Great company is not great Stock. Suzlon energy dont expect to be Multibagger

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THE GREAT COMPANY IS NOT ALWAYS A GREAT STOCK ,AND DOES NOT PROVIDE
GREAT RETURN.

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FINANCIAL REVIEW(CONS)

-Company has many subsidiaries and many of them make loss each year
that’s why suzlon performance is not improving .
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-The stake of promoters has reduced due to allotment of shares to non promoters. And 99% of Shares Are pledged.
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-Statutory auditor has qualified in audit report on some matters like
delay filling of Ecb and evaluation of performance of independent
directors.
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-Last 5 years sales growth is minus 11% .
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-Company stands in very low margin business segment,if you see last 5
years sales and expenses no improvement can be seen.,However last year
some cost control measure has been taken resulting increased margin.
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-Most of company profit goes into tax and interest due to heavy debt
portion consisting along with equity as well as Company has issued Gdr and Adr but volume of sales is reducing each year.
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-Last dividend was paid in year 2008 and from then neither dividend
paid nor capital gain in terms of price given to shareholders.
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-Each year sales volume coming down inspite of equity and debt
portion increasing.
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-in last 5 years company has not created any reserves
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– In last 5 years no improvement in debtor turnover and inventory turnover.
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-IN last 5 years return on capital and net worth is negative.
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Business Review(PROS)
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-The Suzlon Group is one of the leading renewable energy solutions
providers in the world with a presence across 19 countries in Asia,
Australia, Europe, Africa, North and South America.
With over two
decades of operational track record, the Group has a cumulative
installation of approximately 15.5 GW of wind energy capacity, over
7,500 employees with diverse nationalities and world-class
manufacturing facilities.
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Suzlon, as a wind energy solutions company has a large in-house
Research and Development (R&D) set-up in Germany, the Netherlands,
Denmark, and India.
Approximately 9.50 GW of the Group’s installations
are in India, which makes up for ~36% of the country’s wind energy
installations, making Suzlon the largest player in this sector.
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From being a premier wind turbine supplier, Suzlon has recently
forayed into the solar energy solutions space. The Group,
headquartered at Suzlon One Earth in Pune, India, is comprised of
Suzlon Energy Limited and its subsidiaries.
Pioneering the ‘Concept to Commissioning’ model in the wind energy
industry, Suzlon has opened the market to new customer segments.
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The
company heavily invests in R&D to ensure that it capitalizes on all
aspects concerning renewable energy, and stands at the forefront of
manufacturing this technology to harness the wide spectrum of
renewable energy solutions available today.
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-Suzlon key market are Brazil,China,North America except india.
China is the strong market for suzlon.
but now a days China itself facing economical survival.
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-Key Management Includes J.p.chalasani and Rakesh Sarin and both have
enough experience
In power sector.
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-company has recently started its 2 manufacturing units in pondecherry.
-From this year company has started to keep tight control on fixed
costs and debt and also reduced debts too much.
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-Company took one more step with the installation of newest product
from 2.1 MW range, the S111 120m prototype, at
Naliya, Gujarat.
This is the latest variant of successful
S97 120m and S111 90m products which combines the
larger blade of S111 with the higher hub height and hybrid
tower of S97.
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The S111 120m showcases its ability to make
low wind sites viable, increase efficiency, and enable energy
security, affordability and reliability.
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-The renewable industry recorded a
growth of 18% CAGR in 2015 and is expected to attract
US$5.86 trillion worth of investment between 2014-2035.
-CARE upgraded Suzlon to an investment
grade rating of BBB- for its long term loans, fund based
working capital limits and SBLC backing AERH Bonds and
A3, for its non-fund based working capital and proposed
commercial paper.
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-Suzlon forayed into the solar energy market with projects
of 210 MW by Telangana State Utility Southern Power
Distribution Company of Telangana Limited (TSSPDCL).
Won through competitive bidding, the project is to be
fulfilled at six sites across the state through six Special
Purpose Vehicles (SPVs
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-In last few years Many development has been done by suzlon management
and govt thrust on make in india looks promising for Suzlon energy
.
-During the year under review, the Company decided to embark further into the
renewable energy sector by venturing into solar space.
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The Company has
won bids for 515 MW solar power projects across
four states namely Telangana, Maharashtra, Rajasthan and Jharkhand,
out of which power purchase agreements for
340 MW have been signed. Post March 31, 2016, the Company signed a
Share Subscription and Shareholders Agreement
with CLP Windfarms (India) Private Limited (“CLP) and SE Solar
Limited, a subsidiary of the Company for setting up 100 MW
solar power project in the State of Telangana and eventually sale of
SE Solar Limited to CLP.
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Conclusion(:Last years shows some improvement in bottom line but not
on top line inspite of Huge capital infusion may be through Equity,Debt,ADR,GDR and 99% Pledged Shares.
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Suzlon current eps 0.50 and trading @ 18 if we see
in 2009 suzlon eps was 1.5
And market price was 26.
So in current situation if suzlon earns eps of 1 it can
touch 25 or 30 in one year
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but if you are thinking
It as multibagger then you are cheating with yourself
DISCLAIMER :I am not holding Suzlon energy

Author: Atul singh stock market analyst

My aim is to generate awareness among investors and to protect them from being trapped.

3 thoughts on “Great company is not great Stock. Suzlon energy dont expect to be Multibagger”

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