According to reports, Suzlon Energy Ltd has rallied nearly 20 per cent so far in the year 2013, supported by positive triggers such as approval of corporate debt restructuring (CDR) and inflow of new orders, and analysts are positive that the stock can deliver another 50 per cent in near term.
According to analysts, there are many positive triggers for the wind turbine maker and the biggest one is the restructuring of its Rs 14,000 crore of debt on its books.
At 01:40 pm, the stock was trading at levels around Rs 22. Analysts see a target price of Rs 32-34 from current levels in near term, representing a little over 50 per cent upside from current levels.
“Suzlon was not even an investment idea about three-four months back, but now with the CDR in place and with order flows which have been there for the last 18 months, it is a good stock to buy on dips,” said Ambareesh Baliga, market expert, in an interview with ET Now.
“The stock witnessed a good run-up from Rs 18-19 levels to closer to about Rs 26-27, but it has now corrected a bit which gives investors to buy the stock for target closer to Rs 32-34,” added Balinga.
Suzlon corrected very sharply last week after the company reported its biggest quarterly loss of Rs 1,154 crore in the three months to December as its performance crumbled under the weight of heavy interest burden on its huge debt and contracting sales volume.
Revenue in the third quarter of 2012-13 declined 3.5 per cent to Rs 4,014 crore. “The company, which has piled up Rs 14,000 crore in debt – almost twice its equity base – has reported losses for the past three years,” ET reported.
Although Suzlon has temporarily averted the near danger, it is not completely out of the woods and the stock will only be able to hold onto gains if the company manages to expand its order book, say analysts.
“The sentiment has changed on Suzlon and this is largely to do with the fact that they have got a lot of order wins which clearly gives the impact that earnings will improve in near future,” said Avinnash Gorakssakar, Head Research, Miintdirect.com.
“If the restructuring of the debt happens, that is going to actually make the company’s operations quite profitable, but the company has still a long time away,” he added.
Gorakssakar is of the view that the traders have been more active on the counter and his guess is incremental upsides even from the current levels look up tp Rs 32-33. However, from purely investment perspective, Suzlon is still a long way.