IWL) has successfully eliminated its interest-bearing indebtedness entirely. This fiscal strengthening positions the institution favorably to capitalise connected the expanding upwind assemblage successful India. Key factors contributing to its beardown marketplace presumption see a robust bid publication totaling 2.7 GW crossed a diversified lawsuit base, it said. Additionally, its operational and attraction arm, Inox Green Energy Services Ltd., boasts robust margins exceeding 45 percent, added the brokerage.

Moreover, Axis besides pointed retired that India's ambitious plans to summation upwind powerfulness capableness by astir 75 GW by FY32, up from the existent 46 GW, further bolster Inox Wind's maturation prospects. The institution has besides adapted technologically by transitioning from 2 MW to 3-3.3 MW turbines and processing the 4.X MW WTG platform, positioning itself for advancements successful the upwind vigor assemblage implicit the adjacent decade, it noted.

Investment Rationale

Order Book: Axis informed that arsenic of March 31, 2024, Inox Wind maintains a robust bid publication totaling 2.7 GW, which is slated for merchantability implicit the adjacent 2.5 years. This bid publication is diversified crossed assorted lawsuit segments, including Public Sector Undertakings (PSUs), Independent Power Producers (IPPs), Commercial and Industrial (C&I) markets, and retail markets. It encompasses a steadfast blend of turnkey projects and instrumentality supplies, reflecting the company's strategical attack to marketplace diversification and task execution.

Ramp-up successful Execution: In FY24, Inox Wind achieved an awesome execution of 376 MW, marking a important 262 percent year-on-year summation from 104 MW successful FY23. With a important bid publication successful place, the institution anticipates further maturation successful bid execution starting from FY25 onwards, with projected figures of 800 MW to 1,200 MW for FY25 and FY26 respectively. Looking ahead, IWL aims to execute an yearly execution people of 2 GW successful the mean term, leveraging its enhanced capableness and robust proviso concatenation readiness. Notably, successful FY16, during the highest of the upwind sector, Inox Wind commissioned 786 MW, highlighting its humanities capableness and acquisition successful delivering large-scale projects, said Axis.

Technological Advancement: Axis further noted that the institution has importantly accrued the accumulation of its 3 MW upwind turbines, successfully transitioning from the erstwhile 2 MW models. Additionally, Inox has secured the licence for a 4.X MW upwind turbine platform. This caller 4.X MW upwind turbine, featuring a ample rotor diameter specifically designed for debased upwind sites, is poised to beryllium a revolutionary merchandise successful the Indian market. This strategical advancement positions IWL astatine the forefront of technological innovation successful the upwind vigor sector.

Financial Performance: Axis noted that Inox Wind incurred losses during FY19-24, chiefly owed to reduced execution linked to little upwind capableness additions. This diminution was caused by the abrupt modulation to a reverse bidding auction authorities starting successful FY18 and the further interaction of COVID-19 successful FY21-22. However, the brokerage expects the institution to instrumentality to profitability from FY25 onwards, driven by higher execution supported by its robust bid book.

Axis projects a Compound Annual Growth Rate (CAGR) successful Revenue/EBITDA of 75 percent implicit FY24-27E, with Profit After Tax (PAT) expected to surge to ₹1,081 crore successful FY27E from a nonaccomplishment of ₹51 crore successful FY24. Additionally, it projects an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) borderline of 15 percent, aligning with the company’s guidance scope of 14-15 percent.

Nil Interest-Bearing Debt connected the Books: A bid of promoter money infusions, totaling ₹2,940 crore implicit FY23-25 done involvement sales, has resulted successful zero interest-bearing indebtedness for Inox Wind, further stated Axis.

While the caller 2 months person been successful the reddish for the stock, 1 indispensable enactment that the scrip is conscionable 20 percent distant from its highest of ₹177, deed connected May 27, 2024. Meanwhile, it has soared 273 percent from its 52-week debased of ₹38, deed connected July 3, 2023.

Disclaimer: The views and recommendations made supra are those of idiosyncratic analysts oregon broking companies, and not of Mint. We counsel investors to cheque with certified experts earlier taking immoderate concern decisions.

3.6 Crore Indians visited successful a azygous time choosing america arsenic India's undisputed level for General Election Results. Explore the latest updates here!

Published: 28 Jun 2024, 02:59 PM IST