Suzlon Energy has again come to it’s all time low levels of 40 and has started looking extremely attractive. Suzlon Energy’s Q1 results were fairly good and right on track as guided by the management. I think Suzlon will definitely achieve what they guided for at the end of FY11. Suzlon Energy has guided to achieve about 25,000 crores of revenues and an 8% EBIT which brings EBIT to about 2000 crores. The company due to it’s huge debt will be able to post a bottomline of around 500 crores for FY12. Now if you compare this expected performance with last year, then it is a hugely positive for the company as they have come to profit from a big loss. They have recently sold 26% stake in a company and generated around 859 crores and is going to use them all to bring down the debt.

Suzlon Energy is also taking 100% stake in REpower and that will give them access to the lying cash in that company which will be used to repay the debt again thus bringing down the debt considerably. If you look at the sales and margins, they are improving and so is the net profit. But the debt repayment will just add a lot to their net profits due to lower interest payment. They plan to do 2000 crores of EBIT but net profits come to only 500 crores, so the debt repayment will wipe off quite a lot of interest and that is going to add a lot to their net profit numbers. For FY13, we’re expecting Suzlon to post no less than 750 – 800 crores. If the company goes as we expect, then this stock can easily double in 18 months from current levels.

Invest into Suzlon Energy at current levels with a long term horizon.

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