February 14, 2007

Suzlon Energy an underperformer: CLSA
2007-02-13 16:54:08 Source : Moneycontrol.com
CLSA has maintained underperform rating on Suzlon Energy.
CLSA report on Suzlon Energy:
Suzlon made a counter-bid for REpower at 20% higher price than Areva's bid, pegging the market cap of REpower at USD 1.3bn. We believe there is a high probability of a counter bid by Areva. At the current offer price (which is at 53x 2007 consensus EPS), acquisition is likely to result in EPS decline for Suzlon at least for next two years. We believe the key reason for Suzlon's aggressive bid for REpower is access to good technology and R&D capabilities. Acquisition will increase Suzlon's consolidated end-FY07 net gearing from 80% to around 250%. We believe equity dilution is imminent. Maintain our UNDER-PERFORM rating on the stock.