5% increase in Inox Wind share price, free shares next?

Inox Wind’s share price jumped over 5% on April 23 2024, following a significant announcement. The corporation said that a proposal to issue bonus equity shares to shareholders will be discussed at a meeting of the Board of Directors. 

The company has made multibagger profits as a result of almost 500% gain in share price over the last one year as of April, 2024. To understand why the share prices are climbing and to get more insights into the bonus shares, continue reading.

About Inox Wind

Inox Wind Limited is a part of the Indian conglomerate Inox Group, which also holds the INOX Cinemas. The company specialises in the manufacturing of Wind Turbine Generators (WTGs) and offers comprehensive wind energy solutions. 

Established in April 2009, Inox Wind operates multiple manufacturing facilities across India. These include plants in Gujarat, Madhya Pradesh, and Himachal Pradesh where they produce essential components like nacelles, hubs, rotor blades, and towers. Inox Wind has a technical partnership with AMSC Windtec, enhancing its offerings with advanced control systems and global supplier networks.

The company caters to a diverse clientele that includes independent power producers, utilities, public sector units, corporates, and retail investors, providing them with end-to-end turnkey solutions for wind energy projects.

All about bonus shares

Inox Wind Ltd. has announced that its board of directors will meet on April 25 2024 to discuss issuing bonus shares, according to a recent filing with the stock exchange. This marks the company’s first venture into such corporate actions on record.

The specific record date for the upcoming bonus share issue is still to be set. Bonus shares are typically issued to capitalise on a company’s accumulated earnings. They serve to increase the company’s Earnings Per Share (EPS) and paid-up capital while simultaneously decreasing its reserves. 

Shareholders receive these shares free of cost, which is why they are often referred to as “free shares.”These shares are allocated in proportion to the number of shares a shareholder already owns, ensuring that there is no dilution in the stake of the promoters. 

Previously, Inox Wind had integrated Inox Wind Energy into its operations. For every 10 shares that Inox Wind Energy stockholders owned at the time of the merger, they got 158 equity shares of Inox Wind.

Why did the Inox Wind share price jump?

The Inox Wind share price surged over 5% in early trading on April 23, following the company’s announcement on issuing bonus shares. Over the past year, Inox Wind shares have skyrocketed by 462%, and they have risen more than 10% in the last five trading sessions alone, nearing all-time highs.

This upward momentum is partly due to Inox Wind’s large pipeline of orders. In fact, in Q3 FY24, it had a robust order book of 2.6 GW.

There was a recent announcement on April 19, 2024, of securing a substantial 210 MW repeat order for its 3 MW Wind Turbine Generators (WTGs) from Hero Future Energies. The turbines are scheduled to be deployed in South India and delivered starting in Q3 of FY25, reinforcing the company’s growth prospects. 

Inox Wind and CESC have signed a binding framework agreement to install and supply 1,500 MW of wind capacity over the next 3-4 years. It is the largest single wind project order by an OEM in India.

However, last month, the stock experienced a significant drop following news that the Ministry of New and Renewable Energy was considering reintroducing “reverse auctions” for wind power capacity, which impacted the entire sector. This method aims to address issues like undersubscription and higher tariffs found in recent bids.

When we look at Inox Wind share price history, the stock is just 5.29% below its 52-week high of ₹648, reached on February 27, 2024, and has climbed 516.65% above its 52-week low of ₹99.53 set on April 24, 2023.

Financial performance

Inox Wind’s financial performance in Q3 FY24 demonstrates a significant turnaround compared to the same quarter in the previous year, as seen in the overall improvements across key financial metrics. The company shifted from substantial losses showing positive figures and growth, which indicates effective management and strategic operational improvements.

Source: Inox Wind Q3FY24 Investor Presentation 

This financial rebound is supported by the acquisition of the largest single wind project order, which braces the company’s robust order book. Inox Wind also holds a 61% stake in Inox Green, enhancing its position in wind operations and maintenance services. These factors, combined with strong backing from a substantial promoter group and a diverse investor base, position Inox Wind favourably for sustained growth in the renewable energy sector.

Bottomline

The company’s significant rise in share price, as detailed in the Inox Wind share price history, can be attributed to several key factors that underscores its robust position in the renewable energy sector. 

The upcoming meeting regarding the issuance of bonus shares demonstrates the company’s positive financial health and commitment to rewarding its shareholders. Furthermore, Inox Wind’s strategic partnerships, substantial order book, and successful integration of Inox Wind Energy showcase its capacity for sustained growth and operational excellence.

It’s important for investors to keep informed and take into account larger market conditions when making investment decisions, even while the future appears bright based on current estimates and prior performance.