Inox Green Energy services limited

About the Company

The Company is a subsidiary of the NSE-listed Inox Winds Limited (IWL). Inox green limited is engaged in the business of providing long-term operation and maintenance (O&M) services for wind farm projects, wind turbine generators (WTG), and common infrastructure facilities on the wind farm. The company also enjoys synergistic benefits as a subsidiary of Inox Wind Limited which is primarily engaged in the business of manufacturing WTG and providing turnkey solutions.
The company provides exclusive operations and maintenance services for all WTGs sold by IWL through long-term O&M contracts which range between 5 – 20 years. Due to this exclusive agreement, IWL’s order book is an important indicator of the future revenue and growth of the company.

Industry Overview

Between fiscal years 2016 and 2022, India's electricity demand is predicted to have increased at a CAGR of roughly 3.6%, while power supply increased more quickly at a CAGR of roughly 3.9% as a result of significant capacity increases in both the generating and transmission sectors.
Electricity demand is of significant importance to the company as the business majorly is dependent upon the electricity demand.
CRISIL Research expects energy requirements to grow at 5-6% CAGR over fiscal 2022 to 2027, due to healthy economic growth and expansion of the power footprint.

Objects of the offer

1. Repayment and/ or pre-payment, in full or part, of certain borrowings availed by our Company including redemption of Secured NCDs in full; and
2. General corporate purpose.

Financials

The revenue from operations grew at a CAGR of ~2% from FY 2020- 2022. The company’s PAT is also showing a downward trend reporting a loss of ~49 million as of 31^st March 2022. The reason for reporting loss is the heavy finance cost that the company is incurring as the borrowings have sharply increased in FY 2021.

Valuation

Since the company is a loss-making for the past 2 years it is difficult to value the company on the basis of PE multiple. Also, as per the RHP, there are no listed peers in India that are comparable in all aspects.
If we compute the price to book value of the company it comes out to ~1.89. Also, we look at price to revenue it comes around ~13 times so on an overall basis the IPO could have been priced at a lower price band

Risks associated

1. The company is entirely dependent upon Inox Winds limited for its business.
2. The demand for service is primarily dependent upon the demand for electricity.

IPO details and subscription

The IPO starts on 11^th November 2022 and is open till 15^th November 2022. The company is coming with a total issue of Rs. 740 crores out of which fresh issue amounts to Rs.370 crores and offer for sale amounts to Rs.370 crores. The price band of the issue is Rs.61-65 per share and a retail investor can apply for a maximum of 13 lots. As of releasing the blog, the GMP is ~12% and the overall subscription is 0.46 times