Inox Wind unlikely to bid for Siemens' Indian wind energy unit

In May this year, Siemens Energy AG announced that it is putting its India wind turbine business, part of its subsidiary Siemens Gamesa Renewable Energy, up for sale

Leading wind energy solutions provider Inox Wind flagged that the company may not be interested in acquiring Siemens's wind unit Gamesa, despite having evaluated it, whole-time director Devansh Jain said in a post-earnings call with analysts. When asked about the group's interest in the renewable energy firm, Jain emphasized that the group follows a conservative approach to capital allocation and does not intend to engage in competitive bidding for companies with high valuations.

In May this year, Siemens Energy AG announced that it is putting its India wind turbine business, part of its subsidiary Siemens Gamesa Renewable Energy, up for sale, in a strategic move to stem losses and return to profitability.  The Economic Times reported that private equity firm TPG,  domestic players JSW Energy and Inox Wind, are in a race to acquire Siemens Gamesa and that the unit could be valued upto $500 million.

"No matter how much cash we have,  no matter how much cash we raise, we're not going to stress up that. We're going to be very, very cautious. I think organically we can build this business out phenomenally on the manufacturing side.... Our financial metrics typically remain 4 -6 times. We are not competing with people to buy companies at 30 times, 40 times, 50 times. That's not something which is the interest of the InoxGFL Group," Jain said in a post-earnings call on October 25.

Jain's remarks come as investor interest pivots towards greenfield renewable assets, slowing the sale of nearly 20 gigawatts (GW) of operational and under-construction renewable energy assets in India.  Experts suggest that the older projects, which were once backed by higher tariffs, are now struggling to compete with newer projects priced below Rs 2 per unit, leading to a rising number of unsold assets.

"The greenfield assets are attracting investments, through local partnerships, driven by the expectations for future capex decline and stable counterparties including SECI and other federal renewable implementation agencies," said Ankita Chauhan, associate director at S&P Global Commodity Insights.

Inox Wind Ltd is a fully integrated player in the wind energy market and provides end-to-end turnkey solutions.  As of September 2024, the company's order book stands at 3.3 GW,  having added around 1.2 GW of orders to date in the current financial year. It targets to execute 800 mega watts in this financial year.  The company  expects FY25  margin guidance to improve from 15% to 17%, helped by the backward integration initiatives.  "Our royalty payments for our 3 megawatts wind turbine will stop after FY25 resulting in immediate addition to our bottom line," said chief executive officer Kailash Lal Tarachandani.

Meanwhile, Siemens Gamesa has operated in India since 2009 and is currently the market leader with a 40% market share and an installed base of over 8 GW, according to consultancy Wood Mackenzie. The company has a blade factory in Nellore (Andhra Pradesh), a nacelle factory in Mamandur (Chennai, Tamil Nadu), and an operations and maintenance center in Red Hills (Chennai, Tamil Nadu).