Despite industry headwinds, wind turbine OEMs– Inox Wind and Suzlon Energy– have delivered staggering returns.

It's their return to profitability. Inox posted its first quarterly profit (Q3 FY24) after 6 years. Suzlon, too, turned profitable in FY23 after 5 years.

Inox and Suzlon’s order books zoomed 2-4 times in Q3 FY24 on growing demand for wind energy.

The recent profits have boosted prospects for the two players, but a closer look at their operating metrics warrant caution.

High trade receivables & long cash conversion cycles are common features of the working capital intensive wind turbine business.

Inox’s working capital cycle of 505 days is among the worst in the industry!

Steep valuations work against the two. Suzlon trades at a P/E of 80 times; Inox (loss-making on a TTM basis) trades at a m-cap to sales multiple of over 10 times.

High regulations and weak financial metrics cast a shadow on their recent profitability and its sustainability. To read the story, click on the link below.