Inox Green Energy Services lists at 7% discount to issue price at Rs 60

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Inox Green Energy Services made a weak debut on the bourses today, listing at a discount of 7.69 percent to its issue price of Rs 65 per share. The stock began trading at Rs 60 on the NSE and Rs 60.50 on the BSE.

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The Inox Green Energy initial public offering (IPO), too, saw a muted response from investors, with the overall offer being subscribed 1.55 times. Qualified institutional buyers bought shares 1.05 times of the allotted quota, retail investors bought 4.7 times, while high net-worth individuals subscribed to only about 50 percent (0.5 times) of the portion reserved for them.

The subsidiary of wind turbine generator manufacturer Inox Wind raised Rs 740 crore through the IPO. It plans to use Rs 370 crore out of the fresh issue proceeds for repaying debt. "As of end of FY22 fiscal, debt stood above Rs 790 crore. After IPO proceeds, it is down to Rs 420 crore. Another Rs 100 crore has been serviced by sale of three SPVs (special purpose vehicle) to Adani and one to Torrent," Devansh Jain, ED, Inox GFL Group told CNBC-TV18.

"We are planning to sell another SPV in the near future to become net debt free," he added.

With a presence in Gujarat, Rajasthan, Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh, Kerala and Tamil Nadu, the company provides exclusive operation and maintenance services for all wind turbine generators (WTG) sold by Inox Wind through long-term operation and maintenance (O&M) contracts between the WTG purchaser and Inox Wind.

“Dependence on the parent company for most O&M contracts may lead to muted growth in future order inflows,” Chirag Shah, analyst at ICICIdirect, had said ahead of the company’s IPO.

The company has been trying to improve its balance sheet. It narrowed its net loss to Rs 5 crore in FY22 from Rs 27.7 crore in FY20. For the quarter ended June FY23, it posted a loss of Rs 11.6 crore on a revenue of Rs 61.8 crore.

As of June 2022, its operation and maintenance services portfolio consisted of an aggregate 2,792 MW of wind farm capacity and 1,396 WTGs. Of the 2,792 MW capacity, 1,964 MW was attributable to the contracts for comprehensive O&M services, while 828 MW was attributable to the common infrastructure O&M contracts.

“While the company recorded losses in the last two fiscals, the government’s thrust on green energy will aid in the company’s growth. The strong and diverse portfolio, support of long-term O&M contracts are key positives,” said Arafat Saiyed, an analyst at Reliance Securities.

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