Suzlon has waived the minimum consent requirement of bondholders for restructuring of FCCBs. Resultantly, outstanding liability on FCCB bonds stand reduced to $389 million compared to $500 million earlier.
Liability could decline further if exchanged bonds get converted into equity at Rs77 per share. Dilution in equity to be marginal.
The company is targeting 600 MW in order inflows in next few months from the EU and South American region. However, the outlook for Indian market remains subdued.
Suzlon’s stock price had been beaten down due to excessive pessimism over the company’s ability to garner order inflows and deleverage balance sheet.
Following the return of risk appetite for equities in recent past, the stock has been a strong outperformer. However, stock price has risen mainly on expectation of asset sales/bond restructuring which would deleverage balance sheet.
Order inflows still remain patchy and do not offer adequate revenue visibility beyond FY10. In our view, Suzlon needs to demonstrate its ability to win orders after the blade cracking issue.
We maintain ACCUMULATE rating on the stock with price target of Rs88 (Rs81 earlier).