Inox Wind, which came out with a ₹1,000-crore IPO last month, notched up 35 per cent gains on Thursday, its first day of listing. As against the issue price of ₹325, the stock closed at ₹438.40 on the NSE, a gain of 35 per cent on the first day of listing. During intra-day trades, the stock hit a high of ₹448.85 and a low of ₹400. The stock witnessed a combined trading volume of 4.85 crore shares on the BSE and the NSE.

The company’s public issue, which closed on March 20, received strong response from all hues of investors. The issue was subscribed by over 18 times.

Defies expensive valuation The stock has managed to list at a good premium even as valuations were considered slightly expensive at the time of the issue.

The interest in the stock is justifiable due to three reasons:

First, Inox Wind came out with the public issue at a time when the wind energy sector in the country has received a new lease of life. Accelerated depreciation benefits were reintroduced in udget 2014 in July last year. Besides, generation-based incentives for wind power producers were also brought back in 2013-14.

The target for wind power capacity was raised to 60,000 MW by 2022 in this year’s Budget, well above the expected wind capacity of only about 25,000 MW as at the end of March. This presents players with tremendous growth opportunities.

Secondly, Inox has a strong order book worth 1,258 MW, possesses good project execution capabilities, enjoys double digit operating margins and diversified clientele. Between 2011-12 and 2013-14, its consolidated revenues grew at a CAGR of 58.7 per cent while consolidated profits climbed 15 per cent (CAGR). Ebitda margins were in the range of 11-18 per cent in this period.

At Suzlon’s expense? The third and a pertinent reason is that Suzlon Energy, the only other listed alternative in the wind equipment space is loss-making and continues to suffer from debt and liquidity crunch issues. However, the good show by Inox Wind rubbed off on the shares of Suzlon too, which gained 2.6 per cent at ₹29.15 on the NSE.

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