Morgan Stanley 'downgrades' Suzlon Energy
Morgan Stanley has “downgraded” Suzlon Energy from overweight to equal-weight while lowering the price target to Rs 52.45 from the earlier Rs 450, citing slowdown in the global wind turbine market and the unresolved technological issues.
cmp: Rs 70.70
target price: rs 52.45
Morgan Stanley has ���downgraded��� Suzlon Energy from overweight to equal-weight while lowering the price target to Rs 52.45 from the earlier Rs 450, citing slowdown in the global wind turbine market and the unresolved technological issues. ���We expect a slowdown in the global wind turbine market in C2009, with growth moving down to only 6% from 25% in C2008,��� says the report.
Further, the foreign brokerage also does not expects Suzlon ���to get access to REpower technology in the short term.��� Morgan Stanley also feels that with the cancellation of the rights issue of the company, debt will become the primary source of funding the growth at Suzlon. ���We believe that Suzlon is doing the right things... trying to delay the purchase of Martifer���s stake in REpower and cutting back on capex,��� says the report. However, on our reduced numbers, we still perceive risk to Suzlon���s debt covenants. If the Martifer stake purchase cannot be pushed back, we expect Suzlon to breach its debt covenants, potentially resulting in punitive action from lenders, it adds.
target price: rs 52.45
Morgan Stanley has ���downgraded��� Suzlon Energy from overweight to equal-weight while lowering the price target to Rs 52.45 from the earlier Rs 450, citing slowdown in the global wind turbine market and the unresolved technological issues. ���We expect a slowdown in the global wind turbine market in C2009, with growth moving down to only 6% from 25% in C2008,��� says the report.
Further, the foreign brokerage also does not expects Suzlon ���to get access to REpower technology in the short term.��� Morgan Stanley also feels that with the cancellation of the rights issue of the company, debt will become the primary source of funding the growth at Suzlon. ���We believe that Suzlon is doing the right things... trying to delay the purchase of Martifer���s stake in REpower and cutting back on capex,��� says the report. However, on our reduced numbers, we still perceive risk to Suzlon���s debt covenants. If the Martifer stake purchase cannot be pushed back, we expect Suzlon to breach its debt covenants, potentially resulting in punitive action from lenders, it adds.
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