Technical Analysis

Flop: Suzlon Energy

Vidya Bala | Updated on October 08, 2011 Published on October 08, 2011

The stock of wind energy equipment maker Suzlon Energy fell 68 per cent over the last three years, adding itself to the list of top losers in the above period.

Aggressive buyouts of foreign companies, the resultant high debt and slowdown in the wind energy business during the 2008 meltdown, all dragged the stock performance.

The stock is now down 65 per cent from its IPO price despite huge gains made from October 2005 (listing) and Decemebr 2007.

Lower orders/ deferring of orders hurt revenues and Suzlon Energy slipped in to losses in FY-10. The company has since turned around; moving to the profit zone in the March quarter. However, margin pressures on profits remain with higher competition in the Indian market.

The more pressing worry for Suzlon, though, is the foreign currency convertible bonds coming up for conversion in June and October 2012. The company would have to look for funding to repay these if they are not converted in to equity.

As of June the company had a debt equity ratio of 1.6 times. For the June quarter, consolidated sales rose 80 per cent to Rs 4,326 crore over a year ago, while net profits stood at Rs 60 crore, from losses a year ago.



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