Buy Suzlon Energy; target of Rs 64: KRChoksey

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Buy Suzlon Energy; target of Rs 64: KRChoksey

KRChoksey is bullish on Suzlon Energy and has recommended buy rating on the stock with a target of Rs 64 in its May 16, 2011 research report.

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RELATED NEWS Buy Lupin; target of Rs 470: Aditya Birla Money Buy PNB; target of Rs 1255: ICICIdirect.com Buy Elder Pharma; target of Rs 405: ICICIdirect.com ALSO READ See previous views by KRChoksey See what other Experts & Brokerages are saying about Suzlon Energy See messages about Suzlon Energy Suzlon Energy BSE | NSE 31/05/12 Are Mutual Funds betting on Suzlon Energy?

KRChoksey is bullish on Suzlon Energy and has recommended buy rating on the stock with a target of Rs 64 in its May 16, 2011 research report.

"Suzlon Energy Ltd (SEL) reported Rs 7,276 crore (up 20%, YoY) consolidated revenue above to our estimates, primarily led by higher revenue from REpower. EBITDA grew by Rs 803 crore (up 25%, YoY) on account of low raw material costs (down 1,790 bps, YoY) and other expenses (down 718 bps, YoY) also results into improvement of EBITDA margins by 45 bps. Adjusted PAT grew by Rs 211 crore after the adjustment of Rs 220 crore forex gains. SEL reported consolidated revenue for FY11 is Rs 18,090 crore (down 12.3%, YoY) and EBITDA of Rs 785 crore (down 5.8%, YoY), primarily led by lower execution of 1,521 MW by Suzlon WTG business. SEL reported adjusted net losses of RS 1,090 crore for the year end."

"We used individual DCF approach to value Suzlon WTZ business and RE Power. We have derived total value of Rs 64; Suzlon WTG business contributes Rs 25 and RE Power contributes Rs 39. This value is derived by discounting Free Cash Flow to Firm with 13% cost of capital and 1% terminal growth. In WTG business our key assumptions are average execution of 2,381 Sales/ Mw per year and average 11.0% EBITDAM over the period from FY11-18E. In REpower the average execution rate is 1,232 MW and 7.4% EBITDAM per year over the period from FY11-18E. Betting on current WTG (2,203 MW) order book and improved scenario in emerging markets we recommend "Buy" on Suzlon Energy Ltd," says KRChoksey research report.

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