Inox Green Energy Services Ltd. (formerly known as Inox Wind Infrastructure Services Ltd.), which provides long-term O&M services specially for wind turbine generators, will be launching its maiden initial public offer on November 11.
It is one of the major wind power operation and maintenance (O&M) service providers within India.
Here are 10 key things to know before subscribing to the public issue:
1. IPO Dates
The issue will open for subscription on November 11 (Friday) and the last day to subscribe to the public offer is November 15 (Tuesday).
2. Price Band
The price band for the offer has been fixed between Rs 61 - 65 per equity share of face value Rs 10 each.
3. Offer Details
The company, a subsidiary of Inox Wind Limited ("IWL") which is listed on the National Stock Exchange and BSE Limited, is seeking to raise Rs 740 crore through fresh issue of 56,923,077 shares of Rs 10 each amounting to Rs 370 crore and an offer for sale (OFS) of equal number of shares (as the fresh issuance) aggregating up to Rs 370 crore by the selling promoter Inox Wind.
Post the issue, the promoter shareholding will decline by 37.8 percent and come down to 56.04 percent from the current 93.84 percent stake held by the them in the company.
Of the total offer size, 75 percent of the net offer will be reserved for qualified institutional buyers, 15 percent for non-institutional investors and the remaining 10 percent is for retail investors.
4. Objectives of the Issue
The company intends to use the net proceeds from the fresh issuance to part finance its need for prepayment/repayment of certain borrowings in full or part (Rs 260 crore), and for general corporate purposes.
The company will not receive any proceeds from the OFS portion.
5. Lot Sizes
Investors can bid for a minimum lot size of 230 shares and in multiples thereof. The minimum investment for a retail investor works out to Rs 14,950 at the upper end of the price band for 230 shares. A retail investor can apply for upto 13 lots or 2,990 shares for an amount of Rs 1,94,350.
6. Company Profile & Industry
The company is engaged in providing long term O&M services for wind turbine generators (WTG) and the common infrastructure facilities on the wind farm. As a result, it enjoys the benefits of synergies with its parent company IWL, which is principally a manufacturer of WTGs and provides turnkey solutions including supply of WTGs and other services related to setting up of a wind power project.
The company has an exclusivity agreement with IWL wherein it provides exclusive O&M services for all WTGs sold by IWL through long term O&M agreements ranging from a period of 5 to 20 years. Due to this exclusivity agreement, the future growth of company’s revenues depends on the order book of IWL to a large extent.
As of June 30, 2022, the company’s O&M services portfolio consisted of an aggregate of 2792 MW of wind farm capacity and 1396 WTGs. Of the 2792 MW capacity, 1964 MW was attributable to the company’s contracts for comprehensive O&M services and 828 MW was attributable to its common infrastructure O&M contracts.
According to the International Energy Agency (IEA), India is the third-largest energy-consuming country in the world and has become one of the largest sources of energy demand growth globally.
7. Financials
In terms of financials, the company had recorded revenue of Rs 172.2 crore in FY20 and a net profit of Rs 1.7 crore. In FY21, the revenues came in at Rs 186.3 crore and it had incurred a loss of Rs 27.7 crore during the year. In FY22, the revenues of the company increased marginally to Rs 190.2 crore and its loss declined to Rs 5 crore. For the Q1 of FY23, it reported a loss of Rs. - (11.58) cr. on a turnover of Rs. 63.16 cr. Thus due to losses posted for the last 27 months, its issue is at a negative P/E.
For the last three fiscals, Inox Green has posted an average negative EPS of Rs - 0.86 and an average negative RoNW of -21.5 percent.
The management has clarified that the company has posted losses at net levels on account of interest burden and amortization provisions, but it has been reporting EBITDA margins of above 50 percent on average for all these years. Through the fresh proceeds of this IPO, the company will be able to significantly reduce its loan and interest burden which should result in improvement in its net margins.
8. Strengths and key business strategies
The key strengths of the company include its strong and diverse existing portfolio which along with favourable national renewable energy policy provides strong visibility for growth. The company has reliable cash flows supported by long term O&M contracts with the customers with a strong backing of its parent IWL.
Its business strategy is focussed upon exploring opportunities to expand the portfolio and scale its operations while transitioning to an asset light model with minimal capital expenditure. It intends to continue and enhance the focus on predictive maintenance over reactive maintenance and also on providing analytics and asset performance forecast services.
9. Competition
There are several other WTG OEMs which provide O&M services for the WTGs which they manufacture based on contracts for annual maintenance. This arrangement is generally preferred globally primarily due to the ease of procuring spare parts or components from the OEMs compared with other O&M service providers.
Their primary competitors in India are Siemens Gamesa Renewable Energy, S.A., Enercon GmbH, GE and Vestas India.
Independent Service Providers are typically engaged by WTG owners at the expiry of the OEM’s initial O&M on the WTGs or for other reasons relating to costs or incapability of the OEM to provide reliable services for continued business operations. In this category, Renom Energy Services LLP, SKF Ltd, Windcare India Pvt. Ltd. and Kintech Engineering are among their primary competitors.
10. Grey Market, Allotment & Listing Dates
The company’s shares are commanding a premium in the range of Rs 7-10 per share in the grey market currently, according to IPO Watch and IPO Central, that track the grey market movements.
Shares will be allotted to successful bidders on November 18, and the refund to unsuccessful bidders will be credited their accounts on November 21. Shares will be credited to the demat account of the successful bidders by November 22 and the stock will debut on the bourses on November 23.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
