Why is Inox Wind falling/rising?

Recent Price Movement and Market Context

On 08 December, Inox Wind’s share price closed at ₹124.45, down ₹5.75 or 4.42% from the previous session. The stock touched an intraday low of ₹123.4, marking a fresh 52-week low. This decline aligns with the broader renewable energy sector’s fall of 4.26% on the same day, indicating sector-wide pressures. However, Inox Wind’s decline was more pronounced, with the stock falling 5.22% intraday and trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical weakness suggests sustained selling pressure.

Volume data reveals increased investor participation, with delivery volumes rising by 8.53% against the five-day average on 05 December, signalling that more shares are changing hands amid the downtrend. The weighted average price also indicates that a larger volume of shares traded closer to the day’s low, reinforcing bearish sentiment.

Long-Term Growth Contrasted with Short-Term Weakness

Inox Wind has demonstrated robust long-term growth fundamentals. Net sales have expanded at an annual rate of 45.68%, while operating profit has grown by 32.48%. The company reported very positive results in the quarter ended September 2025, with operating profit increasing by 53.26%. Additionally, the company has maintained a streak of positive results for 11 consecutive quarters. Operating cash flow for the year reached a high of ₹137.96 crores, and quarterly profit after tax surged by 257.0% to ₹91.75 crores. The return on capital employed (ROCE) for the half-year stood at a healthy 11.18%, reflecting efficient use of capital.

Institutional investors hold a significant 23.24% stake in the company, suggesting that knowledgeable market participants recognise the company’s underlying strengths. This institutional backing often provides a degree of stability and confidence in the stock’s long-term prospects.

Debt Burden and Valuation Concerns Weigh on Sentiment

Despite these positives, the stock’s recent decline is largely attributable to concerns over its financial leverage and valuation metrics. The company’s debt to EBITDA ratio stands at a high 3.12 times, indicating a relatively low ability to service its debt obligations comfortably. This elevated leverage raises caution among investors, especially in a sector where capital expenditure and financing costs are significant.

Moreover, the company’s return on equity (ROE) averages only 2.29%, signalling low profitability relative to shareholders’ funds. Although the latest ROE is 7.8%, the stock trades at a steep price-to-book value of 3.3, which is considered expensive. While the stock is trading at a discount compared to its peers’ historical valuations, the market appears to be factoring in the risks associated with its debt and profitability profile.

Over the past year, Inox Wind’s stock has underperformed dramatically, delivering a negative return of 40.07%, whereas the Sensex gained 4.15% and the broader BSE500 index returned 0.62%. This divergence is striking given that the company’s profits have risen by an impressive 423% over the same period. The low PEG ratio of 0.1 suggests that the stock’s price has not kept pace with earnings growth, but the market remains cautious.

Investor Takeaway

Inox Wind’s recent share price decline reflects a complex interplay of strong operational growth tempered by financial leverage concerns and valuation challenges. While the company’s fundamentals remain robust, the market is clearly cautious about its ability to manage debt and generate adequate returns on equity. The stock’s underperformance relative to the broader market and sector highlights investor wariness despite impressive profit growth.

For investors, this suggests a need to weigh the company’s long-term growth prospects against its current financial risks. The stock’s liquidity remains sufficient for sizeable trades, but the technical indicators and volume patterns point to continued selling pressure in the near term. Monitoring debt metrics and profitability improvements will be crucial for assessing future price recovery potential.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →