Nobody in their wild dream can think of such type of wealth errosion, and after ICICI Bank, Jet Airways, Unitech this is the turn for Suzlon Energy. One of the very few company from India which I would consider at par with Infosys of IT, Bharti of Telecom, Pantaloon of Retail etc. In the recent time Suzlon were getting some compliants in their blades & some technical issues. To be very frank these type of issues are common and company takes care of replacement & support. But the world has changed a lot in last 8-10 months, market got a news that one blade detachment happened in one of the windmill setup by Suzlon, and market participants started factoring it to their image in US, future earnings downside, so and so....finally the stock price was down 40% in a day. It is just like, someone is waiting for a bad news to dump the stock with no rational or logical thinking in place.
Just like creating wealth is becoming faster now a days, errosion is happening with much faster rate. One must look at such opportunity to build long term wealth but with caution. At HBJ Capital we still believe that Suzlon stock price which is currently at Rs47 level with Mcap of Rs 7,000Cr will fall another 30-50% only because of branding issues, it takes years to build the brand and a day to spoil it.
Investors must wait for Suzlon price to come down to Rs 25-30 level (as on today it is Rs 47) to start fresh accumulation!!!
India's Suzlon Energy Ltd., the world's fifth-largest wind-turbine maker by unit sales, is facing additional questions about its technology after a 140-foot-long blade broke off a tower in Illinois.
News of the blade detachment, at a project financed by Deere & Co., drove Suzlon's shares down 39% to 47.25 rupees, or 93 U.S. cents, Friday in Mumbai trading.
The accident is the latest in a series of cracking windmill blades and other technical problems in the U.S. and India that have hurt Suzlon's image. The share-price decline Friday also reflected investor concerns that Suzlon will be unable to raise the money it needs in coming months to fund an ambitious global expansion plan and may be forced to sell assets, analysts said.
In a statement, Suzlon said the Illinois incident was "extremely rare and unusual." The company added, "Other turbines owned by that customer and our other customers at various locations in the U.S. are operating without interruption." It gave no further details. Richard Schertz, a farmer from near Wyanet, Ill., said he found the blade in one of his cornfields Tuesday, 150 feet away from the turbine's tower.
Stewardship Energy LLC, an Illinois.-based wind-farm developer, began operating four 2.1-megawatt Suzlon turbines on Mr. Schertz's and a neighbor's farmland in mid-2007. The project was financed by John Deere Wind Energy, a unit of Deere, according to Stewardship Energy's Web site. A spokesman for Deere didn't respond to requests for comment.
Earlier this year, Suzlon, of Pune, India, said it would strengthen or replace 1,251 blades -- almost the entire number it has sold to date in the U.S. -- after cracks were found on more than 60 blades on turbines run by Deere and Edison International's Edison Mission Energy.
To overcome its technology problems, Suzlon has moved to take over big European wind-turbine and component producers. But investors are increasingly worried about Suzlon's plans to raise $390 million by mid-December to complete its $1.7 billion takeover of REpower Systems AG, a German wind-turbine producer, analysts said. Suzlon had lined up euro-denominated bank loans for the purchase before the credit crisis but late last month said it was instead planning a rights issue to raise the cash, sparking a major drop in its share price.
Suzlon already has a majority stake in REpower, but, under German corporate laws, needs to acquire one more large block of shares and offer to buy out minority shareholders before it can transfer technology out of the German company.
The market is nervous that Suzlon may have to sell stakes in other units, like Belgian gearbox maker Hansen Transmissions International NV, says one analyst who covers Suzlon. Both shares in REpower and Hansen have also fallen sharply since Suzlon announced its rights issue.
- JK, Equity Analysts, HBJ Capital.
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