Indowind Energy Quality Parameter Revision Highlights Business Fundamentals

Over the past five years, Indowind Energy’s sales growth has registered at 17.62%, while EBIT growth stands at 31.81%, indicating a notable expansion in earnings before interest and tax. The company’s average EBIT to interest coverage ratio is 2.07, suggesting the ability to meet interest obligations with operating earnings. Debt metrics reveal an average debt to EBITDA ratio of 3.31 and a net debt to equity ratio of 0.09, pointing to a moderate leverage position relative to earnings and equity base.

Indowind Energy’s average ROCE is recorded at 1.55%, while the average ROE is 1.20%. These returns indicate the company’s efficiency in generating profits from its capital and equity base, though the figures remain modest in comparison to sector benchmarks. The sales to capital employed ratio averages 0.11, reflecting the turnover generated from the capital invested in the business. The tax ratio is relatively high at 54.33%, which impacts net profitability. Institutional holding is minimal at 0.05%, and pledged shares stand at zero, suggesting limited promoter share encumbrance.

From a market perspective, Indowind Energy’s current price is ₹16.28, slightly below the previous close of ₹16.36. The stock has traded within a 52-week range of ₹14.26 to ₹28.00, with today’s intraday high and low at ₹16.67 and ₹16.05 respectively. The stock’s recent price movement shows a day change of -0.49%, reflecting modest volatility.

Examining returns relative to the Sensex, Indowind Energy has outperformed the benchmark over shorter periods, with a 1-week return of 9.63% versus Sensex’s 0.96%, and a 1-month return of 4.69% compared to Sensex’s 0.86%. However, year-to-date and 1-year returns show a contrasting trend, with the stock posting -32.17% and -20.97% respectively, while the Sensex recorded positive returns of 8.36% and 9.48% over the same periods. Over longer horizons, the stock has delivered substantial gains, with 5-year and 10-year returns at 536.22% and 369.05%, surpassing the Sensex’s 91.65% and 232.28% respectively.

Within its industry peer group, Indowind Energy’s quality evaluation now stands at average, contrasting with several peers such as Urja Global, GVK Power Infrastructure, and Sampann Utpadan, which remain below average. This shift in evaluation suggests a relative improvement in the company’s business fundamentals compared to its sector counterparts. The adjustment in quality parameters reflects a reassessment of the company’s operational consistency, leverage, and returns, providing a more balanced view of its financial position.

Investors analysing Indowind Energy should consider the implications of these parameter changes in the context of the company’s historical performance and sector dynamics. While the company’s leverage ratios indicate a moderate debt burden, the coverage ratio suggests operating earnings are sufficient to service interest expenses. The modest returns on capital and equity highlight areas where operational efficiency and profitability could be further scrutinised. Additionally, the high tax ratio may affect net earnings and cash flow generation.

Overall, the revision in Indowind Energy’s quality parameter evaluation offers a nuanced perspective on its business fundamentals. The company’s growth in sales and EBIT over five years, combined with its leverage and return metrics, form the basis of this updated assessment. Market participants should weigh these factors alongside broader market conditions and sector trends when considering the stock’s potential role in their portfolios.

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