Pick of the Week: Suzlon Energy

FOR MEDIUM TERM BUY SUZLON ENERGY

Equity: 299.64 Cr, BSE Code: 532667, CMP : 54.55

BUY SUZLON ENERGY @ 55 Target: 62 to 64

Suzlon Energy is Asia's leading manufacturer of wind turbine generators (WTGs) having around 58% share of India's domestic installations (in 1HFY07). The company is also among the five largest manufacturers of WTGs globally in terms of annual installed capacity. It is the first Asian company to manufacture WTGs, which have MW and multi-MW capabilities. The products manufactured by Suzlon include rotor blades, control panels, nacelle cover and tubular towers. Suzlon enjoys cost advantages over its global competitors by way of operating manufacturing capacities in India. Also, the company has a subsidiary for technology development in Germany and an R&D facility in the Netherlands for rotor blade molding and tooling. These factors combine to provide Suzlon some kind of competitive advantage in the technology intensive and competitive global wind power equipment market.

We believe that, apart from the cost competitive advantage that is inherent in the wind generated power, the sector is also likely to benefit from countries' increasing move towards adopting the Kyoto Protocol towards reducing carbon-dioxide emissions by 2012. As far as Suzlon is concerned, the company's leadership position in the domestic market and rapid global forays on the back of manufacturing cost advantages and an integrated supply chain are likely to stand it in good stead over the long term. Suzlon strong business model in terms of in-house technology and superior design capabilities has led to a consistent increase in its market share. A bulk of Suzlon product requirements are manufactured at its Indian facilities, providing it a significant cost advantage. Further capacity expansion in the US and China will help the company cater to the strong global wind energy demand. It is also expanding capacity of Hansen Transmission, which obliterates concerns of gear box supply. With its people strength, aggressive vertical integration strategy, strong R&D program, expanding manufacturing capability and a clear focus on global high growth markets, Suzlon is poised for continuing its story of breathtaking growth the world over. Its primary customers in India include companies that have manufacturing facilities with high power consumption. These companies have high profitability and seek investment opportunities with stable returns. In India, Suzlon caters to leading corporate houses like the MSPL Limited, Bajaj Auto Limited, Tata Group and Reliance, to name a few. Suzlon order book position is a reflection of its strong market position and consistency in delivering to their customers. Our order book stands at around USD 4,335 million. Our domestic order book position is for a capacity of 441 MW and international orders for 3,726 MW.

Latest Results :- Suzlon Energy has announced its Q2FY09 numbers. Its Q2 standalone net profit stood at Rs 16.98 crore as against Rs 355 crore. The company's standalone revenues stood at Rs 2,226.25 crore versus Rs 1,687.46 crore.