Suzlon Energy Ltd. share price target

Suzlons 2QFY17 result was a beat on all counts with volumes of 353MW ( 56% YoY) and EBITDA margins of 21.3% ( 460bps YoY) - leading to an APAT of Rs 2.0bn (higher than expected). EBITDA margin improvement was led by (a) contribution from larger turbines, (b) benefit of low RM cost and (c) favorable mix (lower EPC).

EBITDA margin decreased by 620 bps q/q to 7.4% % due to lower capacity utilization The raw material cost and other expenditure q/q decreased by 56% and 29.7%...

Suzlon’s 1QFY17 volumes of 204MW (flat YoY) was below our estimates, leading to a loss of Rs 2.6bn (higher than expected). Loss could have been lower (by Rs 1.2bn) had it not been for the new Ind AS norm. With an order book of 1,205MW (to be entirely executed in FY17E), the company remains confident of meeting its FY17E volume guidance of 1.5 - 1.6 GW. The same should also aid in balance sheet healing (primarily debt reduction).

Muted order announcements, so far in FY17E, have cast pressure on the WTG stocks. However we expect the order flow momentum to pick up as most states have finalized their tariffs. Visibility on volumes over the longer run also remains high given continued government thrust, improvement in technology and expected tender based bidding in wind. In this backdrop, we reiterate BUY on Suzlon with a TP of Rs 28/share (10x FY18E EV/EBITDA).

Suzlon Energy Limited - SUZLON attended Suzlon’s analyst meet, wherein the management was confident of the wind industry’s growth in India over the next five years. The government is committed to attaining 60GW of wind power by 2022 and given the IPP-led customer profile; these targets are achievable, as per the company. It expects FY17 to be a 4.3GW market with Suzlon commanding the leader’s market share of 40-50%.HDFC Securities reiterate their BUY rating on the stock with a TP of Rs28/share (10x FY18E EV/EBITDA).

Trendlyne has 3 reports on SUZLON updated in the last year from 1 broker with an average target of Rs 28. Brokers have a rating for SUZLON with 1 price downgrade and 1 price upgrade in past 6 months.

Suzlon is a market leader in India with a global footprint across all continents. Over the past two decades, Suzlon has built and consolidated its presence in 19 countries. Suzlon is a market leader in India with 100+ wind farms with an installed capacity of ~9,000MW spread across 9 states. Suzlon's diversified client portfolio includes companies from a variety of industries, including...

Suzlons 4QFY16 volumes of 443MW (in line with our estimates) put it back in the black, with an APAT of Rs 500mn. EBITDA margin at 14.1% appears low primarily owing to the revenue mix (lower OMS contribution with increasing WTG volumes).

We expect India?s wind installations to grow from ~2.3GW in FY15 to ~4.5GW by FY18E, which should improve volumes and ensure strong earnings growth at listed wind turbine players Suzlon and Inox. The recent correction provides an attractive entry point in both stocks. Reiterate BUY on Suzlon and initiate with BUY on Inox.

As expected, Suzlon reported dismal 4QFY15/FY15 results with an adjusted loss of Rs 6/24bn. However, FY15 results are not the true barometer (it includes Senvion financials) and Suzlon?s turnaround story will start from 1QFY16. With Rs 88bn coming in via fund infusion from DSA and Senvion sale, the company is out of the debt trap which it found itself over FY13-15.

Having faced multiple crises over FY09-14, we believe Suzlon is on the cusp of a turnaround. It has aggressively reduced debt from its heavily levered balance sheet by divesting its German subsidiary Senvion (for Euro 1bn) and via a preferential issue of Rs 18bn to Dilip Shanghvi and Associates (DSA).

Over the past few weeks, Suzlon has aggressively eliminated debt from its heavily levered balance sheet. First, it has divested its holding in Senvion (its German subsidiary) to raise a billion Euros. Second, in a swift affirmation of support for Suzlon, the promoters of Sun Pharma (Dilip Shanghvi and Associates, DSA) are picking up a 23% stake in Suzlon, via a preferential issue of 1 bn shares at Rs 18/sh