Inox Wind Limited Conference Call Summary (November 3, 2023)
Overview
• Date of Call: October 27, 2023
• Financial Results: Unaudited results for Q2 and half-year ending September 30, 2023
• Hosted by: ICICI Securities
• Key Management Present:
• Mr. Devansh Jain (Executive Director)
• Mr. Kailash Tarachandani (CEO)
• Transcript Availability: Accessible on the company's website
Financial Performance Highlights
• Q2 FY24 Results:
• Cash profit: Rs. 4.7 crores (vs. loss of Rs. 111.6 crores last year)
• Revenue: Rs. 384.4 crores (up 250% YoY)
• EBITDA: Rs. 69.7 crores (improved from a loss of Rs. 18.7 crores)
• First Half FY24:
• Revenue: Rs. 729.4 crores (nearly matching previous fiscal year's total)
• Future Outlook:
• Optimism due to new turbine products, strong order backlog, and favorable renewable energy policies
• Progress towards net debt-free status
Operational Insights
• Q2 Execution:
• Approximately 65 megawatts executed, totaling around 143 megawatts for H1
• Full-year guidance of 500 megawatts expected to be met
• Order Book:
• Significant backlog of 1,200 megawatts, with half in 3-megawatt turbines
• Market Position:
• Strong execution capabilities amidst a competitive landscape
Financial Strategy
• Power Procurement:
• Selling power to group entities, third parties, and exchanges to avoid CAPEX
• Debt Management:
• Current net debt: Rs. 2,715 crores; net interest-bearing debt: Rs. 1,172 crores
• Cost of debt: ~10.5%, with plans for reduction
Inventory and Receivables
• Concerns Addressed:
• High inventory and trade receivables expected to normalize by end of FY24
• Customer Base:
• Diverse across retail, PSU, IPP, and C&I markets
Merger and Future Projections
• Merger Timeline:
• Expected completion in 5 to 6 months, pending approvals
• Post-Merger Expectations:
• Profitability and net debt-free status anticipated sooner than projected
• Historical ROCE and ROE expected around 20%
Contractual and Pricing Mechanisms
• Contract Types:
• Most contracts are fixed, particularly for turnkey projects
• Some contracts may have pass-through elements beyond one year
• Cash Flow:
• Full payment upon turbine execution, with performance guarantees of 2.5% to 5%
• Pricing:
• Turnkey prices: 2-megawatt turbines at Rs. 6-6.5 crores; 3-megawatt turbines at Rs. 7.5-8 crores
Additional Notes
• SPV Sale:
• Rs. 300 crores expected from the sale to promoter company, aimed at reducing Inox Green's debt
• Execution Split:
• Estimated 55:45 split between 2 and 3-megawatt turbines for the year
• Management's Closing Remarks:
• Expressed gratitude and optimism for future growth and capacity utilization.