August 07, 2006

IND: Suzlon - Powering ahead into global markets

The company is a dominant player in India. There is an increasing government thrust and incentives on renewal energy sources such as wind power. SEL is expected to grow 45-50% over the next three to four years. A strong order book of almost 96% of net sales of FY06 and reduced production cost, arising out of backward integration and significant reduction in cost of production indicate better sustainability. At current market price of Rs 1,118, the stock is trading at a P/E multiple of 24x based on FY07 earnings and 18x based on FY08. Estimated EPS comes to about Rs 45 for FY07 and Rs 62 for FY08. Besides domestic demand, the company is increasing footage in international market to power growth.