Inox Green Energy Services Limited (IGESL)
Q1 FY26
Call date · September 01, 2025
1 · Management Commentary
Key Positives
- Strong financial performance: Q1 FY26 total income at INR98 crores (up 79% YoY), EBITDA at INR48 crores (up 61% YoY), PAT at INR22 crores (up 4.4x YoY), and cash PAT at INR44 crores (up 140% YoY).
- EBITDA margin at ~49% for the quarter.
- Machine availability averaged 95.6% across the portfolio.
- Added ~1.6 GWp of solar O&M contracts in April-May 2025; total renewable O&M portfolio now ~5.1 GW.
- Signed a comprehensive O&M agreement for 182 MW of wind projects with a major conglomerate.
- Strategic move into solar O&M, leveraging group synergies.
- Ongoing expansion through both organic and inorganic means, including investment in an entity with ~2 GW O&M assets.
Key Negatives
- No explicit negatives highlighted by management; some analyst concerns on execution pace and working capital cycle were addressed as seasonal/industry-norm.
Forward Guidance
- Capex: Ongoing investments in expanding O&M portfolio and backward integration; demerger of substation business to improve capital efficiency.
- New products/segments: Rapid expansion into solar O&M; targeting multi-GW wind and solar O&M tenders.
- Expected client wins/losses: Actively bidding for large-scale O&M contracts as IPPs shift to outsourcing models; expect further client additions.
- Revenue/margin outlook: Maintain high EBITDA margin (45–50% for wind O&M, ~20% for solar O&M); continued strong growth expected.
- Other strategic initiatives: Demerger of substation business from IGESL and merger into Inox Renewable Solutions to improve ROE/ROCE and PBT by INR50–55 crores annually; approval expected in 2–3 quarters. Targeting portfolio ramp-up from 5 GW to 17 GW over next two years.
2 · Q&A Highlights
Q 1 (Corporate Structure): Will IGESL and Inox Renewable Solutions be demerged to IWL shareholders in the future?
A (Management):
• No current plans; both are integral to Inox Wind and will remain subsidiaries.
• Shareholders can already choose exposure via listed entities.
Q 2 (Execution & Guidance): Q1 execution up only 4% YoY—are annual targets at risk?
A (Management):
• Execution is seasonally lower in H1 (30–35% of annual); focus is on complete sets and working capital efficiency.
• Confident of achieving 1.2 GW execution guidance for FY26.
Q 3 (Margins & Revenue Mix): What drove higher margins and revenue mix this quarter?
A (Management):
• Margin guidance raised to 18–19% for wind business.
• Revenue mix includes contributions from both IGESL and Inox Renewable Solutions; higher other income from value-added services and investments.
Q 4 (O&M Realizations): What are per-MW realizations and margins for wind and solar O&M?
A (Management):
• Wind: INR8–10 lakh/MW revenue, 45–50% margin.
• Solar: ~INR2 lakh/MW revenue, ~20% margin.
Q 5 (Portfolio Growth): How will IGESL scale from 5 GW to 17 GW O&M portfolio?
A (Management):
• Majority will be wind; mix of organic execution and inorganic acquisitions.
• Already control ~6 GW wind and ~1.7 GW solar; expect further rapid growth.
Q 6 (Order Book & Industry Outlook): Is order book growth sustainable?
A (Management):
• Current order book at 3.1 GW; expect to maintain or grow this base.
• Industry outlook strong with government support and new CERC regulations enabling hybridization.
Q 7 (Working Capital): Guidance on receivables/inventory days?
A (Management):
• Net working capital days to remain around 120; expect improvement as execution ramps up.
Q 8 (Strategic Initiatives): Impact of CERC amendment and GST rate cut?
A (Management):
• CERC hybridization regulation enables use of existing infra for both wind and solar, expediting execution and offering up to 10 GW plug-and-play capacity.
• GST rate cut would lower capex, benefiting sector investment and returns.
3 · Other Key Numbers
- Q1 FY26 total income: INR98 crores (up 79% YoY)
- Q1 FY26 EBITDA: INR48 crores (up 61% YoY)
- Q1 FY26 Profit before tax: INR33 crores (17.5x YoY)
- Q1 FY26 Profit after tax: INR22 crores (up 4.4x YoY)
- Q1 FY26 Cash PAT: INR44 crores (up 140% YoY)
- EBITDA margin: ~49%
- Machine availability: 95.6%
- Solar O&M contracts added: ~1.6 GWp (April–May 2025)
- Total renewable O&M portfolio: ~5.1 GW
- New wind O&M agreement: 182 MW
- Investment in entity with ~2 GW O&M assets
- Demerger to remove gross block of ~INR1,000 crores and annual depreciation of INR50–55 crores
- Target O&M portfolio: 17 GW in 2 years (majority wind)
- Wind O&M realization: INR8–10 lakh/MW; margin 45–50%
- Solar O&M realization: ~INR2 lakh/MW; margin ~20%
- Order book: 3.1 GW
- Rights issue oversubscription: 2.13x
- Promoter subscription in rights issue: ~INR560 crores
- Approval for demerger expected in 2–3 quarters