Inox Wind Ltd, manufacturers of wind power equipment, is confident of raising ₹ 700 crore through its initial public offering which will hit the market on March 18.
Of the amount that it plans to raise, the company plans to use ₹ 300 crore for meeting the long-term working capital needs, ₹ 150 crore for augmenting its manufacturing facilities, ₹ 150 crore for building the site infrastructure for its projects and the remaining for general corporate purposes.
“By the end of the next financial year, our manufacturing capacity will be 1,600 MW. We produce turbines of 2 MW each, so we would be making 800 turbines, and other related equipment,” said Deepak Asher, Director, Inox Wind Ltd.
Book running lead managers
The issue’s global co-ordinators and book running lead managers are Axis Capital, DSP Merril Lynch, and Edelweiss Financial Services, and the book running lead manager is YES Bank Ltd.
Inox Wind will issues fresh equity shares to raise ₹ 700 crore, while one of the promoters Gujarat Fluorochemicals Ltd will also sell one crore shares to raise ₹ 325 crore for itself.
IPO price band
The price band has been kept at ₹ 315 to ₹ 325 and will have a ₹ 15 discount for retail investors.
The merchant bankers are confident that the issue will be full subscribed. “We are not very apprehensive about the appetite for this issue. Already some big financial institutions have shown interest. The justification for the price band comes from the company’s growth and financials,” said Ashish Kumbhat, Vice-President-Equity Capital Marktets, Investment Banking, Axis Capital.
The company’s revenues have more than doubled in the nine months of fiscal 2014-15 ended December 31, 2014 compared to the same period last year. Its revenue in the nine months of fiscal 2014-15 was ₹ 1,780 crore against ₹ 877 crore in the same period last year.
“It is true that power sector stocks haven’t been doing well since 2008. But firstly this is a capital goods sector company and that sector has been doing very well. Also, in 2008 the benchmarking was a lot higher which was wrong,” said Kumbhat.
Inox Wind has an order book of 1,258 MW. In the company’s initial years, it sold mainly to its group company Inox Renewables Ltd.
In fiscal 2014-15, sales to the group company was zero. Instead, the company sold its equipment to the likes of Tata Power, Green Infra, and Hero Group’s renewable energy division, among others.