Suzlon rallies 7% after inking Rs 7,000 cr loan deal; expert advises to exit stock

MUMBAI: Shares of Suzlon Energy surged higher in trade after its Germany-based wholly owned subsidiary Senvion SE signed an agreement with a consortium of banks for syndicated working capital facilities worth 850 million euros (Rs 7,000 crore) for the period of three years.

The stock rallied more than 7% in today's intraday trade on the Bombay Stock Exchange (BSE).

The stock had rallied 12% in Friday's trade. Now, experts are advising investors to exit the stock.

"I have heard news that Suzlon is likely to cut its debt by $1.2 billion. It is a good move by the company though I would like to advise investors to exit the stock on rally as going ahead the company would have the assets but business would be not there hence exiting the stock would make sense."

The consortium of banks is headed by BayernLB, Commerzbank Aktiengesellschaft and Deutsche Bank AG.

This move enables Senvion SE to secure follow-on financing early for the credit facilities of 750 million euros agreed in May 2012 for the period up to August 2014.

"This enhanced facility with long tenure is of importance for the growth of the company and the oversubscription of the same with new additions to the consortium clearly reflects strong confidence of global banks in business fundamentals of the company," Marcus A Wassenberg, CFO of Senvion said.