Saturday, 9 January 2016

A New Beginning :2016 Value pick 4

Sometime underrated stock outperforms and our fourth value picks is highly underrated.

Let’s start with our low price high value pick:

Suzlon Energy:
CMP: 21.65(8th Jan).
From a position of strength, Suzlon has gone through multiple crises over the past five years including debt default. However, it has since taken corrective steps to substantially repair its balance sheet by selling off its German offshore wind arm, Senvion for 1 billion euros and issuing fresh equity worth Rs 1800 crore to Dilip Shanghvi & Associates—a promoter for Sun Pharma. Suzlon can now focus all its energies on new order wins and execution in the domestic market, and is well placed to win back 50 percent market share. Government’s ambitious wind energy target of 60GW by 2022 should help to drive demand for wind equipment

Moreover, Suzlon Group chairman Tulsi Tanti said on Thursday(7th Jan) that the group is looking to enter the solar energy sector in the current financial year . Its evolutionary S97"HT DFIG 2.1MW Wind Turbine with an All"Steel Hybrid Tower has achieved 35% PLF over the last 12 months. The evolutionary product has received encouraging response from customers across segments and reflects in the ~350 MW of orders received. Tulsi Tanti, Chairman, Suzlon Group, said, “The S97- HT DFIG 2.1MW with All Steel Hybrid Tower is a game changer and is the result of our continued focus on investing in next generation technologies. Suzlon endeavors to lower the cost of energy and provide clean and affordable energy for all.”

Suzlon demonstrates buoyant growth in Q2FY16; delivers 227MW with 18% normalised EBITDA margin.

  • Sales volume is 64% up Y-o-Y.
  • 18% EBITDA margin is highest in last 5 years.
  • Order book continues to remain strong with INR 6812 crores.
  • Gross debt reduces by 963 crores.

Above all clean energy is next big sector for next 5 years and Suzlon and Inox Wind are the two big players in this sector. For one year prospective Suzlon can move to 35-45 easily.We Suggest to buy this stock for 3 to 5 year horizon to see multi-fold return. 

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