Buy Inox India; target of Rs 1400: ICICI Securities

ICICI Securities's research report on Inox India

Inox India (Inox) saw a steady quarter as earnings aligned with our estimates. Revenue stood at INR 3.6bn (+17% YoY). EBITDA margins improved 100bps YoY to 21.8%; as a result, EBITDA expanded 22% YoY to INR 0.8bn. PAT came in at INR 0.6bn (+19% YoY). Order inflow (OI) for Q2 stood at INR 3.7bn (+2% YoY/-10% QoQ); for H1, it was INR 7.9bn (+17%YoY). Its order book (OB) is at a record INR 14.8bn vs. INR 11.7bn YoY. Over the past few quarters, Inox has consistently reported OI >INR 3.5bn, barring two quarters, when it received some large orders resulting in higher OIs. Key would be for it to sustain OI growth to see earnings growth beyond 20%.

Outlook

We believe, Inox stands tall to capture opportunities across verticals given its moat and the trust built over the years. It has grown >15% CAGR over FY20–25. We expect 18% earnings CAGR over FY25 27E. Maintain BUY and TP of INR 1,400.