Suzlon Energy Research Report By HDFC Securities

Having faced multiple crises over FY09-14, we believe Suzlon is on the cusp of a turnaround. It has aggressively reduced debt from its heavily levered balance sheet by divesting its German subsidiary Senvion (for Euro 1bn) and via a preferential issue of Rs 18bn to Dilip Shanghvi and Associates (DSA). These developments will enable the company to not only reduce debt but also provide much needed working capital to ramp up business in the rapidly growing Indian wind energy market. With the NDA government’s ambitious plans for renewable energy, we expect favourable policy environment for wind power to continue. Aided by significant operating and financial leverage, we expect Suzlon’s earnings to grow manifold over the next few years. Suzlon is among a handful of listed companies levered to India’s fast growing renewables industry. We initiate coverage with a BUY and TP of Rs 34/sh based on 14x FY17E EV/ EBITDA.

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