Incorporated in 2009, Inox Wind Ltd (IWL). is India’s fourth largest wind power solution provider. The company is primarily engaged in the manufacturing of wind turbine generators (WTGs). It has facilities dedicated to manufacturing nacelles, hubs, rotor blade sets and towers at Una Unit (Himachal Pradesh and Rohika Unit, located in the Ahmedabad district of Gujarat. IWL has a technical collaboration with AMSC Austria GmbH to manufacture 2 MW WTGs in India.
Valuation and view
We forecast IWL’s top-line to grow at a CAGR of 40% during FY15-17E, on the back of aggressive capacity expansion, strong order book and large project sites. Also, EBITDA margin is expected to improve to 19.7% by FY17E on the basis of higher realizations. Moreover, it stands to be a key beneficiary of government’s thrust on improving the stature of renewable energy in India with a big market share and access to sophisticated technologies.
We expect IWL’s net profit to grow at a CAGR of ~57% during FY15-FY17E and the RoE and RoCE to improve to 32.0% and 35.0% respectively. At the current market price (CMP) of Rs. 449, the stock trades at a P/E multiple of 18.9x FY16E and 13.6x FY17E. We recommend ‘BUY’ with a target price of Rs. 544 assigning a forward P/E multiple of 16.5x, which implies a potential upside of ~21% to the CMP from 12-18 months perspective.
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