Suzlon Energy In A Bad Shape

Promoters of the troubled wind turbine maker Suzlon have again sold their stake in the company which has seen the stock turning more volatile than ever. Intra-day the stock on February 28, 2013 was down by 44.58%, which was the biggest fall in its trading history. Though the stock partially recovered by end of the day, investors have shown a strong opposition to the promoters’ move of selling the stake in the company.

The promoters earlier owned 55.65% stake in the company. After they sold 10.9 crore shares, their stake has come down to 44.46%. However, the promoters have pledged more than 97% of their shares and hence they nearly have zero non-encumbered shares in the company.

Suzlon Energy is undergoing the debt restructuring of its gigantic debt of over Rs 9,500 crore. The recent stake sale by its promoters was to raise capital to further enhance the capital infusion in the company. The company, in its filing to the stock exchange, said that it will use a part of Rs 240 crore as equity infusion while the rest will be used to free some of its pledged shares, even though the break-up of the same is not available. Earlier too, Suzlon had sold more than 2% stake in the company to raise Rs 60 crore.

The market remains speculative about the stock. On the technical charts, it has given a negative bias and has broken down from the upward sloping trend line. The short-term bias of the stock is so speculative that it will not give any opportunity to buy or exit the counter.

We strongly recommend investors to stay away from the counter.