Suzlon Energy’s robust growth of 27 per cent in sales and 68 per cent in net profits on a consolidated basis for the September quarter does not come as a surprise given the company’s aggressive moves to ramp up market share by tapping global opportunities in the wind energy market.

Further, part of the volumes enjoyed in the current quarter could be attributed to volume lost in the preceding June quarter as a result of constraints in capacity and critical components supply.

Despite the robust growth in earnings, the company has not made much progress in improving its operating profit margins on a consolidated basis. While realisation per MW has grown marginally, this could be merely due to the product mix for the quarter than any improved pricing power overall.

The recent quarters’ performance indicates that Suzlon’s business could now be a pure volume driven game.

This is reason enough for Suzlon to increase its planned turbine manufacturing capacity from an addition of 1,500 MW stated earlier to 3,000 MW, thus taking its global capacity to 5,700 MW by 2008-09. On the order book front, about 60 per cent of Suzlon’s present orders of Rs 16,330 crore originate from the US.

However, the forex risk may not be too high as the company has a natural hedge to the extent of 60 per cent of its international revenues and also has an active treasury operation.

Its recent quarter numbers also allay concerns on this front.

However, this mix may undergo a change once REPower gains more ground in Europe.

While the impending listing of Hansen Transmission could free Suzlon’s balance sheet of some debt for now, payment to Martifer and Areva for the acquisition of REPower (due in FY 2009) may again weigh on the financials.

More Stories on : Stocks | Financial Performance | Non-conventional Energy | Microscope | Suzlon Energy Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page