The listing performance of Inox Green Energy Services, a company that provides maintenance services to clients in the wind energy space, was disappointing to say the least, feel analysts. They have also advise investors to exit their investments and refrain from buying more.
The stock listed at a discount of about 8 percent to its issue price of Rs 65 per share. As of 10.25 am, it recovered slightly to Rs 61.15 on BSE, still down 6 percent from the issue price.
“The top line for Inox Green has remained quite stable for the last three fiscals but the bottom-line is under pressure due to high leverage in its balance sheet,” said Narendra Solanki, Head- Equity Research, Anand Rathi Shares & Stock Brokers. “In the rising interest rate scenario, we believe profitability will be impacted in the near term and we recommended to those investors who were allotted issues to exit on listing day.”
The initial public offering (IPO) had seen a muted response from investors despite positive trends in the broader market, with the overall offer being subscribed 1.55 times. The success of the IPO was largely because of 4.7 times subscription from retail investors, who are now sitting on losses. The portion of shares reserved for high net-worth individuals was undersubscribed.
“We advise allotted investors should look for booking profits or exit on listing day and look for better opportunities in the other listed space,” said Prashanth Tapse, Sr VP - Research, Mehta Equities.
The company has presence in Gujarat, Rajasthan, Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh, Kerala and Tamil Nadu. It 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.
The company has plans to grow into a more asset-light business model. 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 the end of June quarter, its net debt stood above Rs 860 crore.
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The firm has incurred losses in recent years. Though it 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.
“The performance of its group is also not attractive enough. Hence one should book profit with whatever listing premium they get or put a stop loss of Rs 57,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.
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