Change of wind in Suzlon post Shanghvi investment ?

 Technically, Suzlon (CMP:19) has to sustain (at lest 2/3 consecutive close) above 21 zone for short term target of 36 area. Sustain above 36 zone, it may regain 62 area in the mid term. Strong positional support is near 14 area.

 Though Shanghvi deal is already discounted by the market to some extent (nearly 25% up-move last week), it may have potential for more up move.

There are lots of news in Suzlon for the last few months for stake sale (to reduce enormous debt in Balance Sheet). Latest one is BUY of 23% stake in Suzlon for INR 1800 Cr. and some type of financial assistance of INR 4000 Cr. (for smooth working capital requirement) by Shanghvi Family of Sun Pharma. Suzlon will also BUY PV Power Tech (Solar Energy-Sanghvi Family) in an all stock deal. This will facilitate Suzlon's entry into Solar Energy. But first, Suzlon will have to repay debt of INR 6000 Cr. to SBI (which it may pay from its recent INR 7200 Cr. sale of its German arm Senvion SE). There may be also an assurance of Sanghvi Family to look into further requirements of funds for Suzlon on a case to case basis/ specific project financing etc.

The Indian Govt. is also very proactive in the field of clean & renewable energy. Investment by Shanghvi Family (in personal capacity) in Suzlon, might bring back some confidence of market players in its management, which was lost heavily post FCCB Bond default fiasco. Suzlon still has nearly 17000 Cr. (INR) debt in its book. Such enormous debt management will be a key challenge for it. There will be also balance sheet dilution post Shanghvi Family investments. For the last few years, growing economic slow down both in local & global markets, dent its Wind Turbine sale. There were also other negative factors such as removal of tax concessions for wind power in India, Suzlon's high interest burden & CDR in 2012, stiff competition form Chinese manufacturers. But Suzlon is now the process of retiring high cost debts and targeting high growth markets like India, China, Brazil etc. Also there may be some significant stimulus in the forthcoming budget for renewable power energy sector (wind/solar/biomass etc). This deal is also looked good for Shanghvi Family and a win-win situation for both. Re-rating of Suzlon may be on the card. This may bring an opportunity for lots of retail investors who were stuck with Suzlon  at high prices for the last few years since 2008 to average it & turn the "Suzlon" portfolio profitable.