UBS :: Suzlon Energy F Y11: second year of losses

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UBS Investment Research
Suzlon Energy
F Y11: second year of losses
􀂄 FY11 – net loss of Rs11.0bn on a recurring basis
In FY11 consolidated revenue declined 13% y/y to Rs181bn and EBITDA declined
14% y/y to Rs8.1bn. Reported net loss was Rs10.7bn and pre-ex net loss stood at
Rs11bn. In Q4 FY11, Suzlon posted revenues of Rs73.7bn (+20% y/y), EBITDA
of Rs10.2bn (+36% y/y) and PAT of Rs4.3bn (Q4FY10 PAT was Rs253m), aided
by 86% y/y decline in tax outgo to Rs413m. The results are slightly ahead of UBS
estimates.
􀂄 Good order book momentum but international orders remains a worry
Suzlon witnessed a 60% y/y growth in order book to 4,639 MW (Rs301bn) led by
high growth in domestic orders (1,353MW vs. 230MW in FY10), taking the total
order inflow to 4,026MW in FY11. However, growth in international order book
remained muted. Suzlon expects growth in Canada and Brazil to offset sluggish US
market. We believe international orders remain a key driver for the stock.
􀂄 Conference call on 16 May 4:30pm IST
Suzlon initiated the squeeze-out process of REpower and have successfully
completed a) the issuance of $175m of FCCBs, b) the rights issue of Rs11.88bn, c)
the refinancing of Rs106.94bn loan and d) the restructuring of FCCBs. We expect
to receive more details on Suzlon’s business performance in the call.
􀂄 Valuation: Sell rating with a DCF based PT of Rs50
We have a Sell rating on the stock on the low visibility for revenues and no nearterm
catalysts.