Green Energy Infrastructure Company, Suzlon’s 2Q FY10 continued to disappoint, with shipments much lower than expected. At the Suzlon Wind level (parent level), 2Q FY10 wind shipments totalled 283MW, for a 1H FY10 figure of 406MW (17% of our FY10F estimate), and gross margin narrowed from 31% last quarter to 27%.
Suzlon had a disastrous 2QFY10 with Rec. Loss of Rs3.4bn vs Rec. PAT of Rs2.6bn in 2QFY09 and 3x BofAMLe. This was led by uneconomical operations resulting from dwindling backlog -41%, client driven push back in sales – 61%YoY fall in WTG volume (ex-REpower) and 1.4x rise in interest cost.
Management guided that for Suzlon Wind to break-even at the PBT level, shipments of 2,000MW are required. As for guidance for the subsidiaries, Repower is expected to contribute sales of €1.4bn and an EBIT margin of 7.5%, whereas flat volumes are expected at Hansen for FY10F. Suzlon is proactively aiming to fix the debt repayment challenge by asking for a 2 year moratorium in its new US$2.4bn debt refinancing plan.
Suzlon Energy is expected to report an EPS of Rs 2.5 and Rs 4.5 for FY10 and FY11 respectively.