Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We were joined by Mr. Samir Shah and Mr. Dhawal Vakil - Investor relations
team, who shared their outlook on the industry and the company
Key highlights
n Strong momentum in emerging markets, especially India - In FY11, the emerging
markets of India, China and Brazil cumulatively accounted for 1,376MW (1169MW -
India) or 90% of overall volume sales (vs 60% in FY10), registering an impressive 56%
yoy growth. Ex-EM, the volumes declined by 75% yoy. As of FY11end outstanding order
book of 2230MW (India - 1353MW), EMs account for 84% as compared to 58% at the
end of FY10. This is likely to continue given 1) changing customer profile from individuals/
corporates putting up small plants (1 to 10MW) to utilities putting up large plants (100
to 500MW), 2) favorable government policies including GBI, RECs, CERC regulations,
3) sunset clause on Generation Based Incentive (GBI) and accelerated depreciation
(expiring in Mar'12) in India and 4) Brazilian Government's third auction in 1HCY11
(expected size is 2GW).
n Suzlon has strong competitive advantage in the Indian market - Suzlon is likely to
sustain its competitive advantage in India due to 1) successful launch of its new
2.1MW low wind speed machine (technologically on par with global peers), 2) attractive
portfolio of wind sites with different execution levels (a key differentiator) and 3) a
proven end to end execution track record given the significant execution challenges in
developing wind farms in India. Further , management indicated that there is no
significant competitive threat from Chinese manufacturers. Though there are some
70 suppliers in China, only 5 to 6 are serious players. Also, despite China having wind
power capacity of 50,000 MW, Chinese players do not have a proven track record in the
international market.
n Integrated player in the global wind energy market - sustainable business model -
From the perspective of technological integration and knowledge sharing across the
supply chain, Suzlon is well placed. In fact, globally there are only two players, Suzlon
and Gamesa that are integrated across the entire value chain. Due to this, it has a
faster product rollout, better after-sales service and cost competitiveness.
n Triggers- consistent profitability in FY12E & RE power's balance stake acquisition -
At the current market price of Rs45/share, the stock is trading at 7.3xFY12E EBITDA
and 0.9xFY12E consensus book. Triggers - 1) consistent profits throughout FY12, 2)
large orders in domestic market, 3) clarity on Rs10bn Edison receivables and 4) RE
power becoming 100% subsidiary. Concerns - 1) impact on pricing/margins due to
competition, 2) any slowdown in RE power's performance and 3)debt related issues
- cash flow mismatch, interest rates etc.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We were joined by Mr. Samir Shah and Mr. Dhawal Vakil - Investor relations
team, who shared their outlook on the industry and the company
Key highlights
n Strong momentum in emerging markets, especially India - In FY11, the emerging
markets of India, China and Brazil cumulatively accounted for 1,376MW (1169MW -
India) or 90% of overall volume sales (vs 60% in FY10), registering an impressive 56%
yoy growth. Ex-EM, the volumes declined by 75% yoy. As of FY11end outstanding order
book of 2230MW (India - 1353MW), EMs account for 84% as compared to 58% at the
end of FY10. This is likely to continue given 1) changing customer profile from individuals/
corporates putting up small plants (1 to 10MW) to utilities putting up large plants (100
to 500MW), 2) favorable government policies including GBI, RECs, CERC regulations,
3) sunset clause on Generation Based Incentive (GBI) and accelerated depreciation
(expiring in Mar'12) in India and 4) Brazilian Government's third auction in 1HCY11
(expected size is 2GW).
n Suzlon has strong competitive advantage in the Indian market - Suzlon is likely to
sustain its competitive advantage in India due to 1) successful launch of its new
2.1MW low wind speed machine (technologically on par with global peers), 2) attractive
portfolio of wind sites with different execution levels (a key differentiator) and 3) a
proven end to end execution track record given the significant execution challenges in
developing wind farms in India. Further , management indicated that there is no
significant competitive threat from Chinese manufacturers. Though there are some
70 suppliers in China, only 5 to 6 are serious players. Also, despite China having wind
power capacity of 50,000 MW, Chinese players do not have a proven track record in the
international market.
n Integrated player in the global wind energy market - sustainable business model -
From the perspective of technological integration and knowledge sharing across the
supply chain, Suzlon is well placed. In fact, globally there are only two players, Suzlon
and Gamesa that are integrated across the entire value chain. Due to this, it has a
faster product rollout, better after-sales service and cost competitiveness.
n Triggers- consistent profitability in FY12E & RE power's balance stake acquisition -
At the current market price of Rs45/share, the stock is trading at 7.3xFY12E EBITDA
and 0.9xFY12E consensus book. Triggers - 1) consistent profits throughout FY12, 2)
large orders in domestic market, 3) clarity on Rs10bn Edison receivables and 4) RE
power becoming 100% subsidiary. Concerns - 1) impact on pricing/margins due to
competition, 2) any slowdown in RE power's performance and 3)debt related issues
- cash flow mismatch, interest rates etc.
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