Lower quarter margin pulls Suzlon down 9 per cent
Wind power expert Suzlon Energy Ltd lost some of the wind driving the sails of its stock on Tuesday because its net profit-to-sales margin of 21 per cent was lower than the 23 per cent recorded in the year-ago quarter. Its shares fell as a result.
On a standalone basis that does not take into account overseas subsidiaries. The company run by billionaire Tulsi Tanti reported a 21 per cent increase in its net profit for the quarter ended March 31 at Rs 437.42 crore on a 32 per cent increase in income from operations at Rs 2,055.48 crore compared to the corresponding quarter of 2006.
The company's scrip closed on Tuesday at Rs 1137.35, down 9.1 per cent from its Monday's close of Rs 1251.40, while the National Stock Exchange's benchmark Nifty held more or less steady, falling by a marginal 0.39 per cent.
"The market probably expected better results," Chairman Tanti said after the results. "On a consolidated basis our sales have grown by 108 per cent. The consolidated profit, however, is lower because an order of around 222 megawatt is in shipment. This will be booked under the consolidated results as income of the US-subsidiary of Suzlon. However, it has already been booked under the sales of Suzlon Energy Ltd for the standalone results."
Fasiha Sheikh, an analyst with Angel Broking, said the numbers were below the company's own guidance, while margins slipped as well.
"The results are lower than analysts' expectations, too. The other worry is that it seems Suzlon will be able to take over the German company Repower. The margins of Repower are much lower than Suzlon and that will hit the margins of the company, too," Sheikh said.
"I am sure we are going to win this battle with Areva, who is our competitior for acquisition of Repower. If we do not get it too, we will continue in the company as an investor," Tanti said.
On a consolidated basis, Suzlon recorded income from operations of Rs 2,915.94 crore for the quarter ended March 31, with a net profit of Rs 359 crore.
For the full year ended March 31, 2007 on a standalone basis Suzlon Energy Ltd has recorded income from operations of Rs 5,380 crore, up from Rs 3,788 crore recorded in the previous year. The company also recorded an yearly net profit of Rs 1061 crore as against the net profit of Rs 821 crore recorded in 2005-06.
Tanti said that the company has approached the Maharashtra government for a plot of land somewhere on the sea shore of Mumbai to set up a single windmill that will produce two megawatts of power. Tanti said that there was not enough wind to set up a wind farm in Mumbai, but a single windmill can always be set up. "This will be for demonstration to the citizens of Mumbai," Tanti said.