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Wednesday, January 09, 2008
Suzlon Energy - Wind Turbines
Image: courtesy of Suzlon Energy (www.suzlon.com)

Global Presence In Wind Power

Suzlon Energy is an Indian Wind Turbine company with its global headquarters in Denmark. The company has a worldwide presence and is in an expansion phase building and acquiring new locations throughout the world. Suzlon has subsidiaries in the US, Australia, China and Europe. The company was started in 1995 with just 20 people , and today there are 13,000 employees distributed worldwide. An investment in Suzlon Energy a year ago at 1288.05 Rupees (Jan 8/07) would have been worth 2280.00 (Jan 8/08), and would have returned a 77% increase in share valuation.

Suzlon Energy holds the fifth place position for global wind turbine sales with a 2006 worldwide market share of 7.7% (BTM Consult ApS), and they hold the first place position in the Indian wind turbine market. In May 2007 Suzlon acquired REpower, a wind turbine manufacturer with headquarters in Hamburg, Germany, through the control or influence of 86.5% of the voting rights of the company (through Martifer and Areva). The acquisition of REpower allowed Suzlon to extend its offering beyond 2.1 MW wind turbines, into the greater 2.5 plus MW category which is an essential turbine offering for offshore and large wind farms.

Suzlon Energy is a hot stock on the two Indian stock exchanges it trades on (National Stock Exchange Of India and the Bombay Stock Exchange) and currently has a PE of 75.8 (Jan 8/08). Suzlon Energy is a long term hold stock, like most of the pure wind turbine stocks in the global top 5, and should experience or exceed a per annum averaged 25% growth over the next ten years (which is in line with the overall expected wind industry growth)

From a stock purchase perspective, Suzlon Energy is an excellent long term 'buy' and hold, however the Indian market may be a little overheated at the moment, so it may be best to watch how this plays out over the next two months, as there may be a better point to enter into the stock. With the balance of Euro based REpower sales revenues in its future consolidated statements, and its growing manufacturing in the United States and China, the company is building an internationally balanced portfolio of revenues that should help to hedge itself against currency imbalances in different country markets.

Suzlon's first half (ending September 30, 2007) consolidated sales revenue rose significantly by 77% (*) to $1.422 billion US Dollars (Exchange 100 Indian Rupee = $2.55 US,8 Jan/08 ) from $803.13 million for the previous period 2006. First half 2007 (ending September 30, 2007) net profit was $106.32 million US, up 25.43% (*) from 2006's $84.77 million US.

There are six wind turbine models in the Suzlon product offering, and these are the 350 kW (S53), 950 kW (S64), 1.0 MW (S64), 1.25 MW (S64), 1.25 MW (S66) and the 2.1 MW (S88). Through its acquisition, REpower of Germany, Suzlon can offer 1.5 MW, 2.0MW and a very large 5.0 MW model wind turbines.

Suzlon Energy trades on the National Stock Exchange Of India and the Bombay Stock Exchange (India). Suzlon closed (Jan 8/08) at 2280.00 Rupees on the Bombay Exchange with a 52 wk high of 2298.00 Rupees (Jan 8/08) and a 52 wk low of 931.00 Rupees (Apr 3/08). The PE (Jan 8/08) was 75.85 and the dividend yield was 0.22%.

(*this increase includes some addition of REpower results from June 6-30, 2007 that were not included in the previous 2006 Suzlon reporting, so the comparisons are not entirely similar.)

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