Thursday, February 11, 2010


Our FY10E estimates are at risk — Suzlon’s 3QFY10 Recurring PAT loss of Rs2.4bn was below CIRA expectations of loss of Rs722mn. Reported PAT at Rs141mn was higher on account of Rs2.5bn profit on sale of 35.22% stake in Hansen. 9mFY10 recurring losses of Rs10.5bn imply that our FY10E loss
expectation of Rs4.9bn has significant downside risks.

FY10E WTG MW sales guidance expected to be cut — WTG 3QFY10 MW sales at 404MW were down 41% YoY. In 9mFY10 Suzlon has done sales of 810MW. We expect Suzlon’s management to revise down sales guidance of 1900 - 2100MW as it is unlikely that the company can do more than 900MW in 4QFY10.

Domestic sales could be good and exports poor in FY11E — We believe there is a possibility that Suzlon could do more than our estimates of 800MW domestic sales in FY11E given the recent pickup in orders in India from public sector undertakings and large corporates like ACC, GACL, GAIL, ITC and RSMML. However, we are unsure if our FY11E exports estimates of 1300MW can be achieved at this point in time given tepid international order inflows.

Hansen/REpower disappoint due to sales decline — REpower's provisional 3QFY10 EBIT at €25mn was 15% below CIRA expectations of €29.6mn on YoY sales decline of 3% at €310.8mn (CIRA at €370.7mn). EBIT Margins at 8% were in line with CIRA expectations of 8%. Hansen's 3QFY10 sales at €137mn (vs. CIRA at €154mn) were down 12% YoY due to reduction in scheduled deliveries. EBITDA margins at 9.8% were in line with expectations.

WTG net debt down – but still too high — WTG had Rs125.8bn of gross debt at the end of 3QFY10 and cash balance of Rs10.4bn. Issue of GDRs for US$108mn, cash infusion of US$94mn through additional CBs, Rs17.2bn from Hansen stake sale and refinancing of acquisition loans has helped reduce net debt.

To read the full report: SUZLON ENERGY