Suzlon, Leave something for Investors !
Suzlon energy has entered the capital markets with an issue of 2.93 crore shares of Rs. 10 each at a price band of Rs.425 – 510.
Investment Guru is of opinion that the issue is priced very aggresively by the company and hence lefts very less on the plate for Investors from fundamental prespective. However, with IPO boom going on in the markets it would not be a surprise if the issue rolls out some listing gains. Those who are interested in applying are advised to apply maximum of two times their expectation of allotment. From valuation perspective, the issue is worth avoiding.
However from the subscription patterns till date, there has been huge subscription from FII”s. Retail Investors are missing from the show and against an allocation of 86 Lac shares, applications for only 92,000 shares has been received.
Let’s Dig into the company:
The object of the issue is to fund the expansion plans, capitalisation of subsidiaries, construction of new corporate office, Redemption of preference shares and exploring growth opportunities.
Suzlon is a Total wind power solutions company. The company is India’s largest in its class and ranks among top ten in the world.
The company clocked a turnover of 1965 crores durting FY05, registering an increase of 125% over previous year.
The net profit of the company stood at 365 crores for FY05, a 151% increase over pervious year.
The issue comes at a FY05 P/E of 34. If we take the weighted average EPS of last three years, the issue comes at a P/E of 52.
The company considers companies like ABB, Siemens, BHEL and NEPC as its peer and the the peer Group average P/E comes to 29.
The company has Book Value of Rs.93 per share. Hence the issue comes at 5.48 times the Book Value.
Issue opens: 23-Sep-2005
Issue closes: 29-Sep-2005