Axis Securities has reiterated its BUY recommendation on Inox Wind Ltd, albeit with a sharply reduced target price of Rs 130 from Rs 190 earlier, following a Q3FY26 performance that fell short of expectations on multiple fronts. While execution momentum improved sequentially, revenue and profit trailed consensus estimates, prompting downward revisions to earnings projections through FY28. The brokerage has recalibrated its valuation multiple to 23x Dec’27E EPS, citing execution timing risks, a stagnant order book, and near-term sectoral softness. Yet, structural tailwinds in India’s wind energy market and improving margin guidance underpin its constructive long-term stance.

Q3FY26: Execution Improves, But Financial Performance Disappoints

Inox Wind reported consolidated revenue of Rs 1,207 crore in Q3FY26, marking a 33% year-on-year and 8% sequential increase. However, this figure fell short of Axis Securities’ estimates by 11% and lagged Bloomberg consensus by 27%. Execution during the quarter stood at 252 MW, up 33% YoY and 25% QoQ, but still marginally below projections.

On profitability, EBITDA came in at Rs 282 crore, reflecting a 36% YoY increase and 24% sequential growth. While this beat Axis estimates by 7%, it missed consensus by a similar margin. EBITDA margins expanded to 23%, benefiting from better operating leverage and cost discipline.

Yet, the bottom line disappointed. Attributable PAT stood at Rs 117 crore, up just 1% YoY and 28% QoQ, missing Axis estimates by 24% and consensus by a steep 42%. EPS for the quarter came in at Rs 0.7.

Shift from MW Guidance to Revenue Metrics Signals Strategic Reset

A key development was management’s shift in guidance framework. Historically, Inox Wind guided based on MW execution. It has now transitioned to revenue and margin-based guidance, reflecting a more diversified order mix.

The company now guides for over Rs 5,000 crore in FY26 revenue, implying 35% YoY growth, and projects approximately 75% YoY growth in FY27. EBITDA margins are expected at 20–22% for FY26 and FY27, upgraded from the earlier 18–19% band.

The change reflects evolving order book composition—now evenly split between turnkey EPC projects and equipment supply contracts—alongside customer-led site readiness delays and grid connectivity issues that introduce volatility in MW recognition.

Order Book Remains Healthy but Lacks Fresh Momentum

As of Q3FY26, the order book stood at 3,185 MW, marginally lower than 3,235 MW in Q2FY26, indicating stagnation. Fresh order intake during the quarter was approximately 582 MW.

The order book is balanced, with 51% from end-to-end turnkey projects and 49% from equipment supply contracts. Management asserts that this backlog provides execution visibility for 18–24 months, though near-term ramp-up remains critical.

Estimate Revisions Reflect Conservative Execution Assumptions

Axis Securities has sharply revised downward its projections through FY28, primarily on slower execution assumptions. The revised versus old estimates are as follows:

Revenue estimates have been cut by 14%, 22%, and 26% for FY26–FY28, respectively. PAT estimates have been lowered by up to 22%.

Valuation Reset: Multiple Compressed to 23x Dec’27E EPS

Given execution timing risks and muted sector sentiment amid weaker peak power demand data, Axis has reduced its target P/E multiple from 29x to 23x Dec’27E EPS.

After adjusting for the minority stake in Inox Green Energy Services and Resco Global (approximately 8%), the brokerage arrives at a revised target price of Rs 130 per share.

At the current market price of Rs 106, this implies an upside potential of roughly 23%.

Balance Sheet Strength and Cash Flow Comfort Provide Cushion

Despite operational volatility, Inox Wind remains financially stable. It continues to be a net cash company as of H1FY26. Working capital days, however, have risen to 200–210 days due to rapid revenue ramp-up and execution mix changes.

Operating cash flow is projected at Rs 850 crore in FY26E and Rs 853 crore in FY27E. Free cash flow is expected to turn positive at Rs 650 crore in FY26E.

Leverage ratios remain comfortable, with net debt-to-EBITDA projected to turn negative by FY27E.

Strategic Catalysts: Manufacturing Expansion and New Turbine Launch

The commissioning of a 1.2 GW nacelle and hub manufacturing facility near Ahmedabad strengthens vertical integration. Additionally, the upcoming 4.X MW turbine—designed for low wind regimes in India—is positioned to reduce LCoE and drive competitive advantage.

Meanwhile, subsidiary Inox Green Energy Services is scaling rapidly, managing 13.3 GWp of renewable assets with robust margins—50% in wind O&M and 15–20% in solar O&M.

Sector Tailwinds Intact Despite Near-Term Headwinds

India installed approximately 4.5 GW of wind capacity in 9MFY26 and is on track for 6 GW in FY26, with a medium-term aspiration of 8–10 GW annually. Increasing Commercial & Industrial participation and improved transmission infrastructure remain supportive.

However, execution bottlenecks, auction under-subscription risks, and working capital pressures temper near-term optimism.

Investment Thesis: BUY with Calibrated Expectations

Axis Securities maintains its BUY rating, supported by structural growth in India’s renewable energy transition, improving margin guidance, and balance sheet strength. Yet, the sharp reduction in target price underscores execution discipline as the defining variable for shareholder returns.

For investors, Inox Wind offers asymmetric upside if revenue momentum accelerates meaningfully in FY27. However, position sizing should reflect near-term volatility and sensitivity to execution timelines.

The recalibrated target of Rs 130 provides a measured pathway to value realization in a sector where long-term opportunity remains compelling but short-term delivery must catch up with ambition.