A few points on suzlon…
Suzlon can go down to 14 in the short term…
Due to new accounting standards and huge Fccb…the forex gain or loss provides a big impact on the profit after tax…
In Q1 there was a huge forex loss (48 crores loss) and in Q2 there was a huge gain( 33 crores gain)…after demonetization, the rupee has fallen in Q3…so we can expect the profit in Q3 to be less by around 70-80 crores from that declared in Q2…
Secondly, if and when the policy unceratinity with regards to the tax benefits for wind power gets clarified…then we can expect the stock to really fly…
Thirdly, from Q4 onwards…once the policy unceratinity is resolved in budget…and forex position stablizes…and due to less interest payment and almost nil tax gor next 5-6 years…Suzlon will start flying…with a quarterly profits of 200-300 crores…
In Fy18…the yearly profit can be above 1000 crores…not bad for a company with 7000 crores marketcap
Fourth…the debt rating of suzlon is set for upgradation…as and when it is upgraded and the company comes out of CDR by march 2017( again reaffirmed by mngt)…
The above two would be two huge morale boosters for investors…
The mngt indicated that they are expecting some foreign institutions to invest post cdr exit…
Fifth…This new turbine which has a height of 120 meters) has a plf of above 40%…thats a huge positive for suzlon…in the next year, orders will migrate to this new turbine…already 100mw orders booked for this turbine…supply will start from Q4 of the present year
Sixth…they have signed an agreement with AP govt for 4000mw of power in next 5 years…it is now approved by AP cabinet too…
So that itself adds around 800-1000 mw to their order book.
The present wind orderbook is 1340 mw to be executed by end of march 2017…the company is expecting a growth of around 20% in orderbook…
Next year, they may do a combined (solar plus power) 1800 mw…
Seventh…with regards to silar power…they set up these through SPV…then after execution divest 49% stake in these projects to reduce the debt…
And the agreements are structured in such a way that the debt is not reflected in books of suzlon…while the solar projects add a portion to the topline and bottom line of suzlon…
There is a regulatory requirement that they cannot fully sell the solar installation till one year…so after a year of setting up…the company intends to fully sell these.
As long as the company has a stake in them…it gets added to topline and bottom line of suzlon…WITHOUT ADDING TO ITS DEBT… and once it is fully sold off…company gets good amount of cash…
A lot of good things are about to happen in Suzlon in the future…but the stock will move sluggishly in the next few months…
Suzlon has 35 % share in indian market and a good standing worldwide…it is trying to increase its marketshare to 50%… If it succeeds…just imagine half the indian wind enegy of india @ just 1 billion dollars…
Atleast the foreigners will find it dirt cheap…and thats enough to make it a multibagger…may be 2x to 3x in the next 15 to 18 months
It is only a stock for the proponents of slow investing…focussed investing…
Disclosure: made an initial investment…may invest more if ether the stock falls to 13.90 / 14 level…or closes above 15.30 and comes out of downtrend…and looking to buy more on bad Q3 results (due to forex loss as per new acciunting standards)
