Waaree Renewables Vs Inox Green Energy: India is currently experiencing a revolution in its energy sector. The country that has traditionally been heavily reliant on coal is now transitioning to something greener and cleaner.

The companies we’ll look at are at the forefront of this market. Although the companies differ slightly, one manufactures energy-generating devices and the other operates & manages these renewable devices.

In this article, we will look at when both of these companies were founded and what they currently manufacture. We’ll do a thorough fundamental analysis of their finances. Then we’ll determine which stock is the best bet on India’s energy boom.

Waaree Renewables Vs Inox Green Energy – Company Overview 

Waaree Renewables

Waaree Renewable Energies was founded in 1989. Waaree Renewables is India’s largest aggregate installed capacity of 12GW as of June 30, 2023. The Company has its plants in Chikhli, Surat, Tumb, and Nandigram in Gujarat. It is a top player in the solar module export for FY23. 

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As of June 30, 2023, the total number of customers served by Waaree were 407 in India and 20 outside India The Company has supplied more than 6GW of solar modules and commissioned more than 1.1GW solar EPC projects.

The Company boasts of a broad clientele base having served Companies like Reliance Industries, Bharat petroleum, Aditya Birla Group, Adani, Jindal Steel and Power and many more industries. The Company takes up Engineering Procurement & Construction contracts, contracts for the sale of Power and contracts to Operate and maintain the solar farms.

Waaree Renewables offers a comprehensive rooftop solar solution. The company has developed expertise in converting unused roof spaces into an efficient energy source, adapted to customer needs.  Along with the rooftop solar panels, Waaree also installs floating solar solutions which are floated on lakes, ponds, and reservoirs for solar panel installations.

Inox Green Energy

Inox Green Energy Services was incorporated on 11th May 2012 as Inox Wind Infrastructure Services Limited. The Company is a subsidiary of Inox Wind Limited and is a part of the INOXGFL Group which principally operates in the specialty chemicals and renewable energy sectors. 

The parent Company, INOXGFL Group is one of India’s most business conglomerates with a history of 90 years. The company has established a multibillion-dollar business with a diverse portfolio of refrigerants, fluoropolymers, specialty chemicals, wind energy, and renewables.

Inox Green Energy is a fully integrated wind energy Operations & Maintenance Company. With an operational portfolio of 3.14 GW the Company’s expertise lies in providing Long Term O&M services on wind farms and Wind Turbine Generators. The O&M contracts undertaken by the company are for a long tenure of 5-20 years, with a current average residual contract duration of more than 6 Years.

Waaree Renewables Vs Inox Green Energy – Industry Overview

India is committed to achieving 50% of its cumulative electric power installed capacity from non-fossil fuel sources by 2030. The country had 167.75 GW of installed renewable energy capacity by the close of FY23, with an additional 78.75 GW under implementation and 32.60 GW under various bidding stages.

India ranks 4th globally in renewable energy installed capacity, wind power capacity, and solar power capacity. The renewable energy sector in India attracted substantial foreign direct investment (FDI), amounting to USD 12.57 billion from April 2000 to June 2022. 

The country aims to reach 500 GW of non-fossil energy capacity by 2030, there is a significant investment opportunity in the renewable energy sector. Electricity demand is expected to rise due to population growth (projected to reach 1.51 billion by 2030) and urbanization.

India’s transition to a sustainable future involves ambitious targets, including reducing carbon intensity by over 45% by the end of the decade, achieving a 50% share of renewable energy in electric power capacity by 2030, and aiming for net zero carbon emissions by 2070. 

Despite fossil fuels currently constituting 59% of the installed energy capacity, this share is expected to decrease significantly to 31.6% of the energy mix by 2030, with India steadfast in its commitment to a greener energy future. 

The Union Budget for FY24 received a total allocation of Rs. 10,222 Cr. This marks a substantial 48% increase compared to the preceding budget, which was set at Rs. 7,033 Cr. 

In the FY24 budget, the central government allocated Rs. 3,500 Cr to provide a viability gap funding for battery storage projects with a capacity of 4,000 MWh. Additionally, the government has released guidelines to encourage the development of pump storage projects. 

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Waaree Renewables Vs Inox Green Energy – Financials

To Compare the financial performance of both Companies, we will be taking the standalone performance of both Companies from FY20-FY23. This is done as Inox Green Energy was a recently listed entity with limited financials available in the public domain.

Revenue & Net Profit

Waaree Renewables reported a revenue of Rs. 342 Cr in FY23, which increased by a massive 457% from Rs. 154 Cr in FY22. This superficial growth has remained throughout the past four years as the Company scaled from just Rs. 7.6 Cr in FY21 to a massive Rs. 154 Cr in FY22, which is a whopping 1921% growth in a year.

Inox Green on the other hand has a much normalised revenue growth. Inox Green Energy’s revenue increased from Rs. 174 Cr in FY22 to Rs. 248 Cr in FY23, a growth of 42%. However, in the previous few years, The Company’s growth has been very slow and it performed well only in FY23. Due to this, since FY19 the Company’s growth rate is 14.5% CAGR.

Particulars / Fiscal Year2020202120222023CAGR (%)
Waaree - Revenue₹1.97 ₹7.60 ₹153.56 ₹ 341.73 457.71%
Inox Green - Revenue₹165.32 ₹172.25 ₹173.99 ₹ 247.87 14.46%

Along with massively scaling revenue, Waaree’s margins have also slightly expanded leading to a 191% growth in Net Profits from Rs. 20 Cr in FY22 to Rs. 59 Cr in FY23. The Company has been profitable only since FY21 and since then its Net Profit has grown at 404% CAGR.

Inox Green on the other hand just became profitable in FY23, reporting a Net Profit of Rs. 25.13 Cr. The Company was down under heavy losses in FY21, due to sky-high operational expenses in managing the respective facilities. Nevertheless, the ever-mounting losses have been falling to all time lows as the Company improves its operational efficiency and should be profitable in the upcoming years.

Particulars / Fiscal Year2020202120222023CAGR (%)
Waaree - Net Profit(₹0.18)₹2.34 ₹20.40 ₹59.40 403.83%
Inox Green - Net Profit(₹52.26)(₹153.35)(₹57.04)(₹25.13)N/a

Profit Margins

Operating Margins of Inox Green Energy were the highest among the two in FY23. Waaree Renewables reported operating margins of 23.4% as compared to Inox Green with a higher 25.56% margin. Even in the last 4 years, the operating margins of both Inox remain high with average margins of 46%.

However, coming down to Net Profit Margins the entire scenario shifts. Waaree Renewable which has been profitable for the past 3 years has maintained a Net Profit margin of 17% in FY23. Inox Green on the other hand is yet to turn a profit. It had a Net Profit Margin of -8.64% in FY23.

Particulars / Fiscal Year20202021202220235 Year Avg
Waaree - Operating Margins61.95%57.07%16.43%23.40%39.71%
Inox Green - Operating Margins53.16%53.16%51.24%25.56%45.78%
Waaree - Net Profit Margins-3.66%20.72%12.15%17.12%11.58%
Inox Green - Net Profit Margins-2.61%-2.61%-2.39%-8.64%-4.06%

Return Ratios

Waaree Renewable’s Return on Equity touched an all-time high of 72.61% on the back of bumper profits by the Company. This high ROE should normalize as the company continues to retain its profits back in the Company. Same goes for Return on Capital Employed which is 98.61% for Waaree Renewables.

As for Inox Greem, which is yet to turn a profit reported a ROE of -1.88%. What’s interesting is that this ROE has increased from a grave -66.97% in FY21. ROCE of the Company remains positive at just 1% in FY23.

Particulars / Fiscal Year20202021202220235 Year Avg
Waaree - ROE (%)-1.56%7.41%48.01%72.61%31.62%
Inox Green - ROE (%)-66.97%-0.49%-1.88%-23.11%
Waaree - ROCE (%)5.00%9.17%44.80%98.61%39.40%
Inox Green - ROCE (%)2.00%3.00%1.00%2.00%

Debt Analysis

Debt to Equity for Waaree Renwables touched an all time high of 1.78x in FY20. This debt to Equity has been consistently coming down and finally in FY23, Waaree became a debt free Company. The same goes for Inox Green energy, whose Debt to Equity has significantly dropped from a high of 18.8x in FY20 to a low of just 0.51x.

However, in terms of Interest Coverage ratio Waaree is now at an ICR of 68.64x, due to its completely deleveraged balance sheet and higher income. Inox Green however is at an ICR of just 0.64x as it still has a good amount of debt on its sheets along with much lower  income than required to furnish its annual interest payments.

Particulars / Fiscal Year20202021202220235 Year Avg
Waaree - Debt to Equity1.781.160.440.000.85
Inox Green - Debt to Equity18.8012.231.890.518.36
Waaree - Interest Coverage0.841.7318.0568.6422.32
Inox Green - Interest Coverage0.510.760.860.640.69

Waaree Renewables Vs Inox Green Energy – Key Metrics

We have now understood both the Companies’ business and take a good comparative look at their financials. Now let us look at a few Key Metrics.

ParticularsWaaree Inox Green
CMP₹2,960.00 ₹127
Market Cap (Cr.)₹29,905 ₹3,924
EPS₹26.63 (₹1.03)
Stock P/E (TTM)₹267.60 ₹131.32
ROE (%)51.92%-1.88%
Book Value₹13.46 ₹47.69
Price to Book Value213.342.68
Promoter Holding74.46%55.72%

Waaree Renewables Vs Inox Green Energy – Future Plans

Future Plans – Waaree Renewable Technologies

  1. The Company will evaluate opportunities in both International and domestic markets to secure more EPC contracts.
  2. Waaree will be participating in more Government & private bidding process.
  3. The Company will take up Third-party O&M opportunities in both organic & inorganic methods.
  4. Waaree is currently in the process of set up a 1 MW Green Hydrogen Plant 
  5. The Company will also be collaborating with hydrogen value chain to establish an electrolyser gigafactory

Future Plans – INOX Green

  1. From FY24-FY26 Inox Green Energy is expected to increase its WTG supplies exponentially, we are targeting to add at least 500 MW to our portfolio annually. 
  2. The Company is looking to grow further in the coming years by outright acquisitions.
  3. The assets light model of just O&M will help IWL maintain an EBITDA Margin of 50% and above.

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Conclusion

Waaree Renewables has exhibited remarkable revenue growth and profitability, driven by its strong solar module exports and rooftop solar solutions. The company is debt-free with impressive margins and return ratios. Its future plans involve expanding EPC contracts, government bidding, and exploring green hydrogen opportunities.

On the other hand, Inox Green Energy, an integrated wind energy O&M company, has shown slower revenue growth but improving operational efficiency. It turned profitable in FY23 but lags behind Waaree in profitability metrics. Inox aims to increase wind turbine supplies, pursue acquisitions, and maintain high EBITDA margins through its asset-light model.

Both companies operate in the promising renewable energy sector in India. However, Waaree Renewables currently holds a stronger financial position and growth trajectory, while Inox Green Energy is focused on improving its performance and expanding operations.

Written by Nasir Hussain

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