Release Date: February 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Inox Wind Ltd (BOM:539083, Financial) reported a significant revenue increase of 113% YoY, reaching INR506.9 crore in Q3 FY24.
- The company achieved a positive EBITDA of INR99.5 crore in Q3 FY24, compared to an EBITDA loss of INR172.5 crore in Q3 FY23.
- Inox Wind Ltd (BOM:539083) secured a large 1,500 megawatt order from CESC, the single largest wind order ever awarded to any OEM in the country.
- The company has a robust order book of approximately 2.6 gigawatts, providing strong revenue growth visibility.
- Inox Wind Ltd (BOM:539083) has significantly reduced its debt levels and aims to achieve net debt zero status by H1 of the next financial year.
Negative Points
- The company faces challenges in executing turnkey projects due to the complexity and time required for project development and infrastructure setup.
- There is a significant shortage of quality BOP (Balance of Plant) service providers in the market, which could impact project execution timelines.
- The 4 megawatt turbine platform is still in the development phase and will take another two to three years before it becomes commercially available.
- The company’s ability to ramp up operations to meet the increasing demand may be constrained by the availability of cranes and other logistical challenges.
- Inox Wind Ltd (BOM:539083) has a high dependency on large orders from a few key customers, which could pose a risk if any of these customers face financial or operational difficulties.
Q & A Highlights
Q: Can you provide some guidance for FY25 execution front?
A: We are gearing up for a gigawatt of annual execution. Our order book is now excluding LOIs north of 2,500 megawatts. We will be looking at a very significant ramp-up in operations and a significant jump to what the market expects. - Devansh Jain, Director
Q: Can you help us understand more regarding the infrastructure for the new 4 megawatt turbine setup?
A: We have announced a license agreement for the 4x platform. It will take two to three years to come to fruition. We have a strong balance sheet, large project site inventory, and a diversified order book. The 4x platform is well-suited for certain parts of the Indian market, and we are preparing for the next 8 to 10 years. - Devansh Jain, Director
Q: How does the split between turnkey and equipment supply orders help with revenue growth?
A: Having both turnkey and equipment supply orders allows us to scale our business faster and leverage other players developing their own projects. This de-risks us and enables us to scale up our entire opportunity. - Devansh Jain, Director
Q: Can you explain the revenue recognition workflow for your business?
A: For supply of goods, we recognize revenue when the risk and rewards transfer to the customer. For EPC revenue, it is recognized based on the commissioning of WTG. O&M revenue is time-based and recognized over the period of service. - Unidentified Company Representative
Q: What is the current bid pipeline and how does it impact future guidance?
A: There are almost 15 gigawatts of tenders out there, including hybrid, wind, and FDRE. We are participating in most of these tenders and expect significantly larger numbers than previously communicated for FY25 and '26. - Devansh Jain, Director
Q: What are the issues causing delays in the ordering and execution cycle?
A: The sector has seen pain over the past five years. We have a mix of turnkey and equipment supply orders to mitigate risks. We are selective about our customers and focus on those capable of executing projects. - Devansh Jain, Director
Q: What is the normalized interest cost expected from Q4 onwards?
A: We are on a run rate of INR30 crores to INR35 crores in Q4. This includes one-time charges and will decrease as debts are repaid. We expect to be net debt-free over the next two quarters. - Devansh Jain, Director and Rahul Roongta, CFO
Q: How much of the current order book is for the new 3 megawatt turbines?
A: Approximately 350 megawatts are for 2 megawatt turbines, and the rest are for 3.3 megawatt turbines. The 3 megawatt turbines reduce the cost of energy by 35% to 40% compared to the earlier 2 megawatt turbines. - Devansh Jain, Director and Kailash Lal Tarachandani, CEO
Q: What is the timeline for the merger with Inox Wind Energy Limited?
A: We have filed the scheme in NCLT and expect approval within the next two to three quarters. - Kailash Lal Tarachandani, CEO
Q: How is the availability of cranes and BOP services for the new 3 megawatt turbines?
A: There is no shortage of cranes. We have partnerships with crane suppliers and BOP service providers. There is a significant shortage of quality BOP service providers in the market, but we have a strong network to ensure smooth execution. - Devansh Jain, Director and Kailash Lal Tarachandani, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
