Inox Wind Limited (INOXWIND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Inox Wind Limited and Inox Green Energy Services Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vikram Datwani from Nuvama Institutional Equities. Thank you, and over to you, sir.

Thank you. Good evening, everyone. On behalf of Nuvama Institutional Equities, I welcome you all to the Q1 FY '27 Results Conference Call of Inox Wind Limited and Inox Green Energy Services Limited. We are joined today by Mr. Devansh Jain, Executive Director, INOXGFL Group; Mr. Akhil Jindal, Group CFO, INOXGFL Group; Mr. Sanjeev Agarwal, CEO, Inox Wind; Mr. S.K. Mathu Sudhana, CEO, Inox Green; and other senior members of the management. I would now like to hand over the call to Mr. Sanjeev Agarwal for his opening remarks. Thank you, and over to you, sir.

Thanks, Vikram. Good evening, everyone. I will first brief you on the financial and operational achievements of Inox Wind for the quarter under review, as well as other key developments and future road map before handing it over to Mathu for his briefing on the development at Inox Green. I'm pleased to inform in quarter 1 FY '27 on a consol basis, Inox Wind has reported a revenue of INR 872 crores, adjusted EBITDA of INR 237 crores, PBT of INR 95 crores, PAT of INR 64 crores and cash profit of INR 153 crores. As per our strategic initiative undertaken in the previous quarters, where we have pivoted towards increasing the share of equipment supply in our order mix, we are pleased to inform you that we are making steady progress towards this. Our operations are showing resilience post this pivot. This initiative would help achieve a healthy balance sheet as well as a financial robustness. The strategy is expected to yield long-term benefits and reflect meaningfully in the financials, Q3 onwards. As of July '26, the share of equipment supply in our order book stood at approximately 59%, with the balance 40% being turnkey. This excludes order received from INOXGFL Group entities and is only for orders received from the third-party entities. The virtuous cycle of interplay with INOXGFL Group entities is playing out well. The growth at our group company, Inox Clean, will lead to larger orders for Inox Wind, Inox Green as well as Inox Renewable Solutions. Inox Clean has plans to set up 3 gigawatt plus capacity of IPP portfolio every year. We are pleased to inform you that Inox Wind has signed an MOU for 1.5 gigawatt, I'll repeat again, 1.5 gigawatt with Inox Clean Energy in June, out of which firm orders have been signed for 500 megawatts so far. Firm orders for the balance 1 gigawatt would be signed in due course of time. In another positive development in the first quarter, we have received an LOA for 200 megawatts from NLC India. This is a repeat order from NLC in the month of July through an extensive tendering process. With this, our order book stands at approximately 4.4 gigawatts, just to repeat again, an order backlog of 4.4 gigawatts as on July 2026. This provides us a clear execution visibility for more than 24 to 36 months. We are strongly placed with all our customers, including C&I, PSU, IPP captive, that is GFL and retail. Many more tenders as well as negotiations are underway, and we are confident of securing more orders this year. Further, we have a visibility of receiving large recurring orders from Inox Clean Energy over the next few years, as I mentioned before. With respect to our 4X wind turbine model, execution is progressing well. The foundation work has been completed. The tower and other main components are ready. We are on track to install the first prototype in the month of August, with commercial launch expected by end of FY '26. Our expansion plan -- and I would like everyone to hear this with open eyes and ears. Our expansion plans in Inox Renewable Solutions Limited are also progressing well. Our operational Jaipur transformer factory is gearing up to manufacture our next bigger capacity, which is 4.9 MVA transformers for our 4X series. We also plan to further increase our[ transformer ] manufacturing capacity and including a medium-sized [ transformer ] between 8 to 20 MVA as well as large transformers, which is 100 MVA plus. We also own our own fleet of cranes. Presently, we have 4 of them in operations, and more to come in within this financial year. Besides transformers, we plan to manufacture high value-added and high-margin power electronic systems such as inverters, unit substations and energy capacitor systems, which is used in our wind turbines. Our [ USS ] is expected to be commercially launched in FY '27. All these investments have relative short payback periods and will lead to revenue and margin expansion in IRSL. Further, the demerger of the power evacuation infrastructure from Inox Green into Inox Renewable Solution has been completed as on August 1, 2026, being the record date. IRSL would now be automatically listed on the stock exchange post receipt of regulatory approvals. Coming to Inox Green, we have received approval from Honorable NCLT Ahmedabad for the acquisition of Wind World India Limited. The acquisition formalities are expected to be completed in quarter 2 FY '27. This is a milestone transaction in the renewable space, one where we expect to realize significant business synergies as we integrate the acquired business post completion of the acquisition process. We shall provide further updates on this in our next analyst call. As on June 2026, our O&M portfolio stands at 13.3 gigawatts, including investment made. The wind industry continues to show excellent transactions -- traction, sorry, driven by macro tailwinds, with 1.4 gigawatt wind capacity commissioned in India in quarter 1 FY '27. The total installed wind capacity stood at 57.4 gigawatts as on June 2026. We expect to see strong annual wind capacity additions ranging between 8 to 10 gigawatts over the next few years, driven by RTC, FDRE and hybrid capacity additions. In fact, out of the total renewable capacity of 9.334 gigawatts awarded through tenders in quarter 1, 2.35 gigawatts, that is 25%, comprised of stand-alone wind tenders alone. The installed wind capacity in India is expected to be 7x the current capacity in the next 2 decades. Power demand continue to remain strong, and it is worth noting that power demand in the first 4 months of FY '27 so far has been the highest by far in the last 4 years. Inox Wind is well placed to benefit from the continued macro push towards renewable as well as for the interplay of group company synergies. I would like now to hand it over to Mathu for his remarks on Inox Green. Mathu, over to you.

Thanks, Sanjeev. Good evening, everyone. I hope I'm audible. I will firstly brief you on the financial achievements of Inox Green during the quarter before moving to other aspects. During Q1 FY '27, Inox Green reported: total income of INR 101 crores, up by 17% year-on-year; EBITDA of INR 57 crores, up by 19% year-on-year; profit before tax of INR 54 crores, up by 74% year-on-year; profit after tax of INR 41 crores, up by 86% year-on-year; cash PAT of INR 55 crores, up by 25% year-on-year. Machine availability for the entire portfolio averaged approximately 96.3%. The operations continue to do well and have shown continuous improvements, driven by large investments and expenditures incurred in the previous year to improve the entire infrastructure. A significant portion of operating revenues are being generated through value-added services such as turbine overhauls, life extension activities, et cetera. However, as per the accounting norms, they are clubbed as other income, while they are operating in nature. Inox Green's portfolio stood at approximately 13.3 gigawatts peak as on June 2026, comprising of approximately 10.5 gigawatts of wind operating assets and the balance being solar assets. This also includes the investments made to acquire approximately 6.5 gigawatts of operational wind O&M assets, including Wind World India and one other company. As mentioned by Sanjeev earlier, we are pleased to inform you that we have received the approval from Honorable NCLT Ahmedabad for the acquisition of Wind World India Limited. The acquisitions formalities are expected to be completed in Q2 FY '27, post which the financial consolidation will take place. This is a huge milestone in the journey of Inox Green and a value-accretive transaction for all shareholders. We believe there is a significant scope to bring in operational efficiencies in the acquired portfolio through enhanced service offerings, price and cost optimization. Wind World India's O&M portfolio stands at nearly 4.5 gigawatts, servicing a marquee client base that includes Tata, ReNew, Greenko Group, Apraava, Hindustan Zinc, among others. The assets are spread across key wind-rich states, including Karnataka, Maharashtra, Tamil Nadu, Rajasthan, Gujarat, MP and Andhra Pradesh. The portfolio generated revenue of approximately INR 580 crores in FY '26 and the benefits from contracted annual price escalations of approximately 5%. The integration efforts are underway. We shall provide further updates on this in our next earnings call. We expect our other investments to be also completed in FY '27 and to be consolidated in our financials. Besides our inorganic efforts, we believe Inox Green will be one of the biggest beneficiaries of the growth coming from the annual capacity additions of approximately 3 gigawatt plus at our group company, Inox Clean, and external projects executed by Inox Wind. So this is expected to establish Inox Green into one of the largest renewable O&M companies globally. We continue to see success in offering WTG, or that is wind turbine overall, and life extension packages to customers, which as in increasing the life of the turbines and enhancing output. Globally, the life extension of wind turbine has been taken up to 35 years. So typically, every turbine runs at 25 years as a normal standard, but we are intending to increase the life up to 35 years. So this business team has substantial potential for growth ahead. We expect to offer this service to much of the existing fleet of Wind World India's O&M business as well. Further, as mentioned earlier by Sanjeev, we are pleased to inform you that the demerger of the power evacuation infrastructure from Inox Green into Inox Renewable Solutions has been completed as on August 1, 2026. As a result of this demerger, Inox Green is now an asset-light O&M player with significant improvement in ROE and ROCE metrics. We will now open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Vikash Agarwal, an individual investor.

Congratulations, team, for a great result. I'll just bunch up whatever I want to ask so that it can be done fast. I just want to ask, what is the reason for the fundraise at the present acquisition that we have? We understood that those acquisitions were funded by the previous [ professional ] issues that we had made. And also, I would like to know management view, I think Inox Green is a healthy cash-generating entity. And wouldn't it better if we raise debt in that and clear the same from the assured cash flow rather than equity dilution? Also, if we can have a management comment on benefits from the new ALMM rule that could be seen in wind versus solar plus battery? And also competitors are introducing 5-megawatt products, and we are in...

I think we'll do a couple of questions because we missed whatever questions you're asking. On your first question is on Inox Green, I guess. These are enabling resolutions we have done. Beyond that, we cannot comment right now as we are in the silent period.

Okay, sir.

Let me also come in. There was a question about introduction of higher models of wind. Gentlemen, I said in our statement that 4X, our 4X model of wind turbine, the new one would be up in operation in August with a commercial activity starting a month later. As we see this progressing well, we're also contemplating looking at higher models if the demand be there in the market. We believe our 4X model would outclass the wind turbines in this category. Thank you.

Okay. And sir, could you just comment on the benefit of ALMM that is going to be introduced? And when could we see the impact of the same?

I'll talk about the wind. As we speak to you, almost 80% to 90% of the components that goes in wind turbine for us are all indigenized, yes? The ALMM will bring the story for people who do not do this in India. But for us, this was an advantage to start with, and it will remain. The balance 10% is low. We are already active into the job of converting that into the Indian-made. Before end of the calendar year, we would be -- we hope that we are almost 100% on wind turbines. And I'm talking not only for our 3X model, but even for the 4X model.

Sir, I'm just asking that this will benefit us, right? So when can we see the impact of the benefit from the same? I mean, we know that we are getting indigenized and we were well prepared for it in advance. So when can we see the impact? And also if you could comment a little bit on wind versus solar plus battery, and how is it, the outlook? And what does the management feel about it given the present market conditions?

Let's restrict it to the wind story for a moment. I don't want to talk about what would other do, but we think this would give us a span of at least 3 years where this indigenization story that we have -- the initiative, there were a lot of talk, a lot of investors who said earlier, why are you putting so much of money, so much of a CapEx in making everything in India. But probably, we thought this could be -- this is a very, very strategic initiative to be reliant on our own capabilities. The stop shops have been expanded. The vendors who support us, we have helped them give a bit of a technology to make this make in India. We believe next 3 years, this would be something for people who have already taken a decision before. Thank you.

And sir, the interest cost that we are seeing right now in Inox Wind, as we focus more on delivery rather than turnkey, should we see the interest cost coming down?

You can come back in the queue, let others come in. There is long queue there.

The next question is from the line of [ Shubham Borari ] from ICICI Securities.

My question is simple. What was the execution in terms of megawatt in Q1? And what is the approximate number we are looking at for FY '27?

Thank you so much. I mean, this was -- we changed the track 2 quarters before. So we do not announce anything on megawatt now. It is the number of machines that we...

So last year, you see we had made an announcement that we'll move from the machine volumes to the revenue numbers, and that's what we've been guiding, the revenue targets and the margins there. And we'll restrict ourselves to that.

Okay. Revenue guidance and margins would be better?

So we remain committed. We mentioned that in the last quarter, we remain committed on our yearly revenue and margins.

And we maintain that revenue guidance of 75% growth over the previous year and an EBITDA margin of 20% to 22% on a consol basis is what we maintain our guidance for the full year basis. And also, you would appreciate that this is a H2-heavy business. So normally, typically, what we do is 70% to 75% of the business is captured in H2, and we maintain that.

[Operator Instructions] The next question is from the line of Prit from Wealth Finvisor.

My first question is regarding the blended per megawatt revenue that we would have generated for the 10.5 gigawatt portfolio. Could you please share what that number was?

Yes. So what we have already guided for in the past on Inox Green, the turbines that we have been doing, the blended per megawatt is 9 to 10 lakhs. The other two investments that we have would be substantially higher from this number. But once that gets consoled, we'll give you those numbers, too. But they will be substantially higher from these numbers.

So, I understand that, as you mentioned in your prior calls. Just for the purpose of mathematics, for this 10.5 that you've done, should I assume -- I mean, 9 and 10 is a very large range. Is that like a number that you have?

So if you see 10 gigawatts that you're talking about, they're still not being consolidated. So the number -- the revenue numbers in Q1 that you are seeing is not for the consolidated operations, it's only for Inox Green turbines that we were traditionally doing. The other two investments are still classified as investments, and they will get consolidated once the approvals are in place. Beyond that, I think we will not be able to comment as we are under the silent period there.

No, understood. So that's roughly what 4 gigawatts, right? Because out of 10.5, you have 6.5 is investments. So 4 is your -- 4 is the number on which the revenue has been reported. Is my understanding correct?

Yes, that's correct.

So on that 4, what number should we pencil in for the per megawatt realization?

So that's exactly what [ Mathu ] has just mentioned. For our portfolio of approximately 4 gigawatts of wind, the per megawatt revenue is about INR 9 lakh to INR 10 lakh per megawatt, excluding GST, for the two acquired portfolios, which are currently investments and accounted for as under AS 109. So we will be able to do line-by-line consolidation of those turbine portfolios once we acquire the shares. Right now, [ these are investments ], we haven't acquired the shares.

Okay. Thank you, Shweta. The second question I had was regarding the portfolio, overall wind portfolio. So what you're mentioning are only these two elements, which is the organic part as well as the acquisitions. Now Inox Clean can has also been adding capacity, say, the Vena acquisition or the other acquisitions that they've made. When will those capacities get reflected in your portfolio? Is there a time line to it? Could you shed some light on that?

It will be -- if you're talking about Green, it will be over the course of time. So we have just acquired all these portfolios. But you are right, the group -- and that's what we've been saying, that group synergies out of Inox Clean, the biggest beneficiaries would be Wind, Green and Resco because what Inox Clean does -- and Inox Clean, we have stated publicly that's almost 3 gigawatt plus kind of portfolio annually. And all this -- so if those 3 gigawatts, roughly 25%, 30% is wind, so that gets to Wind. The entire portfolio for O&M comes to Green. And the entire EPC that were to be done would come to Resco. So you would see all the synergies of what Inox Clean is a very strategic initiative and a big, big value creator for the entire group.

The next question is from the line of [ Bahu Bali ] from [ Katapai Investments ].

I'm an individual investor. So I just have two basic questions. So my first question is, I mean, the stock has fallen from almost -- more than 65% from the all-time high, right? So do you have any plans to increase promoter shareholding?

No plans as of now, but we'll keep evaluating over a period of time. So there's no firm plans as of now.

So my question is, so basically from the past few quarters, I have been observing that you have been delivering excellent performance. The only concern is -- I mean, it feels like you are over promising and under delivering. So I would say maybe next quarter, so can you confirm that at least a 30% increase in revenue and maybe EBITDA margins of 20%, is it achievable, at least 30% minimum? So can you confirm that?

This is an annualized business. So on a quarterly basis, it will be very tough for us to say. As I have guided earlier as well on the call, we are maintaining -- and we are mindful of what you said. There have been challenges, and we've maintained that, right? Last year, because we're doing a lot of it on turnkey, strategically pivoted towards the equipment supply. And when you move -- when you take a large strategic shift, there are some disruptions. But you would see the operations have shown enough resilience to at least post flattish Y-o-Y results as well. Despite that, what we believe that we'll be able to achieve a 35% growth over the previous year. But yes, this is H2-heavy business, and the numbers will start reflecting in H2. We will see significant improvement in Q2 as well, but I will not be able to comment on the numbers of 30% growth over the previous -- quarterly basis, we cannot quantify that. But yes, on a normalized basis, that is the number we're sticking with.

We remain on our guidance that we gave a quarter before for the full year.

So I mean, the reason I said 30% because -- so basically, I mean, I observed that in the past 2 years, I mean, I agree that definitely, [ H2 ] is greater than H1. But as you said, H2 would account for more than almost [ 60% ] to 70%. That is the reason I'm saying at least 30% is achievable in Q2.

Again, we are not guiding -- thank you so much. We are not guiding in terms of percentage. Let me reiterate, we remain firm that we would achieve the numbers that we just mentioned for the full year.

The next question is from the line of Shubham Shukla from Voyager Capital.

I largely have questions from two fronts. Basically, I just started covering this company, like last quarter. And there are just two fronts where I'm unsure where I could get some clarity from you people is our trade receivables. They are significantly higher than our peers'. And also, I understand that this is like a result from our legacy EPC business also. But what I am trying to understand is EPC, which is done through our subsidiary company, these trade receivable numbers are like there in consolidated level as well as in our stand-alone balance sheet. I was trying to understand how these two are -- like what's the method here to secure an EPC order and then executing it on both stand-alone level and consolidated level? And going ahead, how can we -- of course, we -- I know -- I understand we are trying to gradually move our order book from EPC-heavy to equipment-heavy, which will eventually make things better, like at least for trade receivables, right? I was trying to understand how these two are placed on both consolidated level and stand-alone level. This is the first point where I would like some clarity.

In terms of the receivable numbers, this is a quarterly number. The receivable numbers are not disclosed as required by the Ind AS and the [ LOI ] requirement. But as we have guided, we are sticking to our working capital guidance, which we have provided on an annualized basis. And we keep improving in terms of the last quarter. Our working capital cycle has been improved. In terms of the receivable numbers per se, our receivable is accounted as per the Ind AS 105, which is on the risk transfer basis. And some part of the receivable got stuck in receivable till it is got commissioned. So till it is got commissioned, the receivables got to start reflecting that receivable will show a higher number. But as we are moving towards the equipment supply, as you rightly said, the receivable numbers will start dropping significantly, and you will see a lot of improvement in quarter 2 and quarter 3 onwards.

So I will just add there. So even the receivable days in this quarter, while they have not been published, it would have shown a downward trajectory. And that is exactly one of the reasons we have pivoted towards equipment supply. We are mindful of this, the working capital issues. And to improve on our working capital issues, we have pivoted towards equipment supply. So over the course of next 3, 4 quarters, you will see all these numbers falling out drastically and the balance sheet improving big time.

Okay. Okay. Fair enough. On the second front, I wanted to ask about -- I know that you mentioned that our 4X model is going -- is expected to launch by August of this -- like currently, right now. Like is that the understanding, right, this year, this month, August is going to be the launch for 4X models?

Yes. So commercially, it will take a month more. But yes, in terms of operation, it will happen in the month.

Okay. So I just wanted to ask, I also just looked into our peers. Their product offering has -- I don't know what quantum of their product offering is coming from higher models, say, 5X models and 6X models. I was trying to understand the dynamics, the requirement and the demand-wise, and how...

Sorry to break you here. I would suggest -- first of all, thank you to be our investor. I would suggest that you take up separately with our relationship team. They would be able to help you understand better. Not in this forum, please.

The next question is from the line of [ Akhilesh B. ] from [ North Star ].

Sir, I am a shareholder of your company since FY '23 when the company first inflected. And you've done all great work, which is why the market also rewarded the company. I just want to understand what are the disruptions exactly that you are facing when you are changing the model from turnkey to equipment supply? And now the guidance which you have for the full year, the ask rate is almost INR 6,500 crores of revenue in the next 3 quarters. There's almost a 100% growth rate for those 3 quarters. So does this look achievable? The reason I'm asking you this is the market will reward certainty and consistency. You know that well. And I just want your perspective.

Let me answer the second point first, you raised. Look, there is a great difference between when you do an EPC versus when you do an equipment supply. It brings -- on an equipment supply, we just have to bring a customer who has placed an order on us. He does the inspection, the metal moves out. We make multiple turbines in a month, and we look forward for our customers to have an inspection and take the turbines. This means a faster changeover and achievement of better results, both in terms of revenue as well as cash. You said what are the disruptions? Look, the disruptions on the EPC still remain the same. They have been there for years. The ROW is bringing the equipment, sometimes the customer is not ready. The weather also plays spoilsport. All these issues, something man-made, something beyond your control, this will continue. And that is where we made that call a couple of months back, which we say as a Vision 2.0, where Inox Wind will pivot towards equipment supply alone. I mentioned in my speech that 60% of order booked today stands on equipment supply. This would mean that starting quarter 3, probably end of quarter 2, Inox, which would see a significant change in terms of financials, both the bottom line and the cash results. Thank you so much.

And sir, just one more question. Since Inox Clean is going to be an increasingly big part of our order book, just want to confirm whether the terms at which we do business with the group entity are same or similar to the terms we are doing with other entities?

Great question. Great. Great. So let me reconfirm this. Let me confirm, reconfirm. We do the business in a most ethical and legal binding way. So all our contracts, all our contracts between entities, entities are at arm's length. The terms of payments, the inspections, the way we work, it's Inox Clean for Inox Wind is a customer. They are treated as a customer, the behave as a customer. They do all our inspections. So please, rest assured, Clean remains a customer to Inox Wind.

As much as Inox Wind is dependent on Inox Clean, Inox Clean is as much dependent on Inox Wind as well. So it is not that Inox Wind is the only beneficiary. So Inox Clean, the supplies -- it gets secured supplies from Inox Wind as well. So there's no preferential pricing for any customer, be it Inox Clean or any third party.

[Operator Instructions] The next question is from the line of Rahul Kumar from Vaikarya.

Inox Green, the other income of INR 57.9 crores. Can you break it up between how much is the income from assets that have been acquired versus the value-added services and versus the treasury income in that?

So as far as the other income is concerned, majority of the other income, around INR 57-odd crores or INR 50 crores plus is related to the operational income, which includes the assets which we have acquired as well as the value-add services. The treasury -- the balance is towards the treasury income.