Suzlon Energy Bags 40 MW Contracts

Suzlon Energy has won two contracts for a total of 40 MW from GDF-Suez Futures Energies. As per the contract, the company will supply 20 wind turbines of MM92 and MM82 types for 2 wind farms in France, viz. Somme Soude and Hangest. REpower (a wholly-owned subsidiary of Suzlon Group), will also provide maintenance for these two farms for a minimum period of 5 years.

According to the company, the Somme Soude and Hangest projects are scheduled to be commissioned in September and October 2015 respectively. Following this development, Suzlon Energy's stock soared 3.5% on December 19, 2013, closed at Rs 9.65.

In the month of November in the current fiscal, Suzlon Group has also signed a contract to supply 52 wind turbines of a total capacity of 106 MW with Mitsui & Co. This contract will be commissioned in Q2FY15.

For H1FY14, the company has an order book of nearly USD 7.1 billion (Rs 44118 crore) of approximately 5.1 GW, which is due to be delivered by FY15. However, the company’s total debt of about Rs 14156 crore at the end of the September 2013 quarter and failure of debt restructuring cast doubt on its capacity for execution. In Q2FY14 too, Suzlon Energy reported a consolidated loss of Rs 782 crore. The company has been in losses for the past 8 quarters, with the losses increasing on a sequential basis.

We do not advise investors to enter this stock, as whether the company will be able to meet its queued up orders on time or not remains to be seen.