Capital raising to decide Suzlon's move in medium term

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Capital raising to decide Suzlon's move in medium term

Managing Editor of CNBC-TV18, Udayan Mukherjee, said capital raising for Suzlon Energy would not be so easy. "We need to see what the contours of Suzlon’s capital raising because they need capital to repair their balance sheet. Depending on that the stock will move from here," he added.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say Suzlon Energy BSE | NSE 30/05/12 Are Mutual Funds betting on Suzlon Energy?

Managing Editor of CNBC-TV18, Udayan Mukherjee, said capital raising for Suzlon Energy  would not be so easy. "We need to see what the contours of Suzlon's capital raising because they need capital to repair their balance sheet. Depending on that the stock will move from here," he added.  

Here is a verbatim transcript of Managing Editor, Udayan Mukherjee's comments on CNBC-TV18. Also watch the accompanying video.

The prospect that capital raising for Suzlon Energy may not be so easy because the Hansen stake sale - no progress was announced over the weekend. I don't know whether they will successfully manage some kind of a direct capital raising. They might attempt a QIP (qualified institutional placement) for all you know in the foreseeable future because they did not rule it out, particularly if Hansen sale is not going through.

So we need to see what the contours of Suzlon's capital raising because they need capital to repair their balance sheet. They are not like GMR - they are not in the same boat at all. And since the market has given up on expectations of any fresh news development on the capital raising front in the just foreseeable future the stock has quickly corrected because the run up was in anticipation of that news development.

In any case the quarterly numbers were not great, so stock lost 20%. Now will it lose more from here and go into double-digits or will the market think that eventually in the next 7-10 days the management will come out with a clear capital raising plan.

Depending on that the stock will move from here of course there is another wild card out here which is the Chinese stimulus package on wind power of USD 140 billion. That's a mammoth package for the wind power sector. We don't know whether it includes Suzlon. But if Suzlon can be a beneficiary of that then I think there is reason for a bounceback in the Suzlon stock. So just for today it is the Chinese clarification which is important - medium-term it is capital raising which will be the decider.