Stock views on IVRCL, Suzlon Energy

Citigroup on Suzlon Energy

Citigroup Global Markets has maintained its ‘sell’ rating on the stock saying the company’s international expansion drive has taken its toll in the form of supply delays; tower shortages in the international markets; key component shortages; and negative effects of foreign currency movements and nacelle custom duty changes in the US. According to Citi, mediumterm like commodity price increases; delays in Suzlon’s WTG capacity ramp-up; the possibility of PTC not being extended; and further provisions for blade damage problems may weigh heavily on the stock’s performance. “The target price is based on 17 times December ’09E EPS (earnings per share), the low end of Suzlon’s 05-08 P/E (price to earnings) range of 17-47 times, given concerns about Suzlon’s S88 WTG,” said Citi in a note to its clients. “The recent EME (Edison Mission Energy) order cancellations and availability issues have taken the stock to its trough valuation of 17 times oneyear forward earnings,” the note said.

Prabhudas Lilladher on IVRCL

Broking house Prabhudas Lilladher has maintained its ‘buy’ rating on the stock saying stock is attractively valued at 14.5 times FY09 (estimated) earnings and 11.2 times FY10E earnings at the current market price. “We expect the company to register a CAGR (compound annual growth rate) of 32% and 25% in revenues and PAT (profit af-ter tax), respectively, for FY08-10(estimated),” said the broking house in a note to its clients. According to the broking outfit, a substantial order book growth would be the primary driver of revenues for the company. “The order book as on May 2008 stood at Rs 12,200 crore (year on year growth of 71%) as against Rs 7100 crore. On account of focus on cash contracts, IVRCL enjoys a healthy order book position amongst the peers,” the note said. IVRCL has improved upon its Sales/WC (working capital) ratio at 1.9 times as against 1.7 times in FY07 and is expected to maintain the same, says the broking house.