Inox GreenEnergy Services, a leading provider of O&M services
Inox GreenEnergy Services, a leading provider of operations and maintenance (O&M) services for wind power operators, is set to raise between Rs 800-1,000 crore. This capital infusion will be achieved through preferential allotment and issuance of warrants to fund future acquisitions and expand its operational capacity.
Eyeing Stressed O&M Assets for Growth
Inox GreenEnergy Services is aggressively pursuing the acquisition of O&M assets, explicitly targeting 10 gigawatts (GW) of capacity currently managed by idle or financially distressed entities. Sources familiar with the matter suggest that a formal announcement regarding the fundraiser is imminent.
The company plans to issue preferential allotment and warrants totaling Rs 500-600 crore to four to five global and local investors, including a London-based fund. The remaining funds will be raised through warrants issued to the company’s promoters. This strategic move is expected to increase the promoter’s stake, instilling greater confidence among long-term investors regarding the company’s prospects.
Strengthening Market Position
Inox GreenEnergy Services, as India’s only listed pure-play company focused on renewable O&M services, is uniquely positioned in the market. The company is actively engaging with several O&M firms and independent power producers to secure contracts for managing their operating assets. This strategic move could potentially double the company’s installed capacity within the next year, further solidifying its market position.
Inox GreenEnergy Services has a market capitalization of Rs 4,160 crore, and its stock has surged nearly 41% in the last six months. The primary objective of the proposed fundraiser is to acquire companies that will boost Inox GreenEnergy Services’ target capacity to 6 GW by FY26. During a post-earnings conference call in March 2024, the company mentioned exploring various opportunities and indicated that disclosures would be made at the appropriate time.
Strong Growth and High EBITDA Margins
Inox GreenEnergy Services demonstrates robust financial performance, generating revenue of Rs 8 lakh for every 1 megawatt (MW) of O&M services. This suggests that a cumulative O&M service contract for 5 GW could potentially generate revenues of Rs 400 crore. The O&M business operates on an asset-light model and achieves EBITDA margins in excess of 50% under steady-state conditions. In FY24, Inox GreenEnergy Services reported a 10% year-on-year revenue growth, reaching Rs 261.1 crore compared to Rs 237 crore in the previous year, further solidifying its financial stability.
The company has demonstrated operational excellence, achieving 96% machine availability for its managed assets in FY24. Under O&M contracts, Inox GreenEnergy Services undertakes wind turbines, generators, and general infrastructure maintenance for 5 to 20 years.
Promoter’s Commitment and Market Confidence
The promoter group, led by Devansh Jain, held a 55% stake through Inox Wind until March 2024. By issuing warrants to the promoters, Inox GreenEnergy Services aims to increase its stake, thereby boosting investor confidence in the company’s business prospects. This move is seen as a strategic effort to align the interests of the promoters with those of the long-term investors.
Ambitious Plans for Capacity Expansion
Inox GreenEnergy Services has set ambitious goals for the future, aiming to reach a capacity of 10 GW within the next three to four years. This strategic target is part of the company’s long-term plan to establish itself as a dominant player in the renewable O&M sector. The successful execution of its expansion plans will not only enhance its market position but also contribute significantly to the growth of the renewable energy sector in India, providing a clear roadmap for the company’s future and instilling confidence in potential investors.
Inox GreenEnergy Services’ strategic fundraising and meticulously planned expansion plans underscore its commitment to scaling its operations and enhancing its market presence. By strategically targeting acquisitions and increasing its managed capacity, the company is poised to play a pivotal role in the renewable energy landscape. The increased promoter stake and the solid financial performance further underline the company’s potential for sustained growth and inspire investor confidence.
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