Inox Green Energy Services Ltd IPO - 7 things to know
Inox Green Energy Services Ltd, focussed on alternate and renewable energy solutions and an existing subsidiary of Inox Wind, had filed its draft red herring prospectus (DRHP) in in February 2022 and SEBI is yet to give its observations and approval for the IPO.
Normally, the IPOs are approved by SEBI within a period of 2 to 3 months unless there are other queries or clarifications that the regulator has. Hence, the approval should come in by the middle of April or more likely after the LIC IPO in May 2022.
The IPO of Inox Green Energy Services Ltd will be a combination of a fresh issue and an offer for sale but the next step will be to finalize on its issue date and issue price after the actual SEBI approval comes in.
7 important things to know about the Inox Green Energy Services Ltd IPO
1) Inox Green Energy Services Ltd has filed for an IPO with SEBI and is waiting for the go-ahead from SEBI to proceed with the IPO. The Inox Green Energy Services IPO comprises of a fresh issue of Rs.370 crore and an offer for sale also of Rs.370 crore taking the total issue size to Rs.740 crore.
However, since the price band for the granular details like the number of shares offered and final value are not yet known. More details on the issue will only be available post the IPO details and price band announcement.
2) Let us move to the offer for sale (OFS) portion of the IPO first. A total of Rs.370 crore worth of shares will be sold by the early investors as part of the offer for sale, while the promoters are not exactly diluting their stake in the company.
The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS. However, the selling of stake by the promoter will increase the free float of the company and facilitate listing of the stock.
Since Inox Green Energy Services Ltd is predominantly owned by INOX Wind, it is only Inox Wind that would be offering shares worth Rs.370 crore in the company as part of the OFS.
3) The fresh issue portion of Inox Green Energy Services Ltd worth Rs.370 crore will issue fresh shares in the quantum based on the total price of the offer as decided. Here is how the fresh funds will be utilized by Inox Green Energy Services Ltd.
It will use the funds predominantly to repay or to prepay debt as also for general corporate purposes. Incidentally, Inox Green Energy has debt to the tune of Rs.700 crore and the fresh funds will help to defray part of the high cost debt of the company.
4) The IPO of Inox Green Energy comes at a time when interest in renewable energy companies is at an all-time high. This is due to the focus of the whole world in getting carbon neutral and focus on global climate transition.
With Union Budget 2022 providing measures to boosting renewable energy sources in India, the focus is entirely going to shift in favour of renewable energy even as large companies are also gradually shifting towards making renewable energy and green energy the fulcrum of their energy future.
This is true of most of the large corporations in India. India is committed to a net-zero carbon economy or a carbon neutral situation by 2070, so the opportunity is huge.
5) The revenues of Inox Green Energy have fallen by 26% in the 9-month period ending Dec-2021 at Rs.127 crore on a YoY basis. The company is heading into the initial offer with a net loss of Rs.2.90 crore on its books for the nine month period.
However, it must be noted that green energy is a upfront cost industry and the losses have narrowed sharply compared to Rs.27.70 crore in financial year 2021 i.e. FY21 ended March 2021.
6) In December 2021, the Board of Directors of Inox Green Energy Services Ltd approved the fund raising through the IPO route.
The board had approved the combination of fresh issue and an offer for sale. Inox Wind, is the only existing and eligible shareholder of Inox Green Energy Services and it had given its approval on 18th January 2022, post which the DRHP filing was done by the company in early February.
7) The IPO of Inox Green Energy Services will be lead managed by DAM Capital Advisors (formerly IDFC Securities), Edelweiss Financial Services, Equirus Capital and IDBI Capital Markets. They will act as the book running lead managers or BRLMs to the issue. The stock will be listed on BSE and NSE.
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