Inox Green Energy makes dismal debut; lists at 8% discount over issue price

Inox Green Energy Services (IGESL), a subsidiary of Inox Wind, made a dismal debut on the bourses on Wednesday with its shares getting listed at Rs 60 apiece, an 8 per cent discount to its issue price of Rs 65 per share on the National Stock Exchange (NSE).

On the BSE, the stock of the Inox GFL Group company opened at Rs 60.50. 

Post listing, the stock hit a low of Rs 59.55 on the NSE and BSE. At 10:02 am, it was trading at Rs 61.60, down 5 per cent against its issue price. A combined 11.2 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.

IGESL is one of the major wind power operation and maintenance (O&M) service providers within India. The company is engaged in the business of providing long-term O&M services for wind farm projects, specifically the provision of O&M services for wind turbine generators (WTGs) and common infrastructure facilities on the wind farm, which support the evacuation of power from such WTGs.

The Rs 740-crore initial public offering (IPO) of the company had received a decent response with the issue being subscribed 1.55 times on the back of good demand from retail investors. Retail Individual Investors (RIIs) category was subscribed 4.7 times, Qualified Institutional Buyers (QIBs) portion received 1.05 times subscription, and the non-institutional investor category was subscribed 47 per cent.

As of June 30, 2022, the debutant's parent Inox Wind had entered into binding contracts for the supply of 2 MW capacity WTGs with an aggregate capacity of 964 MW. Further, it had also received letters of intent, which were non-binding and hence might not lead to execution of any form of binding contract, for its new 3.3 MW capacity WTGs with an aggregate capacity of 524.7 MW

Besides, its O&M services portfolio consisted of an aggregate 2,792 MW of wind farm capacity and 1,396 WTGs.

During FY20-22, IGESL registered a CAGR revenue, EBITDA and PAT growth of 2.1 per cent, 8.8 per cent and 246.4 per cent, respectively.

"Dependence on the parent company for most O&M contracts may lead to muted growth in future order inflows. Total debt on the books was at around Rs 900 crore; though the management expects to become net debt free in the coming period through (IPO proceeds and selling a SPV, we see uncertainty on this and future profitability," analysts at ICICI Securities had said in an IPO note.

IGESL is currently entirely dependent on Inox Wind and if they were to choose another service provider for operation and maintenance services of their wind turbine generators, its business, financial condition and prospects may be adversely affected, analysts said. 

The company has entered into a business transfer agreement by which it divested its erection, procurement and commissioning business to one of the subsidiaries of its promoter, Resco Global Wind Services (BTA), which imposes certain contractual obligations on its company. This is among key risks, said KRChoksey Shares and Securities.