Buy Suzlon Energy; target of Rs 15.8: KR Choksey

KR Choksey's research report on Suzlon Energy

Suzlon reported revenue a fall of 50.5% YoY to INR 12.8bn against our estimates of INR 16.05bn. The subdued growth is on account of lower than estimated execution, which was 155MW against our estimates of 200MW. There was solar revenue in Q1FY18, which was not the case in Q1FY19 and hence other revenues declined from INR 3.31bn in Q1FY18 to INR 0.27bn. EBITDA excl fx remained at INR 77cr against INR 475cr in Q1FY18 due to poor executions which impacted operational performance of WTG segment. WTG segment reported EBITA loss of INR 3.85bn against a profit of INR 2.1 bn in Q1FY18. There is bottom line loss of INR 321cr excl fx impact against our estimates of loss of INR 147cr.

Outlook

We have lowered FY19E estimates, while maintained FY20E estimates. We valued the company on SOTP basis and arrived a target price of INR 15.8, upside potential of 119%. We retain BUY rating on the stock.