Suzlon Energy long term bet: Parag Thakkar

Parag Thakkar of HDFC Securities told CNBC-TV18, "Suzlon Energy is a great story from a longer term perspective because considering there is a great focus of this government on renewable energy and also globally. I was reading that even in US, the wind and solar is getting so much of traction that plant load factors of their own coal and gas power plants are coming down. So, it is a worldwide focus due to this climate change thing. They have this annuity cash flow of around Rs 1,500 crore which is only going to increase as the installed base grows and plus there is some charge, so they can charge two percent, five percent extra every year. So, Rs 1,500-1,600 crore is a annuity cash flow which is absolutely recurring in nature and their debt has reduced by half. So, the interest cost is going to come half. So, I think even if they do 1,000 megawatts, they will breakeven. And Indian market seems to be doing 4,000 megawatts from next year." "If they maintain this year’s market share of 35 percent, it will be 1,500 megawatts which means they will be doing cash profit of Rs 500-600 crore. And that will be real turning point for Suzlon. Seasonally also, second half is better for them. So, that is one longer term bet," he added."Apart from that, Balrampur Chini in the midcap space, is interesting, it is not in our coverage space. As this US Fed rate hike is delayed, due to their own job data, this metal pack suddenly is showing a lot of interest and there we are seeing so many stocks where cash is 50-70 percent of the market cap. In fact I was looking at one company where cash is actually equal to market cap." "So, the valuations have fallen down so much and there is a short-term trigger in terms of weakening dollar. So many of the mines are getting closed down. Yesterday, we heard Glencore has closed four zinc mines. So, both triggers are coming out from metals space together."