Inox Wind IPO: Subscribe for long term, says GEPL Capital

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Inox Wind IPO note by GEPL Capital

Inox Wind is the part of the Gujarat Fluorochemicals Ltd. involved in the manufacturing of the wind turbine generators and offering services like wind resource assessments, site acquisition, infrastructure development, erection and commissioning and also long term operations like maintenance of wind power project. Inox Wind is India’s 4th largest WTG company according to the WTG commissioned in the year ended March 31, 2013.

The company has in-house facilities dedicated to manufacturing the major components of a WTG, including nacelles, hubs, rotor blade sets and towers. They manufacture nacelles and hubs at Una Unit. Their rotor blade manufacturing facility and tower manufacturing facility are located at Rohika Unit. The company has entered into a license agreement with WIND ovation to allow them manufacture 100 meter rotor diameter rotor blade sets. Since the 100 meter rotor diameter rotor blade sets have a larger swept area, they are capable of generating more power with the same WTG than the 93.3 meter rotor blade sets that they currently produce. They also intend to apply a portion of the proceeds of this Issue to expand and improve manufacturing facilities to meet expected increased demand for WTGs upon their planned introduction of the 100 meter rotor diameter rotor blade sets.

Valuation & Recommendation"Inox Wind Ltd. stands to gain from operating leverage. At a P/BV of 1.54x we believe that Inox Wind demands a discount to both its domestic peers. We assign a Subscribe rating to the IPO", says GEPL Capital research report.

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