Scripscan:Suzlon Energy Ltd
cmp:18
Code:532667
Story:Apart from the sale of shares by promoters, the markets are also concerned about Suzlon’s high debt and repayment of its FCCB (foreign currency convertible bonds), due in the next year.For the September quarter, Suzlon’s consolidated volumes were up 21 per cent year-on-year at 715 Mw, helping revenue rise 34 per cent to Rs 5,131 crore. Operating profit margins improved over 500 basis points to 9.3 per cent. And, even as interest costs jumped 34 per cent, the company reported a turnaround, with a profit of Rs 48 crore against a loss of Rs 369 crore in the year-ago quarter.More important, order inflows at REpower grew a strong 57 per cent year-on-year in the September quarter. Suzlon’s consolidated order book grew 35.3 per cent to Rs 32,456 crore, almost two times its 2010-11 revenue and provides good visibility. In the past two days itself, REpower (152 Mw) and Suzlon (23 Mw) have bagged equipment orders worth 175 Mw.Meanwhile, am expecting decent growth in revenue in the current and next financial years, with profit growth likely to be stronger, led by improvement in margins. A Bank of America-Merrill Lynch report says Suzlon is likely to report a net profit of Rs 528 crore in the current year and Rs 763 crore in 2012-13. At the cmp of 18 it translates to a price-to-earnings multiple of just four times,reasonable in the given risk-reward equation. Unless the demand side plays havoc, the prospects appear to be improving.
