Suzlon charts a strong path post debt restructuring

LAST MONTH, CRISIL Ratings upgraded the 4,054 crore worth of bank facilities of Suzlon Energy and removed rating watch with developing implications? "The rating upgrade factors in sharp reduction in debt (paying off the entire term debt) done from the proceeds of a recent QIP,"the agency had noted.

- RAGHAVENDRA KAMATH

Even ahead of that the stock had been rallying on the promise of a deleveraged balance sheet, a strong order-book and a favourable outlook for the wind energy sector following regulatory changes. The stock has delivered a return of 225% in the last six months and closed Tuesday's session at 26.45.

Analysts at ICICI Securities pointed out the company reported its first adjusted profit after tax (PAT) of 170 crore in FY23 after FY10, excluding FY17. "We expect revenues to grow at a compounded 37% to around 11,200 crore over FY23-25, analysts at the brokerage wrote. They estimate net profits at 1,100 crore in FY25.

Post a restructuring of the debt, the company's gross debt stood at 1,806 crore in June. In August a Qualified institutional placement (QIP) of shares for 2,000 crore helped the company repay 1,500 crore of borrowings.

Debt levels have thus come down from 11,552 crore in FY19 to 1,937 crore in FY 23. The company's net worth turned positive after nine years. Crisil had observed the fund-based borrowings are also expected to remain nominal because of healthy cash flow generation from the O&M (operation and maintenance) services business and no material debt funded capex plans.

Regulatory changes in the sector are expected to facilitate capacity addition.