Inox Green Energy Services opened its IPO on Friday and will be closing November 15. The IPO price per share was set at Rs. 65, implying a market capitalisation of Rs. $15 billion, at the upper end of the price band of Rs. 56-66 per share fixed by the company on Wednesday (it had earlier revised the issue price to Rs. 60-68). The shares will be listed on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Ahmedabad Stock Exchange (AMEX)…
Introduction
Set to close on November 15, Inox Wind Services Limited’s Initial Public Offering (IPO) is now open for public subscription.
Inox Wind Services was incorporated in 2012 and offers installation, maintenance and repair of wind turbine blades and other wind power equipment.
As a result of its operations, Inox Wind Services has increased its turnover by more than 100% to Rs. 89 crore in FY 16 from Rs. 41 crore in FY 15.
To complement their business model and expand into new geographies, Inox Wind Services acquired Renew Power Solutions Pvt Ltd in January 2016 with a view to strengthening their presence as an expert service provider for renewable energy solutions.
Renew is engaged in consulting services for solar and wind project development across India.
The company currently operates with an annual turnover of Rs 3 crores.
The acquisition will enable Inox Wind Services to grow their business faster through expansion into new geographics.
The current market cap of the company stands at around Rs 112 Crore, which means that you can subscribe up to 2 lakh shares @Rs 120 per share if you invest 10 Lakhs.
Inox Wind Services expects net income at 50%+ YoY growth by end FY17 driven by a robust pipeline coupled with completion of major tenders scheduled this fiscal year, including 600 MW Tuas West project being jointly executed with SREI Infrastructure Finance Ltd.,
leading private equity investor in greenfield projects in India.
What Is Inox Green Energy?
Inox Wind is a subsidiary of Inox Green Energy Services Ltd., which provides energy services to electric utilities, power producers, and industrial companies.
The company offers to build, own, operate and maintain wind farms; sell renewable energy credits; offer feasibility studies for wind projects; and provide a range of ancillary services.
The company has applied for Renewable Purchase Obligation Certificate (ROC) quota under the Gujarat Urja Vikas Nigam Limited’s purchase obligation scheme.
In order to be eligible for ROCs, it must have at least 10 MW of grid-connected capacity in operation by March 31, 2020.
Moreover, as on March 31, 2018 there were no ROCs issued yet.
Hence, while it remains unclear how much ROCs will cost per unit and how many units will be allocated to Inox Wind each year under this scheme, investors need not worry about this uncertainty affecting its business.
The IPO
What is an IPO? An Initial Public Offering (IPO) is a type of public offering in which shares are sold for the first time to members of the public.
It’s a chance for people to buy into a company at its inception.
Why should you subscribe? Inox Wind, India’s leading wind energy service provider and green energy player, has announced plans for an initial public offering (IPO).
The company will sell 8 million equity shares to raise funds and will use these funds primarily for capital expenditure (CapEx), working capital requirement, repayment of debts and other general corporate purposes.
This IPO comes at a time when the Indian renewable sector has been booming with capacity installations reaching 11,000 MW in fiscal year 2017-18.
Renewables also now contribute 15% of the country’s power generation mix up from just 6% in FY 2015-16.
With a whopping 20 GW solar installation target set by government this financial year, it can be said that Renewable Energy companies such as Inox Wind will see significant growth opportunities ahead.
Some investors may be tempted to invest in Inox Wind given its attractive GMP and Quota ratios compared to other companies like Welspun Renewables and Tata Power Renewable;
however one must take note that most IPOs have low or no dividend yields or income stream so investments made solely based on yield rates could end up being unprofitable over the long term.
The Price
The share price for Inox Wind– is Rs. 7,500 per share with a GMP of Rs. 10,000 and a Quota of 1%.
November 15 is the closing date for the public offering. A wind power project is typically priced at Rs. 2.50-3 lakhs per MW which translates to 1% of total cost
or Rs. 25 lakhs per MW or Rs. 2.5 crore (2 million) for each MW of capacity that is being developed for sale to the grid under the Power Purchase Agreement (PPA).
Renewable energy firms have been attracting a lot of investor interest over the last few years because they promise steady returns, as they are not dependent on global commodity prices.
Other companies in this space include ReNew Power Ventures Pvt Ltd., Suzlon Group’s REpower Systems SE and CleanMax Solar Inc., among others.
The GMP
The company provides wind turbine service, maintenance and insurance to all types of wind turbines, including both onshore and offshore.
Inox Wind is a subsidiary of Inox Group, which has been operating for over 30 years in the power-related industry and has accumulated rich experience in energy development.
The company mainly operates in China’s coastal areas with a total installed capacity of more than 1GW.
Starting from January 2013, as a result of its effective management strategy, Inox Wind was listed among the top 500 leading enterprises by Fortune magazine.
On December 18th, 2016, Inox Green Energy Services announced that it would issue 6.86 million shares at an issue price of $8.00 per share through an initial public offering (IPO).
Investors who subscribe to shares will be entitled to one vote per share; shareholders have rights such as appointing directors and voting at shareholder meetings.
After listing on the NYSE board, GMP will not exceed US$6 billion within 12 months after commencement date.
Each purchaser of the offered shares shall be entitled to one vote for each share purchased, regardless of the number of votes registered on his or her name before this date.
Voting rights are apportioned equally between existing shareholders and new shareholders if new shares are issued post-IPO.
In order to meet high standards required by various regulatory agencies in different regions, other projects and financing need to undergo due diligence.
Interested investors should read IPO prospectus before making any investment decision.
Should You Subscribe?
The Inox Wind Initial Public Offering (IPO) is a green energy and renewable power generation company focused on wind farms.
The company, which was founded in 2006, currently operates one wind farm in Andhra Pradesh and is developing three more wind farms in Karnataka, Gujarat, and Maharashtra.
If you are considering investing in a green energy/renewable power generation company that’s focused on wind farms, then this might be for you.
However, you should know that there are some risks involved with investing in this particular company.
For example, there are other companies who have more experience with building and managing wind farms than Inox Wind does.