Suzlon Energy Ltd posted not-so-bad numbers for Q3-FY'14. It's Total Income came in at Rs.5063 crores, 24% higher Y-o-Y, while it's EBITDA Loss was Rs.126 crores, 60% lower Y-o-Y. Even though Suzlon posted a loss at EBITDA level as well as Net Level during Q3-FY'14, it's mainly due to three reasons: the clean-up that the company is undertaking of it's potentially irrecoverable bad debts, restructuring of it's operations by reducing it's workforce & working capital requirement and Foreign currency fluctuation losses. Had it not been for these 3 reasons, Suzlon would have posted EBITDA profits during Q2 & Q3 of this fiscal.
This clean-up & restructuring is expected to continue for another couple of quarters. Hence we could see the company posting some decent EBITDA numbers only in the new fiscal. What is more heartening to note is the improvement in the company's order execution, which is has just started picking up pace. It is still to get back to normal levels, but it is on the right track. On one hand the order execution has started improving, while on the other hand the flow of fresh orders has also been very good. Suzlon received fresh orders worth around Rs.8300 crores during Q3, which has further increased it's Order book position to around Rs.45,000 crores, giving it very strong visibility.
As you can see, Suzlon's T-T-M Total Income chart has started showing an uptrend after Q3. The EBITDA chart had started improving after Q2. Eventhough the improvements in EBITDA & Net Loss are only marginal currently, it's mainly due to the various right-offs that the company is currently undertaking to clean-up it's operations. Things will start improving at a faster pace once all this clean-up is over.
Another positive point in Suzlon's recent results is the reduction in Total Capital Employed (TCE) of the company on the Consolidated basis. As the name suggests, Total Capital Employed is nothing but Total Money Invested or Spent in the business - Total Money recovered from the business. An increase in TCE indicates that either the company is undertaking CAPEX to increase it's capacity or it is not receiving Cash-flow commensurate to the Revenues it is booking during the period. On the other hand, a reduction in TCE means the company has received more Cash than the revenues it had booked during the period (i.e. dues from previous periods) or it has sold some assets.
At the end of December'2012, Suzlon TCE on a Consolidated basis was Rs.17,038 crores, which reduced to Rs.15,877 crores at the end of September'2013 and further reduced to Rs.15,610 crores at the end of December'2013. That means during the last one year Suzlon has received Rs.1,428 crores either via assets sale or recovery of previous dues from customers. This inflow of Capital will help the company improve it's Cash positions & also help reduce it's Net Debt position, which will ultimately help the company in controlling it's Interest Costs. Most of this Capital will come in handy as Suzlon tries to ramp up it's manufacturing to fulfill it's order book.
Suzlon's share price is currently hovering around the Rs.10-11 range, translating into a Market Cap of about Rs.2500 to 2700 crores on the Equity base at the end of December'2013. This Equity Base will expand further in the coming months as the commitments made in the CDR agreement are implemented. FY'2015 should be much more positive for Suzlon on the results front, compared to FY'2014, as most of the clean-up and restructuring costs must have been taken care of during the current fiscal. Suzlon is expected to post healthy EBITDA margins of close to 10% during FY'2015 and should be very close to break-even on the Net Level as well. Once those signs start showing, Suzlon will command much higher valuations than current level.
This clean-up & restructuring is expected to continue for another couple of quarters. Hence we could see the company posting some decent EBITDA numbers only in the new fiscal. What is more heartening to note is the improvement in the company's order execution, which is has just started picking up pace. It is still to get back to normal levels, but it is on the right track. On one hand the order execution has started improving, while on the other hand the flow of fresh orders has also been very good. Suzlon received fresh orders worth around Rs.8300 crores during Q3, which has further increased it's Order book position to around Rs.45,000 crores, giving it very strong visibility.
 |
| Suzlon's Trailing-Twelve-Months Results summary |
As you can see, Suzlon's T-T-M Total Income chart has started showing an uptrend after Q3. The EBITDA chart had started improving after Q2. Eventhough the improvements in EBITDA & Net Loss are only marginal currently, it's mainly due to the various right-offs that the company is currently undertaking to clean-up it's operations. Things will start improving at a faster pace once all this clean-up is over.
Another positive point in Suzlon's recent results is the reduction in Total Capital Employed (TCE) of the company on the Consolidated basis. As the name suggests, Total Capital Employed is nothing but Total Money Invested or Spent in the business - Total Money recovered from the business. An increase in TCE indicates that either the company is undertaking CAPEX to increase it's capacity or it is not receiving Cash-flow commensurate to the Revenues it is booking during the period. On the other hand, a reduction in TCE means the company has received more Cash than the revenues it had booked during the period (i.e. dues from previous periods) or it has sold some assets.
At the end of December'2012, Suzlon TCE on a Consolidated basis was Rs.17,038 crores, which reduced to Rs.15,877 crores at the end of September'2013 and further reduced to Rs.15,610 crores at the end of December'2013. That means during the last one year Suzlon has received Rs.1,428 crores either via assets sale or recovery of previous dues from customers. This inflow of Capital will help the company improve it's Cash positions & also help reduce it's Net Debt position, which will ultimately help the company in controlling it's Interest Costs. Most of this Capital will come in handy as Suzlon tries to ramp up it's manufacturing to fulfill it's order book.
Suzlon's share price is currently hovering around the Rs.10-11 range, translating into a Market Cap of about Rs.2500 to 2700 crores on the Equity base at the end of December'2013. This Equity Base will expand further in the coming months as the commitments made in the CDR agreement are implemented. FY'2015 should be much more positive for Suzlon on the results front, compared to FY'2014, as most of the clean-up and restructuring costs must have been taken care of during the current fiscal. Suzlon is expected to post healthy EBITDA margins of close to 10% during FY'2015 and should be very close to break-even on the Net Level as well. Once those signs start showing, Suzlon will command much higher valuations than current level.
No comments:
Post a Comment