Suzlon Energy (BNP PARIBAS)

Strong 3QFY09; First sign of orders

* Strong 3QFY09 marred by several one-offs
Suzlon’s consol. sales (wind and Hansen) rose 50.9% y-y (16.3% higher
than our estimate) due to better than expected growth in wind business
(600MW vs actual of 679MW) and Hansen (up 79% y-y versus our 30%
y-y growth). RM costs on a consolidated basis (ex REpower) came in at
57.3% (down sharply by 6.4% q-q) helped by lower commodity prices
and better product mix. Other expenses were high (up 6.8% y-y) partly
due to INR0.83b liquidated damages for one particular customer. Total
exceptional items for the quarter were: a) blade retrofit charges
(INR2.3b); b) MTM losses of INR1.2b; and c) FCCB loss of 0.92b. Pro
forma EPS came in at INR2.75 vs our estimate of INR1.70.


* Early signs of order revival
While order booking has been weak (only 195MW in 3QFY09), the
company’s pipeline (in addition to order backlog of 1916MW) includes
2000 MW orders of which the company is confident of booking around
1000MW of orders in the next six months. This supports our revenue
estimate of around 2866MW in FY10. Key positive in this quarter was
the financial closure of Rattlesnake project of Horizon Wind with the S88 V3 turbines.

To see full report: Suzlon Energy