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Suzlon Energy Ltd.
Deleveraging by 8% on HSN
stake sale
„Suzlon to sell 26% in Hansen to deleverage by 8%; Buy
Suzlon has accepted the cash offer of ZF Friedrichshafen (ZF) to sell its 26%
stake in Hansen (HSN) for GBP115mn at GBp66/share – a 96% premium to
HSN’s last week closing price and 32% premium to our PO (GBp50 /share).
However, it is @ 31% discount to price (GBp95) at which Suzlon had sold its 35%
stake in HSN in November’09. We adjusted cash from stake sale for the
repayment of 50% of FCCBs (Jun'12 Old) in FY13E. We maintain our PO of
Rs75/share on roll-forward. Reiterate our Buy rating on Suzlon, on a structural
turnaround. Risks to our non-consensus Buy call are delivery push-back due to
weak macro, currency and execution.
Hansen stake sale to cut leverage by 8% of FY12E
We estimate that Suzlon’s 26% stake sale in Hansen to ZF will lead to a cash
inflow of ~Rs8bn (GBP115mn), which would cut its leverage by 8% of FY12E. We
have factor in the cash realized from stake sale for the repayment of FCCBs
(Jun'12 Old) in FY13E. We also account for Rs1.6bn of one-time loss on sale of
stake in HSN in FY12E.
Three catalysts to Buy Suzlon – A turnaround story
1. 25% CAGR till FY13E in the Indian wind markets on higher feed-in tariffs (offset rising interest cost/low wind sites) and new regulation lead entry of IPPs.
Its back-to-basics strategy has paid-off - YTD orders up 4x in India to 2.1GW.
2. 28% PAT CAGR in REPower on shift in product-mix to high margin offshore
wind and production of its largest selling 2MW to low cost countries and
3. Recovery of Rs10bn (24% of debtors) in 2HFY12 (Edison), to fund growth as
the project is commissioned in 4QFY11 and is eligible for ITC incentives.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Suzlon Energy Ltd.
Deleveraging by 8% on HSN
stake sale
„Suzlon to sell 26% in Hansen to deleverage by 8%; Buy
Suzlon has accepted the cash offer of ZF Friedrichshafen (ZF) to sell its 26%
stake in Hansen (HSN) for GBP115mn at GBp66/share – a 96% premium to
HSN’s last week closing price and 32% premium to our PO (GBp50 /share).
However, it is @ 31% discount to price (GBp95) at which Suzlon had sold its 35%
stake in HSN in November’09. We adjusted cash from stake sale for the
repayment of 50% of FCCBs (Jun'12 Old) in FY13E. We maintain our PO of
Rs75/share on roll-forward. Reiterate our Buy rating on Suzlon, on a structural
turnaround. Risks to our non-consensus Buy call are delivery push-back due to
weak macro, currency and execution.
Hansen stake sale to cut leverage by 8% of FY12E
We estimate that Suzlon’s 26% stake sale in Hansen to ZF will lead to a cash
inflow of ~Rs8bn (GBP115mn), which would cut its leverage by 8% of FY12E. We
have factor in the cash realized from stake sale for the repayment of FCCBs
(Jun'12 Old) in FY13E. We also account for Rs1.6bn of one-time loss on sale of
stake in HSN in FY12E.
Three catalysts to Buy Suzlon – A turnaround story
1. 25% CAGR till FY13E in the Indian wind markets on higher feed-in tariffs (offset rising interest cost/low wind sites) and new regulation lead entry of IPPs.
Its back-to-basics strategy has paid-off - YTD orders up 4x in India to 2.1GW.
2. 28% PAT CAGR in REPower on shift in product-mix to high margin offshore
wind and production of its largest selling 2MW to low cost countries and
3. Recovery of Rs10bn (24% of debtors) in 2HFY12 (Edison), to fund growth as
the project is commissioned in 4QFY11 and is eligible for ITC incentives.
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