Last Updated: Wednesday, March 29, 2017

Buy Suzlon Energy - Target of Rs 24: HDFC Securities

HDFC securities is bullish on Suzlon Energy. Find recommendation for a purchase price of Rs 24 in its research report of 13 February 2017;
Suzlon a Multibagger in making | 2017 | Hidden Gem Stock | Multibagger Suzlon Energy


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1 comment:

  1. After a long period in the desert the wind power sector now comes because of the policies and actions of Modi Government. We have seen the successful completion of 1000MW auction and according to reports two more auctions are due to be completed for a total of 4000mw in the coming months.

    Suzlon has overcapacity but has built factories in Andhra and Rajasthan. Similarly, Gamesa and Inox Wind also go for capacity expansion. This is an indication of the nature of demand in the coming years.

    If we go by the reports of Sanghvi Movers, they expect the demand for cranes of 140 meters. This may give an idea once again that the movement 140 meters after the successful use of 120-meter turbines with a 40% PLF at the same time wind turbine steering manufacturer.

    It is true that the margins a bit to fall, but the absolute increase in volume will result in the company posting better EPS figures in years to come. This is especially true for companies with higher production capacity, which can meet the growing demand for WTG easily.

    Suzlon has a 40% share of the Indian market and a good land bank plus contacts. It will surely be benefited greatly from this new demand. Growing @ 20% CAGR, as per Tulsi Tanti, should not be a big problem.

    So additionally, there is another source of demand growth with renovation of old wind power sites that are occupying the best wind sites but with low capacity generators. These wind turbines are 20 years old and coming to the end of their operational life. In the coming years, they will be replaced by any 120 meters or up to 140 meter turbines. So Suzlon has a great advantage over its wind power competitors.

    Suzlon has always been a high P/E multiple storage. Even in fiscal year 2018, an EPS of about 2.5 rupees or even 3 rupees is possible. So we can only speculate how higher the stock price can go from here.

    Howard highlighted the investment talks based on the position in the industrial cycle and the pendulum of investor sentiment. In the case of Suzlon steel / stainless steel, the wind power industry is going out six years down a cycle and the market sentiment in relation to these stocks is extremely negative. Thus, most are negative prices and thus the risk of falling is quite low.

    If you buy both Suzlon and stainless wind .you get about 65% of India's wind power capacity (now in profit) for 1.5 billion dollars. If this does not simply throw off prices, I do not know what's otherwise.

    Very good technical bottom-up in long-term charts is an added bonus.

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