Is Suzlon a turnaround story after FY16


(Marathondreams) #189

Came across very good article on current state of affairs in Wind energy as well solar industry. Not good news for renewables


(Marathondreams) #190

Solar power generation tariffs dropping at a fast pace


(phreak) #191

Margins dropping with volumes increasing is not bad for the sector. We cannot afford to depend on fossil fuel imports for our energy needs forever. Renewables make us self-sustaining and will reduce our import bills and our deficits. We are doing this while providing jobs within the country (especially Wind). Why won’t this be sustainable? What’s not sustainable is relying on crude and coal.


(amil) #192

This keeps on reminding me of madness in bidding and winner’s curse (an article link has also been shared by someone above)

What Adani, Tata did in UMPP bidding and then were seeking compensatory tariff.
If the bidders are not factoring in black swan events n projects become un-viable, it can lead to financial disasters and who loses? Well, the banks, financers apart from the company itself.


(Mehnazfatima) #193

Have a look at the daily chart of Suzlon…the stock is under bollinger band squeeze while the short term momentum indicator has turned up…looks like there will be a rally in Suzlon in the near term…maybe a modest rally…or maybe a big rally…


(amit anam) #194

Actis-backed Ostro buying string of solar projects from Suzlon for $150 mn

Ostro Energy Pvt. Ltd, the renewable energy platform set up by private equity firm Actis, is set to acquire several solar projects from Suzlon Energy Ltd, one of India’s largest wind-turbine makers, a person with direct knowledge of the matter told VCCircle.


(Mehnazfatima) #195

By executing solar power projects successfully…suzlon will be the only company to be positioned for maximum benefit…as and when the draft wind + solar hybrid policy is finalized by the ministry…

As of now…players are either specialized in wind or solar…only suzlon is developing dual expertise…

Imho…finalization of hybrid wind + solar policy is just a matter of time…


(chets) #196

@Mehnazfatima
Inox wind results were not great. Since number of players in this sector is limited, is it a positive indicator for Suzlon?
Suzlon results are expected next Friday.
Please advice.


(Mehnazfatima) #197

Suzlon results are likely to be good…the top three WTG makers in India are Gamesa, Suzlon and Inox wind.

The wind power figures for 2017 are as follows…

Total capacity installed…5400mw

Capacity by Gamesa…2050mw

Capacity by Inox wind…650 mw

Remaining wind capacity…2700 mw.

Of this i am expecting around 1800 mw to be by Suzlon. That is enough to giver good Q4 result…plus it will have enough orders for Q1. If Suzlon comes out with more than 1800 mw for the full year, then the coming Q1 result wont be that good.


(phreak) #198

The sector itself has done quite well at 5.4 GW. Of this, Gamesa has done 2050 MW and Inox Wind’s is 636 MW. So far Suzlon, Gamesa and Inox Wind have collectively held around 80% market share which leaves about 1700 MW for Suzlon.

Of this Suzlon has already done about 1000 MW for the year so that leaves 700 MW for Q4. Going by past record, this should give us revenues of about 4900 Crore and about 390 Crore or so PAT. This will mean that the year’s PAT will be at 670 Crores or so. Diluted EPS could be Rs.1.2 or so, maybe higher.

A better Q1 FY18 will drastically improve the TTM Diluted EPS because Q1 FY17 was loss-making. We could possibly have a EPS around Rs.1.50 or more. This is still a conservative estimate.

Going by this Suzlon trading around 30 levels in the next 6 months is a very high possibility. That’s about 50% returns from current price.

Risks:

  1. FCCB Conversions continue and will probably peak around Rs.24-Rs.26 by which time all the bonds would have been converted leaving 600 Crore outstanding equity shares. The EPS calculation i have done accounts for the dilution. The longer the dilution takes, the better the EPS will look, by about 10-15%.

  2. Solar auction prices are threatening Wind and consequently even Wind prices are now close to Rs.3 which will put a tremendous stress on margins.

  3. Without AD and GBI, will it still be possible to better 5400 MW volume of FY17?

Opportunities:

  1. Suzlon has efficient WTGs with better PLF and that could help better its market share as the unit prices get more and more competitive. This seems to be already the case as Suzlon might be eating Inox Wind’s lunch.

  2. Export market might open up again and that would be a big 3000 MW opportunity, going by past numbers. Piyush Goyal seems to be inclined to not allow countries to sell here that don’t allow us to sell in theirs. Suzlon has great capacity to cater to exports and has a cost and technology advantage.

  3. Offshore Wind could be a gamechanger in 2-3 years. Suzlon has Senvion’s Offshore Wind technology and that would be a big advantage if and when it happens.


(chets) #199

Thank you @Mehnazfatima and @phreakv6 for your comments! I was expecting around 1500 mw worth of revenue this quarter by Suzlon. I think the market may start reacting positively starting next week itself.


(phreak) #200

1500 MW volume in Q4 would make the total volume over 2500 MW and that would make them the market leader ahead of Gamesa (2050 MW). I don’t think that’s possible (yet). Tanti mentioned aiming for 40% market share in FY17. I think Suzlon’s share is currently around 30-35%. My estimate is on the conservative side and puts the market share at 31%. Closer to 35% would mean better results of course but 1500 MW in Q4 I don’t think is possible.


(chets) #201

My bad!! I meant 1500 mw for the whole year.


#202

Don’t you think, there will be a collateral damage to Suzlon as it operates in the same space similar to Inox Wind?

The reason why Inox Wind plunged so high may also affect Suzlon. Can we expect the similar quarter results from Suzlon?

Opinions?


(Nolan) #203

On the contrary it shows under-execution on part of Inox which might be seen as a gain for both Gamesa and Suzlon. Gamesa has already declared its numbers. Hence Suzlon’s numbers can be revised upwards to adjust for the total industry execution of 5400MW.


(phreak) #204

Today’s fall was indeed Collateral damage. I personally feel its overdone. It has broken and closed below its 20 DMA which is a bit concerning but with only 4 days to go for results, chance of recovery is high.


(pkk123) #205

Read Motilal Oswal report on INOX. They are saying that order book visibility is the biggest problem. Now Suzlon has also not reported much order wins this Q so even if Q results are good, future uncertainty will take a toll on share prices.


(Nolan) #206

Suzlon has an MoU with Andhra Pradesh government for 4,000 MW. They have said in their Q317 concall that they would be giving an yearly account on how much they have already done in AP and how much would they execute in FY18. This is besides the other small orders they have received in period Jan-Mar 17. Seems much more comfortable to me compared to Inox.


(Nolan) #207

India 2nd best for renewable energy investment among 40 countries.


(phreak) #209

Excellent set of numbers. Results here

In short, Sales up 55% YoY and PAT - Rs.579 Crores profit vs Rs.334 Crore loss last year. My estimate of Sales was more or less spot on but PAT was much higher as my estimate was conservative as I had mentioned.

FY17 EPS at Rs.1.67 and diluted EPS at 1.57. Post Q1 FY18, this should go above Rs.2 almost certainly as Q1 FY16 was loss making, completing the turnaround. I think there is every chance of Suzlon trading in the Rs.40-Rs.50 range in a couple of quarters.

Disclosure: Invested and hopeful.