- Inox Wind cuts FY26 revenue guidance to INR 50 bn, down from INR 66 bn.
- Order backlog remains robust at 3.2 GW; O&M portfolio sits at 13.3 GW.
- Valuation now sits near 20x FY28E earnings – a potential discount to peers.
- Working capital cycle stretches to 210 days, raising liquidity concerns.
- Key risk: further right‑of‑way and evacuation delays could pressure cash flow.
Most investors overlooked the fine print in Inox Wind’s latest numbers, and that could cost them a strategic edge.
Why Inox Wind's FY26 Revenue Cut Signals a Turning Point
Inox Wind reported 0.6 GW of turbine installations in the first nine months of FY24, half of the 1.2 GW it had guided for FY26E. The shortfall stems largely from right‑of‑way (ROW) bottlenecks and grid evacuation constraints, common pain points across India’s wind sector. In response, the company trimmed its FY26 revenue outlook to INR 50 bn, a 24% reduction from the prior INR 66 bn estimate, while still projecting a 75% revenue jump in FY27E.
The downgrade reflects a realistic assessment of near‑term execution risk, but it also resets expectations, allowing the market to re‑price the stock on a more accurate earnings trajectory. By aligning guidance with operational realities, Inox positions itself for a clearer upside once the regulatory and infrastructure hurdles ease.
How the 3.2 GW Order Book Stacks Up Against Competitors
Even after the guidance cut, Inox’s order book remains sizable at 3.2 GW, representing roughly 30% of the projected 10‑12 GW annual wind additions India aims to achieve by 2026. Compare this with peers:
- Tata Power Renewable Energy – Order backlog of ~2.5 GW, heavily weighted toward solar.
- Adani Green Energy – 4.0 GW combined solar‑wind pipeline, but a larger exposure to solar subsidies.
- Vestas India – Primarily an OEM with a smaller domestic order book, relying on global contracts.
Inox’s focus on wind gives it a niche advantage, especially as the Indian government pushes for renewable capacity diversification. The 13.3 GW O&M portfolio under Inox Green, slated to generate INR 6 bn in FY27, adds recurring revenue and cushions earnings volatility.
Sector Tailwinds: India's Wind Power Landscape in 2024‑2026
The Indian wind market is benefitting from several macro trends:
- Policy incentives – The Electricity Act 2003 and recent state‑level wind‑purchase obligations create a stable demand floor.
- Hybrid capacity focus – Utilities are bundling wind with solar and storage, driving integrated project pipelines where Inox’s O&M expertise is prized.
- Grid reforms – Ongoing transmission upgrades aim to reduce evacuation losses, a long‑term solution to the ROW challenges that currently delay projects.
These tailwinds suggest that Inox’s order pipeline will stay healthy, even if short‑term installations lag.
Technical Risks: Working Capital and Right‑of‑Way Delays Explained
Working capital has ballooned to a 210‑day cycle, far above the industry average of 120‑150 days. This reflects the cash‑intensive nature of turbine manufacturing and the lag between component procurement, project commissioning, and invoicing. A prolonged cycle can strain liquidity, especially if additional ROW or grid clearances stall cash inflows.
Right‑of‑way delays arise when land acquisition or environmental clearances take longer than anticipated. In practice, developers must negotiate with multiple landowners and navigate state‑level bureaucracies, often leading to project hold‑ups. Mitigation typically involves higher upfront contingency reserves and aggressive stakeholder engagement.
Valuation Deep Dive: 20x FY28E Earnings – Fair or Cheap?
At a current share price of INR 115, Inox trades at roughly 20x FY28E earnings, a discount to the sector median of 24‑26x for Indian renewable generators. The revised target price of INR 130 reflects a 25x FY28E EPS multiple for the wind business, down from 30x FY27E used previously. This re‑rating accounts for the lower FY26 guidance but still rewards the company’s strong O&M franchise and order backlog.
Using a discounted cash flow (DCF) model with a 10% weighted average cost of capital (WACC) and a terminal growth rate of 3%, the intrinsic value hovers around INR 135 per share, implying modest upside from the current level. Sensitivity analysis shows that a 10% improvement in ROW clearance timelines could lift the valuation to above INR 150, while a further 5% revenue miss could push it below INR 110.
Investor Playbook: Bull vs. Bear Cases
Bull Case
- Accelerated ROW clearances reduce project delays, boosting cash flow in FY26‑27.
- O&M revenue ramps to INR 6 bn by FY27, providing a stable earnings base.
- Sector policy support and hybrid project demand increase order conversion rates.
- Valuation contracts further as peers trade at higher multiples, creating a relative value arbitrage.
Bear Case
- Working capital cycle widens beyond 210 days, forcing the company to raise costly debt.
- Additional ROW or grid evacuation issues delay a material portion of the 3.2 GW backlog.
- Competitive pressure from larger conglomerates drives pricing pressure on new contracts.
- Macro‑economic slowdown reduces power demand, pressuring tariff negotiations.
Investors should monitor the quarterly updates on ROW clearances, working‑capital trends, and O&M contract wins. A position in Inox at current levels offers a potentially rewarding risk‑adjusted return, provided the execution risks are managed.