New Delhi, September 30: Major renewable energy producer Inox Clean Energy Limited, a part of the INOXGFL Group, has filed its Draft Red Herring Prospectus (DRHP) with the market regulator, the Securities and Exchange Board of India (SEBI) as it looks to raise ₹10,000 crores from the capital markets.
This involves a fresh issue of equity shares worth ₹8,000 crore and an Offer For Sale (OFS) of up to ₹2,000 crores, by promoter Devansh Jain. With this, the IPO would be the largest by a privately held renewable energy company in India.
The debt challenge
For Inox Clean Energy, this public listing comes as it is heavily saddled with debt of ₹16,672 crores, much of which came from the company’s 11 acquisitions over the past 2 years.
For the company, this acquisition spree has been based on India’s need for renewable energy, with electricity demand continuing to grow, the Central Electricity Authority estimates that India would need about 179 GW of solar energy and another 49 GW of wind energy to meet rising demand. From the money raised, the company plans to allocate Rs.6,000 crore to settle debt, just 35% of the total, with no clarity on how the rest would be addressed.
Shaky Financials
Currently, it has 9.29 GW of renewable energy assets across India and Africa, along with another 6 GW of solar module factories in Gujarat and North Carolina. The company earns about 83% of its revenues from power generation and the rest is mainly from solar module manufacturing, but that is currently sold mostly to its own plants.
In FY26, the company earned ₹31 crore in profits, but that wasn’t an operating profit. If we strip out the other incomes earned, and focus on its core business, there’s a loss of about ₹138 crores, with a negative cash balance of ₹52 crores. Its EBITDA is at ₹1,190 crores, but its interest of ₹1,005 crores and depreciation of ₹1,054 crore eat most of it. That leaves it with a ₹408 crore net loss.
Risks
For investors, the challenge has been integrating its acquisitions, based on 13 days done. The Athena(559 MW) acquisition is still in process and could fail if it doesn’t get the requisite approvals from government agencies.
It has a debt to equity ratio of 4.19x, with a performa net loss of ₹408 crore, leaving little room for errors. Add to that a SEBI inquiry into the promoters’ role in acquiring the company, and the risks for investors remain immense.
With just five of its buyers representing 80% of its revenues, the company’s financials can get into jeopardy if any one of them delays the payments.
For investors, the main challenge would be to trust the company to turn itself around, even though it’s fundamentals remain strong from consistent demand. But profits remain thin and the debt will take years to clear even post-IPO, and turning that around depends more on external factors than ever.
Will Inox Clean Energy stage a remarkable turnaround like Suzlon Energy or will it go the Byju’s way? Only time will tell.
Disclaimer: Inox Clean Energy Limited is proposing an initial public offering of its equity shares and has filed a Red Herring Prospectus (RHP) with the Registrar of Companies. The RHP is available on the website of SEBI at www.sebi.gov.in, as well as on the websites of the book running lead managers and the stock exchanges. Any investment decision should be made solely based on the information contained in the RHP. Potential investors should note that investment in equity shares involves a high degree of risk, and for details, they should refer to the RHP, including the section titled “Risk Factors”.
