Release Date: August 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 increase in revenue, rising 85% YoY to INR651 crore in Q1 FY25.
- EBITDA saw a substantial growth of 349% YoY, reaching INR157 crore in Q1 FY25.
- The company turned net cash positive with a promoter infusion of INR900 crore, strengthening its balance sheet.
- Inox Wind Ltd (BOM:539083) achieved its highest-ever quarterly financial performance, setting a strong base for future growth.
- The company has a robust order book of over 2.9 gigawatts, with strong customer demand and significant order inflows.
Negative Points
- 110 megawatts of capacity are awaiting grid connectivity approval, which delayed potential revenue recognition.
- Despite the strong financial performance, the company faces ongoing execution challenges, particularly in logistics.
- Interest payments remain a concern, although they are expected to decrease significantly in the future.
- The company is cautious about potential acquisitions, emphasizing prudent capital allocation to avoid overpaying.
- There is uncertainty regarding the impact of commodity price fluctuations, although the company has measures in place to mitigate this risk.
Q & A Highlights
Q: Are we facing or thinking of any execution challenges due to logistical issues to meet our guidance for this year?
A: No, we don't foresee any major execution challenges. Small execution challenges are always there on the ground, but largely, the way we are executing right now, we don't see any foreseeable problems.
Q: How is the order pipeline or bid pipeline looking, particularly with regard to the C&I segment?
A: The majority of orders are currently coming from the C&I segment due to huge demand. Overall, the demand is large, and we are receiving orders from all kinds of customers across various segments.
Q: What is the impact of commodity prices, particularly steel, on your operations?
A: We are well-hedged with quarterly tie-ups for steel and annual tie-ups for other commodities like copper and aluminum. Given our ramp-up, we leverage our supply chain to renegotiate prices, which helps us manage costs effectively.
Q: Are you considering acquiring the business of a large MNC that is currently on the block?
A: Yes, we are evaluating it. However, we follow a prudent capital allocation policy and will not buy just for the sake of buying or at absurd prices.
Q: Regarding the guidance for next year of 1,200 megawatts, are you considering revising it upwards?
A: Yes, there could be an upside to the execution guidance beyond 1.2 gigawatts, evident from our massive order inflows. However, we won't provide specific numbers at this time.
Q: What is the update on the Inox Wind Energy merger?
A: Shareholders' and creditors' approvals have been obtained. Regulatory approval is ongoing, with a hearing scheduled for the first week of September. We expect the merger to be completed by November.
Q: What are the current working capital days?
A: We have guided for the full year, but on a quarter-on-quarter basis, we are not providing specific guidance. For the full year, it is approximately 90 working days.
Q: Can you explain the rationale for setting up a new nacelle manufacturing unit near Ahmedabad?
A: The new unit will provide substantial savings on CapEx as it is on a lease rental basis with minimal annual costs. This decision is in line with our strategy to scale up rapidly and meet the growing demand.
Q: What is the plan for the remaining NCRPS post-merger?
A: Post-merger, the NCRPS held between IWEL and the company will be squared off. The remaining NCRPS, around INR560 crore, will be retired as and when there are surplus cash flows.
Q: What market share are you targeting going forward?
A: We are focusing on profitability rather than market share. We aim to take our fair share of high-quality orders with marquee customers, targeting around 20%-25% market share as the market grows.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
