Frankly, Suzlon Energy's Q2 FY'14 numbers did disappoint me a little bit. But still, it is a positive indicator compared to Q1, when Suzlon had posted Consolidated revenues of about Rs.3900 crores, the lowest figure in 9 quarters. Suzlon's EBITDA loss was at Rs.291 crores in Q1. For Q2, Suzlon has posted a 23% Q-o-Q jump in Consolidated revenues to about Rs.4800 crores and an negligible EBITDA loss of less than Rs.20 crores. Suzlon's cost reduction efforts seem to be showing it's effect in both Q1 & more so in Q2. The near break-even on the EBITDA front in Q2 itself is a very big relief. Any further boost in order execution will lead to bigger boost in Suzlon's EBITDA in the coming quarters.
The following chart shows Suzlon's Quarterly progress on Total Income, EBITDA & Net Profit over the last 10 quarters. Note the improvement the company has posted in the last 2 quarters, compared to the immediately preceding quarters.
Suzlon's Order book stands expanded at over Rs.43,000 crores. REPower continues to win new orders at a pace faster than it's execution. Hence, it's order book is gradually increasing. In the first half of the current fiscal, REPower contributed nearly 80 to 85% of Suzlon's Consolidated revenues. The company's India division has started moving, but there is still work to be done to get to levels where it was about 4 to 6 quarters back. Suzlon Wind has done lots of restructuring work during H1 of FY'14. Hopefully, Suzlon Wind's order execution will improve substantially from Q3 onwards. Increasing order execution will give confidence to it's customers, vendors & partners, and this will ultimately help it win more orders in the coming quarters.
Suzlon's stock price has started moving up in the last couple of weeks. From levels of about Rs.7, it has now got into double digits. At a price of Rs.10/-, Suzlon's Market Cap on Fully diluted Equity Base will be close to Rs.2900 crores, which I feel is still very small compared to the company's potential. If Suzlon does manage to successfully get back to normal speed of execution in the next 3 to 4 quarters, it could be doing handsome levels of EBITDA & Cash Profits. And once the Cash Profits start pouring in, Suzlon could start reducing it's Debt burden. This could further boost Suzlon's valuation. But all these things could take upto 2 years of hard work for the company's management. But if they do manage, then Suzlon's valuation could easily scale upto well in excess of Rs.15 to 20,000 crores or more.
The following chart shows Suzlon's Quarterly progress on Total Income, EBITDA & Net Profit over the last 10 quarters. Note the improvement the company has posted in the last 2 quarters, compared to the immediately preceding quarters.
Suzlon's Order book stands expanded at over Rs.43,000 crores. REPower continues to win new orders at a pace faster than it's execution. Hence, it's order book is gradually increasing. In the first half of the current fiscal, REPower contributed nearly 80 to 85% of Suzlon's Consolidated revenues. The company's India division has started moving, but there is still work to be done to get to levels where it was about 4 to 6 quarters back. Suzlon Wind has done lots of restructuring work during H1 of FY'14. Hopefully, Suzlon Wind's order execution will improve substantially from Q3 onwards. Increasing order execution will give confidence to it's customers, vendors & partners, and this will ultimately help it win more orders in the coming quarters.
Suzlon's stock price has started moving up in the last couple of weeks. From levels of about Rs.7, it has now got into double digits. At a price of Rs.10/-, Suzlon's Market Cap on Fully diluted Equity Base will be close to Rs.2900 crores, which I feel is still very small compared to the company's potential. If Suzlon does manage to successfully get back to normal speed of execution in the next 3 to 4 quarters, it could be doing handsome levels of EBITDA & Cash Profits. And once the Cash Profits start pouring in, Suzlon could start reducing it's Debt burden. This could further boost Suzlon's valuation. But all these things could take upto 2 years of hard work for the company's management. But if they do manage, then Suzlon's valuation could easily scale upto well in excess of Rs.15 to 20,000 crores or more.
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