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Suzlon Energy Ltd
Neutral
SUZL.BO, SUEL IN
4q results fall short, but strong guidance for FY12
• A profit after 8 consecutive loss making quarters, but lags expectations.
Suzlon reported consolidated Mar-q PAT of Rs4.3bn, however adjusted for
forex gain of Rs2.2bn; recurring PAT of Rs2.1bn was below our est.
(Rs3.4bn). The disappointment was led by lower WTG sales volume
(492MW in Mar-q vs. est. of 641MW). According to management
~160MW of deliveries got postponed to 1QFY12. The overseas order
backlog in Suzlon wind (~877MW) continues to be sticky and the company
has sold only 77MW outside India in Mar-q vs. our est. of 195MW.
• Pricing healthy, but margins and inflows disappoint: Suzlon wind
reported healthy gross profit realization of ~Rs22mn/MW (~10% higher
than est.); amid our concerns on falling wind turbine prices and rising RM
cost (see our note- Risk scores over reward). Wind business EBITDA
margin (ex-forex gains) improved to only 7%, well below estimate (12.9%).
This was mainly owing to lower sales volumes, and to some extent higher
employee and fixed operating costs. Order inflow momentum seems to have
slowed down, since beginning of Feb-11 Suzlon has reported only 144MW
orders, all from India (vs. 2.48GW in 9MFY11).
• REpower delivers on guidance: REpower posted a strong Mar-q and
reported EBITDA of Rs4.7bn after a loss of Rs230mn in 9MFY11. It
managed to meet lower end of guidance with FY11 revenue of Euro1.27bn
(guidance of Euro1.25-1.35bn) and EBIT margin of 5.2% (range of 5-7%).
• Challenging consol. level guidance for FY12. Suzlon has guided to
Rs240-260bn consol sales (vs. our est. of Rs227bn) and 7-8% EBIT margin
(vs. our est. of 6.5%), ahead of our and street estimates. Prima-facie
guidance appears to be factoring in a blue sky scenario, where Suzlon wind
is able to deliver 2.25GW+, pricing remains healthy, RM costs do not spike
up, and fixed costs remain stable.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Suzlon Energy Ltd
Neutral
SUZL.BO, SUEL IN
4q results fall short, but strong guidance for FY12
• A profit after 8 consecutive loss making quarters, but lags expectations.
Suzlon reported consolidated Mar-q PAT of Rs4.3bn, however adjusted for
forex gain of Rs2.2bn; recurring PAT of Rs2.1bn was below our est.
(Rs3.4bn). The disappointment was led by lower WTG sales volume
(492MW in Mar-q vs. est. of 641MW). According to management
~160MW of deliveries got postponed to 1QFY12. The overseas order
backlog in Suzlon wind (~877MW) continues to be sticky and the company
has sold only 77MW outside India in Mar-q vs. our est. of 195MW.
• Pricing healthy, but margins and inflows disappoint: Suzlon wind
reported healthy gross profit realization of ~Rs22mn/MW (~10% higher
than est.); amid our concerns on falling wind turbine prices and rising RM
cost (see our note- Risk scores over reward). Wind business EBITDA
margin (ex-forex gains) improved to only 7%, well below estimate (12.9%).
This was mainly owing to lower sales volumes, and to some extent higher
employee and fixed operating costs. Order inflow momentum seems to have
slowed down, since beginning of Feb-11 Suzlon has reported only 144MW
orders, all from India (vs. 2.48GW in 9MFY11).
• REpower delivers on guidance: REpower posted a strong Mar-q and
reported EBITDA of Rs4.7bn after a loss of Rs230mn in 9MFY11. It
managed to meet lower end of guidance with FY11 revenue of Euro1.27bn
(guidance of Euro1.25-1.35bn) and EBIT margin of 5.2% (range of 5-7%).
• Challenging consol. level guidance for FY12. Suzlon has guided to
Rs240-260bn consol sales (vs. our est. of Rs227bn) and 7-8% EBIT margin
(vs. our est. of 6.5%), ahead of our and street estimates. Prima-facie
guidance appears to be factoring in a blue sky scenario, where Suzlon wind
is able to deliver 2.25GW+, pricing remains healthy, RM costs do not spike
up, and fixed costs remain stable.
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