Inox Green - Another. special. situation !
Inox Green - Another. special. situation !
Happy Sunday friends !
Another sunday. Another special situation :)
Most demergers spin out the hidden gem and keep the boring parent.
Inox Green just did the opposite. It kept the gem and spun out the heavy machinery.
The company is India’s only listed pure-play renewable O&M service provider. In plain words, it does not build wind farms. It looks after them after they’re built, on long-term contracts that run anywhere from 5 to 20 years.
That is an annuity business. Steady cash, low capital, sticky customers.
Buried inside that annuity business was something it did not need: a capital-heavy “power evacuation” business, the substations and common infrastructure that carry power off the wind farm, with roughly ₹1,000 crore of gross block.
While the demerger story has been playing out, the stock has largely been in a downtrend, with current market capitalization at ₹7,240 crore.
Finally, on 4th May 2026 (effective date of merger), with NCLT’s final approval Inox Green carved that heavy business out into a separate company called Inox Renewable Solutions (IRSL) and walked away lighter.
Note: Effective date is NOT the same as the Record date for determining which shareholders get shares in the two companies.Here is why that simple-sounding move matters, what shareholders actually get, and whether there is value left on the table.
WHY DEMERGERS CREATE VALUE
This section is for the unintiated in the world of demergers.
When a company houses two very different businesses under one roof, the market struggles to value it properly.
Think of it this way. One business is asset-light, high-margin and predictable. The other is asset-heavy, lumpy and capital-hungry. Investors who want the first do not want to pay for the second. So they assign one blended, middling multiple to the whole thing. The good business gets dragged down by association.
This is the conglomerate discount. A demerger seeks to remove this discount.
Separated entities attract their own investors and analysts. Each management team gets dedicated focus and its own capital allocation. Each business pursues its own strategy, unshackled from the other’s balance sheet. The discount tends to evaporate.
Almost all demergers follow this pattern. For example:
ITC demerged its hotel business in January 2025, a division that consumed a large share of capital while contributing only a sliver of operating profit. ITC Hotels listed as an independent company and ITC itself became a cleaner FMCG play.
Reliance demerged from Jio Financial Services in 2023. Raymond and Aditya Birla Fashion both split contrasting businesses into separate tickers in 2025.
The mechanism works best when the two businesses have genuinely contrasting profiles: different margins, different capital needs, different investor bases.
Inox Green is almost a textbook case of that contrast.
On one side, an asset-light O&M annuity. On the other, a capital-intensive infrastructure and EPC business.
WHY THE INOX GREEN DEMERGER MAKES SENSE
To understand the logic, you first need to know who Inox Green is and where it sits in the group.
Inox Green is the O&M arm of Inox Wind, one of India’s leading domestic wind turbine maker, and both sit under the decades-old INOXGFL Group.
It was incorporated in 2012, listed on the NSE and BSE in November 2022, and today manages a renewable O&M portfolio of about 13.3 GWp, spread across 17 states.
That is roughly 10 GW of wind and 3.3 GWp of solar.
Now here is the part that makes the demerger make sense.
- The asset-light business was carrying an asset-heavy passenger.
The O&M business is what investors actually want to own. It runs on long-term contracts, throws off steady cash, and needs very little capital to grow. Management has guided that the wind O&M piece operates at roughly 50% EBITDA margins, with solar O&M around 15% to 20%.
But the power evacuation business, the substations and common infrastructure, sat on the same balance sheet. It carried around ₹1,000 crore of gross block and added a drag of roughly ₹50 to 55 crore of annual depreciation through the profit and loss account every year.
That depreciation was quietly suppressing reported profit. Strip it out, and the picture changes sharply.
- What separation actually unlocks.
Once the power evacuation business is gone, management expects three things to happen. This is key.
- Profit jumps without selling a single extra unit. Removing ₹50 crore-plus of annual depreciation flows almost straight to the bottom line. On the call, management spelled out the punchline: after the demerger, with depreciation gone and finance costs near nil, “profit before tax would be roughly equal to EBITDA”.
- Return ratios re-rate. Taking ₹1,000 crore of gross block off the balance sheet mechanically lifts both ROE and ROCE, because the same earnings now sit on a much smaller asset base.
- The story gets clean. Inox Green becomes what management calls India’s only listed pure-play renewable O&M company, an annuity business investors can value on a simple, recurring-cash framework instead of a muddled blend.
- And critically, almost no revenue leaves. Management was explicit: only around ₹10 crore of revenue exits with the demerged business, while around ₹50 crore of depreciation (expense) also exists. So, a net benefit of ₹50 crore.
The bottomline is you lose a rounding error of sales and shed a real chunk of cost. That is the whole point.
Here is the split, side by side:
- The growth engine that stays behind.
The demerger is not the only thing happening. The surviving O&M business is scaling fast.
In 9M FY26, Inox Green reported total income of ₹339 crore (up 76% year on year), EBITDA of ₹153 crore (up 64%), and profit after tax of ₹75 crore (up 552%).
Machine availability, the metric that proves the O&M actually works, averaged 96.2% over the nine months.
The full picture, in one table:
Then there is the inorganic leg.
Inox Green has invested to acquire roughly 6.5 GW of operational wind O&M assets from two companies. One of those was won through the insolvency process: Inox Green secured an NCLT bid for Wind World’s assets, bringing in 4.5 GW of O&M operations.
Once these acquisitions consolidate into the financials, management expects FY27 EBITDA upwards of ₹600 crore, against ₹153 crore in 9M FY26. Yes, you read that right.
So the business you are left holding after the demerger is cleaner, lighter, more profitable, and growing into a much bigger number. That is the thesis in a nutshell.
Then there is the inorganic leg.
Inox Green has invested to acquire roughly 6.5 GW of operational wind O&M assets from two companies. One of those was won through the insolvency process: Inox Green secured an NCLT bid for Wind World’s assets, bringing in 4.5 GW of O&M operations.
Once these acquisitions consolidate into the financials, management expects FY27 EBITDA upwards of ₹600 crore, against ₹153 crore in 9M FY26. Yes, you read that right.
So the business you are left holding after the demerger is cleaner, lighter, more profitable, and growing into a much bigger number. That is the thesis in a nutshell.
THE MECHANICS, AND WHERE THINGS STAND
The structure here is unusual, so it is worth slowing down.
In a normal demerger, the company spins its smaller or non-core unit into a brand-new shell and lists it. Here, the demerged power evacuation business does not go into a new shell.
It merges into Inox Renewable Solutions (IRSL, formerly Resco Global Wind Services), which is the group’s existing EPC and infrastructure arm and itself a subsidiary of Inox Wind.
The board approved the scheme on 13 November 2024, with an appointed date of 1 October 2024.
What shareholders receive.
For every 1,000 ordinary shares of Inox Green you hold, you receive 122 equity shares of IRSL. No cash changes hands. You keep your Inox Green shares (now a cleaner, asset-light O&M company) and you additionally receive IRSL shares (the power evacuation and EPC business).
You end up owning two companies instead of one. IRSL then lists automatically on the NSE and BSE.
Where the assets and liabilities go.
All assets, liabilities, contracts, licences and employees of the power evacuation business transfer to IRSL on a going-concern basis. For Inox Green, the headline effect is the one already described: roughly ₹1,000 crore of gross block out, roughly ₹50 to 55 crore of annual depreciation out.
The timeline, where we are today.
The path so far:
What is still pending, as of late May 2026, is the operational tail. The record date has not been declared, shares have not yet been allotted, and IRSL has not yet started trading.
On the Q3 call, management guided that listing is roughly a one-to-one-and-a-half-month process after NCLT approval, while cautioning that the exact timing sits with the regulator and is not in their control.
In other words: the demerger is effective. The shares just have not landed in demat accounts yet. This is the window before the record date, which should be declared anytime now.
THE VALUATION MATH. IS THERE VALUE?
Disclaimer: What follows is a simple, illustrative if-then exercise to help you think about how the market might value these two businesses once they trade separately.
Start with where the whole sits today.
As of mid-to-late May 2026, Inox Green trades around ₹180 a share, for a market capitalization in the ₹7,240 crore range.
On trailing twelve month (TTM) numbers, that is a punchy multiple. TTM consolidated revenue of about ₹292 crore (www.screener.in) and PAT of about ₹80 crore, putting the trailing PE north of 90x.
Source: www.screener.in
The market is clearly not paying for what Inox Green earned last year. It is paying for FY27 and beyond.
That is the right lens, because FY27 is when the math changes.
The surviving business: Inox Green (O&M).
Management’s FY27 EBITDA guidance is upwards of ₹600 crore.
Here is the key structural feature post-demerger, in management’s own framing:
With depreciation eliminated and finance costs near nil, PBT is roughly equal to EBITDA, and there is a tax shield that means no cash tax outgo for the upcoming years (only a deferred-tax accounting entry at the ~25% rate).
So if FY27 EBITDA lands near ₹600 crore, accounting PAT could be in the order of ₹450 crore once the ~25% deferred tax is notionally applied, with cash profit close to the full EBITDA.
Against a current market cap of roughly ₹7,200 crore, ₹600 crore of EBITDA is about 12x EV/EBITDA, and ~₹450 crore of accounting PAT is about 16 to 17x earnings, on forward numbers.
The re-rating, in one view:
That is the bull case: today’s eye-watering trailing multiple collapses to something defensible, even attractive - the moment FY27 consolidation lands.
The Bear case is equally simple: that ₹600 crore is guidance, not history, and it depends on the acquisitions consolidating smoothly and margins holding.
The spun-off business: IRSL (power evacuation / EPC).
The most recent independent marker is a primary capital raise: in August 2025, Inox Wind sold a roughly ₹175 crore stake in IRSL at a post-money valuation of about ₹7,400 crore.
Sure, the public market may price IRSL very differently than a private deal but ₹7,400 crore valuation for just IRSL is interesting.
At ₹7,400 crore, the spun-off infra arm was privately valued at roughly the same level as Inox Green’s entire current market cap.
Pulling it together.
The value case rests overwhelmingly on Inox Green the survivor: an asset-light annuity, suddenly stripped of depreciation, guiding to a multi-fold jump in FY27 EBITDA, trading at a forward multiple that looks reasonable even if the trailing one looks absurd.
IRSL is a bonus leg whose public value is genuinely unknown until it lists, and which carries its own baggage.
Hope that was insightful.
Rahul Rao, CFA