Buy Inox Wind; target of Rs 505: Angel Broking

Angel Broking's report on Inox Wind

For 4QFY2015, Inox Wind (IWL) reported a strong set of numbers. Its top-line grew by 34.9% yoy to Rs 930cr, led by supply of 198MW of wind turbine generators (WTGs) during the quarter as against 132MW of WTGs supplied during 4QFY2014. The EBITDA during the quarter came in at Rs 170cr, an increase of 212% yoy, due to lower EPC cost and other expenses. Hence, the EBITDA margin improved by 1,040bp yoy to 18.3%. Despite higher tax payment, the profit improved by 156.5% yoy to Rs 118cr during the quarter.

Outlook and Valuation: "We forecast IWL’s top-line to grow at a CAGR of 48.1% during FY2015-17, on the back of aggressive capacity expansion, strong order book and large project sites. We expect EBITDA margin to improve to 17.5% by FY2017 on the basis of higher realization for larger rotor blades and no royalty payment burden from FY2016 onwards. The stock is currently trading at 13.7x its FY2017E EPS; given the attractive valuation we recommend a Buy rating on the stock. We have assigned a multiple of 16x to its FY2017 EPS of Rs 31.6 to arrive at a target price of Rs 505", says Angel Broking research report.

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