The quarter's performance reflects the company's successful execution in India's expanding renewable energy sector, with operating profit (PBDIT excluding other income) reaching a quarterly high of ₹281.62 crores. However, despite strong operational metrics, the stock has underperformed significantly, declining 47.06% from its 52-week high of ₹201.00, raising questions about sustainability and valuation justification.
The renewable energy sector in India continues to benefit from government initiatives and corporate sustainability commitments, positioning Inox Wind favourably within the heavy electrical equipment industry. Yet, the company's technical indicators remain firmly bearish, with the stock trading below all key moving averages and exhibiting high volatility with a beta of 1.82.
Financial Performance: Sequential Strength Masks Year-on-Year Deceleration
Inox Wind's Q3 FY26 financial performance presents a tale of two narratives. On a sequential basis, the company demonstrated robust momentum with net sales growing 7.89% from ₹1,119.18 crores in Q2 FY26 to ₹1,207.45 crores in Q3 FY26. The consolidated net profit surged 27.95% quarter-on-quarter, recovering from the previous quarter's 13.33% decline. This sequential improvement reflects strong execution and order book conversion during the typically favourable October-December period.
| Metric (₹ Cr) | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 |
|---|---|---|---|---|---|---|
| Net Sales | 1,207.45 | 1,119.18 | 826.25 | 1,274.82 | 911.27 | 733.01 |
| QoQ Growth | +7.89% | +35.45% | -35.19% | +39.89% | +24.32% | — |
| YoY Growth | +32.50% | +52.68% | +29.19% | — | — | — |
| Operating Profit | 281.62 | 227.72 | 183.69 | 254.29 | 203.95 | 166.09 |
| Operating Margin % | 23.32% | 20.35% | 22.23% | 19.95% | 22.38% | 22.66% |
| Consolidated PAT | 117.39 | 91.75 | 105.86 | 186.87 | 116.65 | 25.68 |
| QoQ Growth | +27.95% | -13.33% | -43.35% | +60.20% | +354.24% | — |
| YoY Growth | +0.63% | +257.28% | +928.77% | — | — | — |
| PAT Margin % | 10.49% | 10.78% | 11.78% | 14.93% | 12.15% | 11.52% |
However, the year-on-year comparison reveals concerning deceleration. While revenue growth of 32.50% YoY appears healthy, the consolidated net profit growth of merely 0.63% YoY signals margin compression and operational challenges. The PAT margin contracted 166 basis points year-on-year from 12.15% in Q3 FY25 to 10.49% in Q3 FY26, despite operating margins improving 94 basis points to 23.32%. This divergence stems from substantially higher interest costs, which surged 46.00% YoY to ₹50.32 crores, and elevated tax provisions at 39.53% compared to 42.07% in the previous year quarter.
The operating profit excluding other income reached a quarterly peak of ₹281.62 crores, reflecting improved operational efficiency and better project execution. Employee costs remained well-managed at ₹51.34 crores, representing 4.25% of revenues. The gross profit margin of 21.72% demonstrates the company's pricing power in a competitive market, though it has declined from 26.16% in Q3 FY25.
Balance Sheet Transformation: From Debt Burden to Financial Flexibility
Inox Wind's balance sheet has undergone a remarkable transformation over the past three years, evolving from a highly leveraged structure to one with significant financial flexibility. Long-term debt has plummeted from ₹887.65 crores in March 2023 to merely ₹1.90 crores as of March 2025, representing a 99.79% reduction. This deleveraging has been achieved through a combination of equity infusions and operational cash generation, fundamentally altering the company's financial risk profile.
Shareholder funds have strengthened substantially to ₹5,046.74 crores in March 2025 from ₹1,713.06 crores in March 2023, a 194.64% increase. This expansion includes a significant share capital increase to ₹1,624.13 crores following preferential allotments and rights issues. The debt-to-equity ratio has improved dramatically to 0.17 times on a half-yearly basis, amongst the lowest in the company's recent history. The improved capital structure provides Inox Wind with the financial bandwidth to pursue growth opportunities without the burden of excessive interest costs that plagued previous years.
Deleveraging Success Story
Inox Wind has achieved one of the most impressive balance sheet turnarounds in the heavy electrical equipment sector. Long-term debt collapsed from ₹887.65 crores (Mar'23) to just ₹1.90 crores (Mar'25), whilst shareholder funds nearly tripled to ₹5,046.74 crores. The company now operates with negative net debt, providing substantial financial flexibility for capacity expansion and working capital requirements in the growing renewable energy market.
Working capital management remains an area requiring attention. Current assets stood at ₹5,019.93 crores against current liabilities of ₹3,055.37 crores as of March 2025, providing a comfortable current ratio of 1.64 times. However, trade payables increased to ₹1,065.37 crores from ₹605.48 crores year-on-year, reflecting the company's expanding operations and supplier credit utilisation. The inventory turnover ratio improved to 2.84 times on a half-yearly basis, the highest level recorded, indicating better working capital efficiency.
Return on equity (ROE) remains subdued at 7.81% for the latest period, though this represents significant improvement from the negative returns of previous years when the company was loss-making. The average ROE over recent periods stands at just 2.29%, well below industry standards and peer performance. Return on capital employed (ROCE) has turned positive at 9.49% for the latest period after years of negative returns, though the average ROCE of -2.75% reflects the legacy of unprofitable years. These metrics indicate that whilst the company has achieved financial stability, capital efficiency remains below optimal levels.
Capital Efficiency Concern: Despite strong revenue growth and improved margins, Inox Wind's ROE of 7.81% and ROCE of 9.49% remain modest compared to industry leaders. The company needs to demonstrate sustained profitability and improved asset utilisation to justify its current valuation multiples. The average ROCE of -2.75% and average ROE of 2.29% reflect the drag from loss-making years, though recent trends show improvement.
Renewable Energy Tailwinds: Riding India's Green Energy Wave
Inox Wind operates in one of India's most promising sectors, benefiting from strong government policy support and corporate sustainability commitments. India has set ambitious renewable energy targets of 500 GW by 2030, with wind energy playing a crucial role. The company's integrated manufacturing capabilities across four facilities in Gujarat, Himachal Pradesh, and Madhya Pradesh, with a combined capacity of approximately 2.5 GW, position it well to capitalise on this structural growth opportunity.
The company's FY25 performance validates this thesis, with annual revenues surging 103.70% to ₹3,557.00 crores from ₹1,746.00 crores in FY24. This represents the strongest annual growth in recent years and reflects robust order book execution. The company transitioned from a loss of ₹46.00 crores in FY24 to a profit of ₹435.00 crores in FY25, marking a complete operational turnaround. Operating margins improved from 14.90% in FY24 to 21.30% in FY25, demonstrating operating leverage as volumes scaled.
However, competitive intensity in the wind energy sector remains high. Peers like Suzlon Energy have also demonstrated strong performance, with Suzlon's ROE of 14.45% and price-to-book value of 7.90 times indicating superior market positioning. The sector faces challenges including raw material price volatility, execution risks on large projects, and policy uncertainty around renewable energy incentives. Inox Wind's ability to maintain its current growth trajectory will depend on continued order inflows, timely project execution, and margin protection in an increasingly competitive environment.
| Annual Metrics (₹ Cr) | FY25 | FY24 | FY23 | FY22 |
|---|---|---|---|---|
| Net Sales | 3,557.00 | 1,746.00 | 733.00 | 624.00 |
| YoY Growth | +103.70% | +138.20% | +17.50% | — |
| Operating Profit (Excl OI) | 757.00 | 261.00 | -264.00 | -310.00 |
| Operating Margin % | 21.30% | 14.90% | -36.00% | -49.70% |
| Profit After Tax | 435.00 | -46.00 | -696.00 | -482.00 |
| PAT Margin % | 12.20% | -2.60% | -95.00% | -77.20% |
| Interest Cost | 168.00 | 239.00 | 326.00 | 282.00 |
Peer Comparison: Valuation Disconnect Despite Operational Improvements
When benchmarked against peers in the heavy electrical equipment sector, Inox Wind's valuation presents a mixed picture. The company trades at a price-to-earnings ratio of 36.11 times, positioned in the middle of the peer group range. This compares to Suzlon Energy at 19.23 times, Thermax at 53.61 times, and premium players like Siemens Energy & Industrials at 89.17 times and GE Vernova T&D at 81.66 times. BHEL trades at an elevated 109.35 times despite weak fundamentals.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield % |
|---|---|---|---|---|---|
| Inox Wind | 36.11 | 2.82 | 2.29 | 0.09 | — |
| Suzlon Energy | 19.23 | 7.90 | 14.45 | -0.06 | — |
| Thermax | 53.61 | 6.79 | 11.85 | -0.14 | 0.49 |
| Siemens Energy | 89.17 | 22.39 | 25.11 | -0.76 | 0.15 |
| GE Vernova T&D | 81.66 | 43.83 | 16.31 | -0.41 | 0.14 |
| BHEL | 109.35 | 3.65 | 1.63 | 0.12 | 0.21 |
The critical differentiator lies in return metrics. Inox Wind's ROE of 2.29% significantly lags peers like Siemens Energy (25.11%), Suzlon Energy (14.45%), and Thermax (11.85%). This return gap raises questions about whether the current P/E multiple of 36 times is justified. The price-to-book value of 2.82 times appears reasonable compared to premium peers trading at 20-40 times book value, but seems elevated given the low ROE profile.
Inox Wind's competitive advantage lies in its debt-free status with a debt-to-equity ratio of just 0.09, the lowest amongst peers alongside Suzlon Energy. This provides financial flexibility that highly leveraged peers lack. However, the market appears to be pricing in significant future earnings growth, reflected in the PEG ratio of 0.12, suggesting that current valuations assume sustained high growth rates. The company's market capitalisation of ₹18,518 crores makes it the sixth-largest player in the peer group.
The one-year stock performance tells a cautionary tale. Inox Wind declined 39.63% whilst the broader heavy electrical equipment sector fell 17.71%, resulting in underperformance of 21.92 percentage points. This contrasts sharply with the company's operational improvements, suggesting that investors remain sceptical about sustainability or are taking profits after the multi-year rally that saw the stock gain 364.38% over three years.
Valuation Analysis: Premium Multiples Require Sustained Execution
Inox Wind's current valuation of ₹106.40 per share translates to a market capitalisation of ₹18,518 crores, with the stock trading at 36.11 times trailing twelve-month earnings. This represents a premium to the industry average P/E of 31 times, implying market expectations of above-average growth. The price-to-book value of 2.82 times compares favourably to the book value per share of ₹29.70, indicating the market values the company's franchise and growth potential at nearly three times its accounting net worth.
Enterprise value multiples provide additional perspective. The EV/EBITDA ratio of 21.83 times and EV/EBIT ratio of 28.12 times suggest the company trades at a significant premium to its operating earnings. The EV/Sales ratio of 4.60 times indicates investors are paying ₹4.60 for every rupee of revenue, a multiple that requires robust margin expansion and sustained growth to justify. The EV/Capital Employed ratio of 2.67 times reflects the market's assessment of the company's asset productivity.
Valuation Dashboard
P/E Ratio (TTM): 36.11x (vs Industry 31x) – Premium valuation
Price-to-Book: 2.82x (Book Value: ₹29.70)
EV/EBITDA: 21.83x – Elevated multiple
PEG Ratio: 0.12x – Suggests high growth expectations
Dividend Yield: Nil – No dividend distribution
The valuation grade of "Very Expensive" assigned by proprietary models reflects these stretched multiples relative to current profitability. The stock has traded in this expensive zone since February 2024, with brief interludes. Historical patterns show the stock oscillating between "Very Expensive" and "Risky" classifications, never achieving a "Fairly Valued" or "Attractive" rating in recent years.
The 52-week price range of ₹101.20 to ₹201.00 illustrates extreme volatility, with the current price 47.06% below the high and just 5.14% above the low. This proximity to 52-week lows despite strong operational performance suggests either value emergence or fundamental concerns about future growth sustainability. The absence of dividend yield eliminates income as a valuation support, making the investment case entirely dependent on capital appreciation expectations.
Shareholding Dynamics: Institutional Activity Signals Mixed Sentiment
The shareholding pattern of Inox Wind reveals interesting dynamics that provide insights into investor sentiment. Promoter holding stands at 44.18% as of December 2025, stable over the past three quarters but down from 48.27% in March 2025. This 4.09 percentage point reduction in Q1 FY26 likely reflects equity dilution from capital raising activities rather than promoter selling, given the company's capital structure transformation during this period.
| Shareholding Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoters | 44.18% | 44.18% | 44.18% | 48.27% | Stable |
| FII | 14.16% | 13.37% | 13.70% | 15.67% | +0.79% |
| Mutual Funds | 9.64% | 7.93% | 6.99% | 7.15% | +1.71% |
| Insurance | 0.24% | 0.11% | 0.09% | 0.08% | +0.13% |
| Other DII | 0.49% | 1.83% | 2.03% | 2.21% | -1.34% |
| Non-Institutional | 31.29% | 32.59% | 32.93% | 26.61% | -1.30% |
Foreign institutional investors (FII) have increased their stake to 14.16% in December 2025 from 13.37% in September 2025, a sequential addition of 0.79 percentage points. This represents a reversal from the declining trend observed earlier, with FII holding at 15.67% in March 2025. The recent uptick suggests renewed foreign investor interest, possibly driven by India's renewable energy growth story and the company's operational turnaround. A total of 137 FII accounts hold positions in the stock.
Mutual fund activity presents the most bullish signal. Domestic mutual funds have consistently increased their stake over the past three quarters, rising from 6.99% in June 2025 to 9.64% in December 2025, an addition of 2.65 percentage points. The most recent quarter saw a substantial 1.71 percentage point increase, indicating strong conviction from domestic institutional investors. With 29 mutual fund schemes holding positions, this broad-based participation suggests professional investors see value despite the stock's recent weakness.
Insurance company holdings remain minimal at 0.24% but have been gradually increasing from 0.08% in March 2025. Other domestic institutional investors (DII) reduced their stake significantly by 1.34 percentage points in the latest quarter to 0.49%, possibly reflecting profit booking after the strong rally in previous years. Non-institutional investors, comprising retail and high-net-worth individuals, hold 31.29%, down 1.30 percentage points quarter-on-quarter, suggesting some retail profit-taking at current levels.
The combined institutional holding of 24.53% indicates moderate professional investor participation. Promoter pledging stands at 3.19% of total shares, a relatively low level that doesn't pose immediate concern but warrants monitoring. The key promoters include Inox Leasing And Finance Limited (27.71%), Devansh Trademart LLP (8.62%), and Aryavardhan Trading LLP (5.99%).
Stock Performance: Technical Weakness Overshadows Fundamental Improvements
Inox Wind's stock performance presents a stark contrast between long-term gains and recent weakness. Over a five-year period, the stock has delivered exceptional returns of 487.03%, vastly outperforming the Sensex return of 60.30% by a massive 426.73 percentage points. The three-year return of 364.38% against Sensex's 36.73% demonstrates the stock's multi-bagger potential during the renewable energy sector's bull run.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 0.05% | -1.14% | +1.19% |
| 1 Month | -7.56% | -1.20% | -6.36% |
| 3 Months | -28.40% | -2.19% | -26.21% |
| 6 Months | -22.87% | 2.59% | -25.46% |
| YTD (FY26) | -13.92% | -3.04% | -10.88% |
| 1 Year | -39.63% | 8.52% | -48.15% |
| 3 Years | 364.38% | 36.73% | +327.65% |
| 5 Years | 487.03% | 60.30% | +426.73% |
However, the recent performance paints a concerning picture. The stock has declined 39.63% over the past year, underperforming the Sensex by 48.15 percentage points. This represents a complete reversal of the previous outperformance trend. The three-month decline of 28.40% and six-month fall of 22.87% indicate accelerating downward momentum. Year-to-date for FY26, the stock is down 13.92% compared to Sensex's 3.04% decline.
Technical indicators uniformly signal bearish sentiment. The overall technical trend turned bearish on December 1, 2025 at ₹132.95, having previously been in a mildly bearish phase. The stock trades below all major moving averages: 5-day MA (₹109.72), 20-day MA (₹107.58), 50-day MA (₹116.85), 100-day MA (₹130.99), and 200-day MA (₹147.70). This alignment of moving averages in descending order represents a classic bearish technical setup.
The MACD indicator shows bearish signals on both weekly and monthly timeframes, whilst the RSI indicator provides a lone bullish signal on the weekly chart. Bollinger Bands indicate mildly bearish to bearish conditions, and the KST (Know Sure Thing) oscillator remains bearish across timeframes. The on-balance volume (OBV) shows mildly bullish weekly signals but no clear trend monthly, suggesting mixed volume patterns.
Risk metrics further underscore the stock's volatile nature. The beta of 1.82 indicates the stock is 82% more volatile than the broader market, classifying it as a high-beta stock. The risk-adjusted return over one year stands at -1.02, reflecting negative returns combined with high volatility of 38.71%. This compares unfavourably to the Sensex's risk-adjusted return of 0.74 with volatility of 11.53%. The stock falls into the "HIGH RISK LOW RETURN" category based on recent performance.
Key support levels to watch include the 52-week low of ₹101.20, a mere 4.89% below current levels, followed by psychological support at ₹100. Resistance levels include the 20-day moving average at ₹107.58, the 50-day MA at ₹116.85, and stronger resistance at the 100-day MA of ₹130.99. A sustained move above ₹130 would be required to shift the technical structure from bearish to neutral.
Investment Thesis: Quality Concerns Offset Growth Momentum
The investment case for Inox Wind rests on multiple pillars, each requiring careful evaluation. The company's quality assessment stands at "Average," an upgrade from "Below Average" prior to October 2024. This improvement reflects the operational turnaround and financial restructuring achieved over the past two years. The five-year sales CAGR of 45.68% and EBIT growth of 32.48% demonstrate strong top-line momentum, whilst the transition to profitability in FY25 marks a critical inflection point.
Mojo Investment Parameters
Overall Score: 36/100 (SELL category)
Valuation: Very Expensive
Quality Grade: Average
Financial Trend: Positive (Short-term)
Technical Trend: Bearish
Institutional Holdings: 24.53% (Moderate)
However, significant quality concerns persist. The average ROCE of -2.75% and average ROE of 2.29% reflect the drag from loss-making years, though recent metrics show improvement with latest ROCE at 9.49% and ROE at 7.81%. The EBIT-to-interest coverage ratio averages just 0.62 times, indicating historical difficulty in servicing debt obligations, though this has improved dramatically with near-zero debt currently. The absence of dividend payments reflects management's focus on reinvestment rather than shareholder distributions.
The financial trend assessment shows "Positive" status for the short term, driven by several favourable factors. Net sales for the latest six months grew 38.95%, whilst ROCE reached a high of 11.18% on a half-yearly basis. The inventory turnover ratio improved to 2.84 times, and the debt-equity ratio fell to a low of 0.17 times. Operating profit margins expanded to 23.32% in Q3 FY26, the highest quarterly level achieved.
Offsetting these positives, interest costs surged 47.48% in the first half of FY26 to ₹101.13 crores, and quarterly consolidated PAT declined 5.90% sequentially in Q3 despite revenue growth. These mixed signals suggest the company is navigating a transition phase where scale benefits are being partially offset by higher financing costs and tax normalisation.
Key Strengths
- Strong revenue growth trajectory with 32.50% YoY increase in Q3 FY26
- Substantially deleveraged balance sheet with debt-equity ratio of 0.17x
- Operating margins at multi-quarter high of 23.32%
- Positioned in high-growth renewable energy sector with government support
- Integrated manufacturing capacity of ~2.5 GW across four facilities
- Increasing mutual fund participation indicating institutional confidence
- Transition to sustained profitability after years of losses
Key Concerns
- ROE of 7.81% significantly below peer average and industry standards
- Stock in bearish technical trend, trading below all moving averages
- Valuation at 36x P/E appears stretched given current profitability metrics
- High volatility with beta of 1.82 increases portfolio risk
- Interest costs surging 47.48% despite deleveraging efforts
- PAT margin compression of 166 bps YoY despite revenue growth
- Stock down 39.63% over past year, underperforming sector by 21.92%
Outlook: Monitoring Points for Future Performance
The forward trajectory for Inox Wind depends on several critical factors that investors must monitor closely. The company's ability to sustain revenue growth whilst improving capital efficiency will determine whether current valuations prove justified or excessive. Order book visibility and execution capability remain paramount, particularly as competition intensifies in the renewable energy equipment space.
Positive Catalysts to Watch
- Sustained quarterly revenue growth above 25% YoY
- ROE improvement towards 12-15% range within 2-3 quarters
- Operating margin stability above 22% demonstrating pricing power
- Order book announcements indicating strong pipeline visibility
- Further institutional accumulation by mutual funds and FIIs
Red Flags Requiring Attention
- Sequential revenue decline in any quarter signalling execution issues
- PAT margin falling below 9% indicating profitability pressure
- Stock breaking below ₹100 support level on high volumes
- Promoter stake reduction or increase in pledged shares
- Working capital deterioration with rising debtor days
The renewable energy policy environment in India will significantly influence sector dynamics. Any changes to incentive structures, tariff mechanisms, or capacity addition targets could materially impact demand visibility. Competitive intensity from both domestic players like Suzlon and potential new entrants must be monitored, as margin pressures could emerge if pricing power weakens.
From a technical perspective, the stock needs to reclaim the ₹130 level and establish it as support to shift momentum from bearish to neutral. A break above the 200-day moving average at ₹147.70 would signal a potential trend reversal, though this appears unlikely in the near term given current technical setup. Conversely, a break below the 52-week low of ₹101.20 could trigger further selling pressure towards the ₹90-95 zone.
Operationally, the company must demonstrate consistent improvement in return ratios. Achieving ROE above 12% and ROCE above 15% would bring metrics closer to peer levels and justify premium valuations. The ability to generate positive operating cash flows consistently and reduce working capital intensity will be crucial for sustainable growth without dilutive capital raises.
The Verdict: Operational Progress Insufficient to Justify Stretched Valuations
Score: 36/100
For Fresh Investors: Avoid initiating positions at current levels. The stock trades at expensive valuations (36x P/E) with a "Very Expensive" grade, whilst return metrics (ROE 7.81%) lag significantly behind peers. Technical indicators remain uniformly bearish, and the stock has declined 39.63% over the past year despite strong operational improvements. Wait for either significant valuation correction towards ₹85-90 or sustained improvement in profitability metrics with ROE exceeding 12% before considering entry.
For Existing Holders: Consider reducing positions on any technical bounce towards ₹115-120 levels. Whilst the company has achieved commendable operational turnaround with strong revenue growth and balance sheet deleveraging, the risk-reward at current valuations appears unfavourable. The bearish technical setup, high volatility (beta 1.82), and stretched multiples relative to profitability suggest limited upside potential in the near term. Maintain strict trailing stop-loss below ₹100 to protect capital.
Fair Value Estimate: ₹85-90 (20-25% downside from current levels) – Based on peer comparison at 25-28x P/E applied to sustainable earnings, adjusted for below-average ROE profile and execution risks.
Note: ROCE = (EBIT - Other Income) / (Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. The author and publisher are not responsible for any investment decisions made based on this analysis.
