Is Suzlon a turnaround story after FY16


(Nolan) #338

Atleast it breaks the jinx of falling after results. Good results and a good breakout. Its heartening to see that Tanti is backing his words with action. In a backdrop of lackluster macro and micro environment, Tanti kept mentioning that none of their PPAs are getting cancelled or renegotiated. The negative media made everyone believe that wind sector is doomed. But being the only player bucking the trend, Suzlon has shown resilience.

The industry would continue to remain slow for next 1-2 quarters but I have always believed that if Suzlon continues to execute its orderbook, it would sail through this rough patch with minimum damage. My believe is reinforced after current quarter results and the breakout thereafter.

It is noteworthy that no other player in Wind sector, not even Gamesa, has delivered good set of numbers this quarter. I can only imagine that if in lean period and in weakest of quarters, Suzlon management has braced up to the situation with such finesse, then Suzlon is very well prepared for the upcoming long haul in the energy sector. And by long haul I do not mean years but decades of growth to come.

Another tag that there are many other better opportunities to pursue other than Suzlon, is getting overrated now. I have a belief that market has run up and the next phase of growth may not be coming from the regular midcap gems but from the turnaround minnows like JPA, GMR and Suzlon, which will play upon the infrastructure theme much touted by Porinju (in his tweets and interviews) and others lately.


(Niraj Kumar) #339

Suzlon appear like a typical value trap stocks. While result in last few quarters are showing improvements but company continue diluting equity by converting FCCBs and debt etc into equity at massive scale which make existing owner not able to get advantage from good results. Also Suzlon enterprise value is close to Rs 19000 cr with debt of more than 10000 cr with annual revenue of around Rs 13000 cr and during best pf times OPM is not more than 24% and considering recent regulratory challenges improving upon current OPM of around 20% is a challenge. Wind energy is highly cyclical industry and with drop in tariff due to new regime of contract, limited availability of good wind sites and lands, many state govts putting pressure to renegotiate existing PPAs to much lower tariff.
Disc: No Investment


(amolk) #340

Q1 net order intake was 680 MW & delivery volume was 412 MW.
680 MW order inflow looks great even the uncertainty with new bid policy and GST in Q1.
The current order backlog is 1169 MW. Is it safe to assume 500 MW order inflow per quarter?
If yes then Suzlon should close FY18 with 412 + 1169 + 500 (6 month cycle)? =2081 MW
On track to delivery 2081 MW?

Disclosure - 4% of my portfolio


(Amit Mehta) #341

“…The outlook for wind companies has been negative since the budget which reduced the accelerated depreciation from 80 per cent to 40 per cent, and withdrew gener ation-based incentive and 10-year taxfree benefit for profits from investments in wind energy . As per industry estimates, India as a whole may end up installing 1000 MW-1500 MW of wind energy capacity in FY18 versus 5,400 MW in the previous financial year.
_Analysts said revenue visibility for wind energy companies is unclear as their order books are taking a beating due to a gradual shift from a feed-intariff regime to an auctioning regime…”

Read more at:
http://economictimes.indiatimes.com/articleshow/60070524.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst


(Nolan) #342

Central Govt, after feeling the pressure from developers and bankers, is mulling over sending an advisory to State Discoms to honor its PPA commitments without any price renegotiation.


(hazariwalapu) #343

do anyone know how much topline they have done in India( Domestic) and how much is exports?

Thanks


(Mehnazfatima) #344

This report gives us an idea about the long term prospects of wind energy sector…

http://www.windpowermonthly.com/article/1442635/indias-wind-capacity-grow-expected


(Nolan) #345

Center demonstrating authority over 7 States using special powers under Electricity Act. Suzlon only counts orders with PPA backed agreements and advances. Its order book currently stands at 1169MW and 1500MW of framework-based projects waiting for PPA signing.The last year execution was 1779MW. Now if I combine the Q118 execution of 412MW and add PPA backed orders of 585MW (half of 1169MW) then it comes to ~1000MW. Considering there are three more quarters to go, I am hopeful that they would match or marginally exceed last year’s execution. And I am not even taking the 1500MW framework into account. If in the current transitory phase when the market can see total execution of ~3GW, Suzlon can end up with more than 50% market-share, then I am quite hopeful for coming years. On margins, there might be concerns but I’ll wait to see how much manpower cost reduction and technology upgradation helps them in making up for lower margins of auction-based orders.


(amolk) #346

In the conference call, management mentioned that only half of backlog order - 1169 MW is PPA backed.
1500 MW framework based projects? This is excluding the expected 3GW execution this year right? And How these are different than order backlog


(Nolan) #347

Dear @pumba22, I stand corrected. You are right - Only half of 1169MW are PPA backed. Management said that all orders are backed with advances and somehow I misunderstood that they are all PPA-backed. Apologies!

These are frameworks/arrangements with IPPs where they would be helping with project execution as soon as the client IPP gets a FIT/Auction based order. Since Suzlon does not bid directly in auctions, they get into arrangements with clients who are bidding on their behalf. They have 1500MW of such framework already in place with client/s.


(AmeyaD) #348

http://www.suzlon.com/pdf/investor/AR/2016-17/Suzlon_Annual%20report_2016-17.pdf Annual Report


(SS64) #349

(maheshkumar) #350

(James Sebastian) #351

CFO Resigned : Press release from Suzlon

Suzlon Group, one of the leading renewable energy solutions providers in the world, today announced that Sanjay Baweja has resigned as CFO of Suzlon w.e.f. October 4th 2017 due to
personal reasons. Tulsi Tanti, Chairman, Suzlon Group, said, "Sanjay has played a key role in successfully managing several operational improvements during his tenure. I would like to thank Sanjay for his contribution and wish him all the best for his future endeavours.”

Views invited on how this will impact the company.


(mntolia) #352

Suzlon also supplies parts to other countries right? If the story of wind in India seems bleak they can still earn from foerign sales right?

How much revenue do they get from other countries?

Disc: Invested and I am new to investing


(..pd..) #353

Sir, leave the Suzlons to the experts. One should keep it safe when new. There are many better companies out there.


(mntolia) #354

I understand I am new but I do want to learn. I have invested very little.

By asking questions and getting answered from more experienced people like you, I can better understand how to assess companies.


(Nolan) #355

No meaningful sales is reported from overseas at the moment in the recent past. Do not be hopeful much in the near term future. If you are already invested then be very patient with a long horizon till 2022 to reap benefits. If not, then you might want to consider some other less risky opportunities.


#356

And the market is reacting to the news !!!

How low can the tariffs go further?.

Discl: Invested at ~ 20 levels.


(hazariwalapu) #357

http://www.moneycontrol.com/news/business/economy/wind-power-tariff-plunges-to-record-low-of-rs-2-64-per-unit-2405449.html