Is Suzlon a turnaround story after FY16

This is what I like about suzlon…very limited downside risk from the present level and prospects of good gain as its a turnaround stock in a turnaround sector. Taleb calls such things as asymmetrical bets…such things are rare and when you find such an opportunity, you bet heavily on it.

For me even if suzlon turns out to be a cyclical play, it still gives very good returns …ordinary investors like me have to be content with just a few of such investment ideas…we cannot hope to generate an investible idea every week or even every month…

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Sharing the Quarterly sales volume and order book data below.
I see the order backlog ratio falling for past few Qtr. It doesn’t look good.

However, to be honest, I am a bit oblivious in this regard- What is the comfortable number which should be maintained. Also, is there any role of quarterly trend in it, like: in Q4 as the execution rate is high the ratio falls and in a subsequent Qtr the order booking goes up and thus, drives the ratio upwards.
Question: What should be the trend and is Suzlon in line with it?

Regards,
Yogansh Jeswani
Disclosure: Not Invested, just tracking.

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You can see how the ratio moves. It is highest in Q1 and then drops through the year. Order book should be the least of Suzlon’s worries considering that the pie is getting bigger and bigger with every passing year.

Disclosure: Invested big from around 13 levels.

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Interesting read on how off grid solar is failing in rural India

Suzlon on the verge of a breakout ? Have a look at the chart below…

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Suzlon to be included in F&O from 31st march as per NSE circular.

Cheers
G1

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Intense competition in reverse auctions for solar projects due to limited supply of projects has pushed companies to bid lower, said the Mercom report.

Module prices, which make up for about 60% of a solar project’s total costs, have fallen by 26% in 2016 alone and are expected to fall another 20% this year, giving possibility to tariffs falling further, Mint reported on 16 March.

How does it impact Suzlon ?

While on the surface level, as a source of power solar seems to be getting cheaper, Wind has some distinct advantages.

  1. Wind generates more domestic jobs and this is one of the reasons why the govt. has been equally favourable to Wind when it comes to renewables.
  2. Solar panels are mostly imported and so don’t directly contribute to the economy at large. We do have some panel manufacturing companies now but they can’t keep up with the demand nor economics of it.
  3. Wind has an inherent advantage for large scale installations in that it has a better PLF working day and night although it cannot work on all states. Suzlon’s newer turbines are even more efficient and should improve PLF.

Right now we need all the power we can generate as India’s power demand goes up so the govt. is inclined to support Wind at least until 2022.

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Slightly off the topic -
Off grid solar power is unviable at the moment in terms of cost.

  1. There are no subsidies from the government other than on solar pumps.

  2. Off grid system needs batteries, which augments the overall cost of solar powered system. Makes it unviable in terms of cost.

  3. On grid system is the only mode which is viable in term of cost, but is of no use in areas where there is major supply disruption. (For instance, i am planning to set up solar powered system on my farm, but we only get 6 hours of power daily). So, on grid system is of no use …as whatever my system is generating will go straight to grid; on the other hand, i am only getting grid power for 6 hours.

I have taken note of all your reasoning around Off grid solar. The biggest reason why off grid solar is a failure in villages in India is theft of solar panels.

In remote villages, govt called for 100% electrification. For ex: Govt installed lot of off grid solar panels in remote villages due to lack of infrastructure. The panels were stolen and now govt is mulling the idea of going the conventional route of connecting them via Grid.

Cheers,
Amit

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Theft is an issue, but how does it matter if it’s an off grid system or an on grid system. Solar panels can be stolen irrespective of being off or on grid. No?

Mridul,

Read this.

It is different. Off grid solar is good in cities or villages where there is good governance. They will use solar farms to connect to the grid system to provide electricity to villages. It is more centralized form of governance and it can prevent theft. However, decentralized solar on rooftops in remote villages is invitation to theft.

I understand Amit bro. What i am saying is theft can be less in areas where there is good law and order situation. but at the same time, cost of batteries make it unviable. Got my point?

Can this derail Indias renewable growth story…

Suzlon Restructures Overseas Subsidiaries to Reduce Costs

23/Mar/2017: Gujarat, Andhra Pradesh refuse to pay more than Rs.3.46 per kWh for wind power.

Quoting the article: ‘A wind power developer, who did not want to be named, said there is no problem with solar projects where all concerned central and state government agencies have been following the auction process for years. “But wind is a different matter. We made our calculations of returns based on certain assumptions, which will now go haywire. Definitely, this is not what developers want,” this person said.’

Indian Renewable Energy Development Agency to sanction Rs 13,000 cr loans for renewables in FY18

Summary:

**Demand for electricity will grow twice as fast as that for transport.

** China and India will account for 71 percent of new capacity. By 2050, electricity will account for a quarter of all energy demand, compared with 18 percent now. How will that additional power be generated? More than three-quarters of new capacity (77 percent), according to the McKinsey research, will come from wind and solar, 13 percent from natural gas, and the rest from everything else. The share of nuclear and hydro is also expected to grow, albeit modestly.

What that means is that by 2050, nonhydro renewables will account for more than a third of global power generation—a huge increase from the 2014 level of 6 percent. To put it another way, between now and 2050, wind and solar are expected to grow four to five times faster than every other source of power.

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Now we can expect vrry good Q4 numbers from suzlon.

The total wind power installed by Jan end 2017 was 2100 mw…and in the last two months of the financial year 3300 mw were installed…with a buge 2026 mw being installed in March 2017, maybe to benefit from the GBI…

All said, we can now look forward to…blockbuster Q4 numbers from Suzlon, exit from CDR, and a few big names buying suzlon…

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Is the green edging out the black?
As clean energy becomes cheap and its supply smooth, coal-based power plants may face dim future…