Suzlon Energy, India’s first indigenous wind technology company, was incorporated in the year 1995 by Mr. Tulsi Tanti. Now the company is the fifth largest wind turbine manufacturer in the world and the largest in India and Asia. Suzlon provides a wide gamut of services and it includes providing total solutions in wind power generation with consultancy, design, manufacturing, installation, operation and maintenance services. The Company’s R&D system leverages the growth of the company.

The company owns a technology development centre at Germany and R&D centre at Netherlands for rotor blade molding and tooling and wind turbine manufacturing facilities in India. Suzlon recently acquired Hansen Transmission, Belgium based Wind gearbox manufacturer. This acquisition afforded the company to build up technological and manufacturing capabilities in the Wind Gear box segment and other areas. The company has wide global network and is operating projects at Australia, Brazil, China, Italy, Portugal, South Korea Turkey and United States. To enhance its global projects the company installed manufacturing units capable of producing Wind Turbine machineries and wind turbine systems at Belgium, United States, and China. The company holds nearly 10.5% share in the global market. Now, the company has the total production capacity of over 3000 MW. 

RECENT DEVOLEPMENTS 

·               Suzlon Wind Energy Corporation recently bagged an order amounting $240       million from Horizon Wind Energy of United States, to supply 200 MW of wind turbine.

·                                 The company plans to enter in to Solar and Bio-fuel Business. The company is conducting feasibility study for the further approach in this business. This will help the company to produce 10-20 MW additionally.

·                                 Suzlon recently acquired 30% stake in RE power Systems, a German based wind turbine firm, from French nuclear major Areva. The company with this acquisition is now having total stake of 66% in the REPower Systems. 

FINANCIALS 

The company announced its first quarter results recently. These results are compared with the last quarter results and are tabulated below. 

Net profit of the company for the quarter ended June 30 208 declined by 1.5% and stood at Rs.880.4 Million as against the same quarter last fiscal and on QoQ basis the profit declined by 81%. The company’s first quarter numbers have taken a hit primarily on account of foreign exchange loss. Escalation in the raw material prices and other expenditures remained major concerns for the company in this quarter. Sales Revenue for this quarter moved up by 42% to Rs.276 Billion from Rs.194.4 Billion reported in the same period previous year.

EBITDA margin moved up to 15.36% from 7.83% on YoY basis. Despite this growth in the sales revenue, Profit after tax (PAT) declined due to huge provision made for the foreign exchange loss of Rs.146 crore. As on July 30 2008 the company’s order book had orders worth nearly Rs.1649 Billion. The domestic orders and international orders amounted for Rs.144 Billion and Rs.1504 Billion respectively. The export order includes Rs.700 Billion from US, Rs.250 and Rs.220 Billion worth orders from China and Australia respectively. The company received orders worth Rs.320 Billion from European markets and an order worth Rs.145 Billion from DLF India to install 71 turbines. The company reported that DLF’s order is one of the largest order ever in India and if it is installed it will make DLF the owner of the largest single wind portfolio in India.   

COMPANY OUTLOOK 

The Global wind energy council recently reported that, by the year 2020 12% of the world’s electricity will be generated from wind. Increasing oil prices, development in the field of renewable energy generation, and climate change concerns have increased the demand for wind energy. The company recently entered in to a joint venture with Arabian company acquired Honiton energy of China and it is now holding 25% stake in it. The company reported that the joint venture will favor the company to sell more turbines as the acquired company has good order pipeline and it will aid the company to expand its market in china. The Blade Retrofit program commissioned by the company in the last quarter is expected to complete in this financial year. The order pipeline of the company looks good and it is expected to receive many overseas orders in the upcoming quarters. It is planning to raise a total of Rs.500 Billion through issuing various securities.

In the last financial the company already received Rs.218 Billion by issuing shares to Qualified institutional Buyers. The company reported that the funds received will be used to refinance the financial assistance it obtained from international lenders for various acquisitions. The company expects that the Cumulative global installed capacity will grow to 287940 MW in 2012, which was 94005 MW in 2007. As the company is having a healthy order pipeline and the prices of turbines are increasing it is expected that the company will post good results in the forthcoming quarters.  

STOCK OUTLOOK

The stock is now trading at the level of Rs.230-250. The stock had a year high of Rs.460 and hit year low of Rs.174 on the first of last month. The stock is now in a near term upward trend and gained nearly 31% in the last one month. Both near term and long term investors may accumulate this stock at this level.