Inox Green Energy Services makes tepid market debut; lists at 8% discount

Inox Green Energy Services, a subsidiary of wind turbine generator manufacturer Inox Wind, made a weak debut on Dalal Street on Wednesday as shares of the wind power operation and maintenance service provider listed at ₹60 apiece on the National Stock Exchange (NSE), a discount of 7.7% over its issue price of ₹65. On the Bombay Stock Exchange (BSE), the stock opened at ₹60.5, down 6.9% against the IPO’s upper price band.

Post listing, Inox Green Energy Services' share price declined as much as 8.9% to hit a low of ₹59.2, while it touched a high of ₹63.95 on the BSE. In a similar trend, it hit a high and low of ₹64 and ₹59 on the NSE. A combination of 2.87 crore shares changed hands over the counter on the BSE and the NSE in the first hour of trade so far, while market capitalisation stood at ₹1,758.9 crore. In comparison, the benchmark BSE Sensex was trading 83 points higher at 61,502 levels, while the 50-share NSE Nifty was quoting at 18,267, up 26 points.

The listing of Inox Green was in line with the market expectations as the stock was trading at discount in the grey market, an unofficial market where deals are done in-person only among the trusted group of investors before shares are available on stock exchanges.

Inox Green is the 31st company to list on the domestic exchanges this year. Earlier this week, speciality marine chemical manufacturer Archean Chemical Industries and electronics manufacturing company Kaynes Technology India made debuts on November 21 and November 22, respectively.

The ₹740 crore initial public offering (IPO) of Inox Green Energy Services had received a muted response from investors, which included a fresh issue of ₹370 crore and an offer for sale (OFS) of ₹370 crore by parent Inox Wind. The issue was subscribed 1.55 times as it received bids for 10.37 crore shares against the 6.67 crore shares on offer. The quota for qualified institutional buyers (QIB) was booked 1.05 times, and the non-institutional investor’s portion was subscribed 0.47 times. The retail portion, however, received 4.7 times bids.

The company intends to use capital proceeds from the fresh issue of equity shares for repayment of certain borrowings availed by the company, including redemption of non-convertible debentures (NCDs) in full, and general corporate purposes.

As per the shareholding pattern submitted with SEBI, the promoter, Inox Wind, owns 93.84% shares in Inox Green Energy Services. Post IPO, Inox Wind aims to become debt-free following fund infusion by promoters. According to the prospectus filed with the SEBI, as of June 2022, the company had a gross debt of ₹1,717.8 crore and cash balance of ₹222 crore, and a net debt of ₹1,494.8 crore on its books.

Formed in 2012, Inox Green Energy Services is engaged in the business of providing long-term O&M services for wind projects, specifically the provision of O&M services for wind turbine generators (WTGs) and the common infrastructure facilities such as pooling stations and transmission lines, which support power evacuation from such WTGs. As of June 30, 2022, Inox Green’s O&M services portfolio consisted of an aggregate 2,792 MW of wind farm capacity and 1,396 WTGs. Its portfolio of O&M contracts (consisting of both comprehensive O&M contracts and common infrastructure O&M contracts) covered an aggregate of 2,792 MW of wind projects spread across eight wind-resource rich states in India with an average remaining project life of more than 20 years. The counterparties to its O&M contracts feature a mix of independent power producers (72%), public sector undertakings (14%) and corporates (14%), as on June 30, 2022.