HSBC reiterates underweight on Suzlon

MUMBAI: HSBC has reiterated its underweight rating on Suzlon Energy after the company's fourth quarter net losses were beyond what analysts had expected.

The company reported a net loss of Rs 300.24 crore in the three months ended March 2012 against a a net profit of Rs 211.05 crore in the same period a year ago mainly due to higher interest costs and lower revenues.

HSBC has a price target of Rs20 for Suzlon. ""Suzlon is trading at a premium to its global peers on CY12 estimated PE (price to earnings). Using the global peer group (ex Suzlon) CY12 estimated PE (price to earnings) multiple of 15.7 times, the Suzlon stock price would be around INR13.9,"" the bank said in a note to clients.

""Given the debt overhang at Suzlon, we do not see any good reason for it to trade at a premium to the peer group. Hence, a possible downside of around cINR7 exists, which we believe reflects the worst-case scenario for the stock,"" it said. Suzlon shares fell 0.7% to close at Rs 20.70 on Monday.