Shares of Suzlon Energy climbed over 3% in opening trade on Monday, in an otherwise weak broader market, after the promoters re-confirmed their participation in the proposed rights issue following the sudden demise of the company’s founder, chairman and managing director Tulsi Tanti. The shares trade ex-rights share today as the Pune-based energy company has fixed October 4 as the record date for the rights issue.
“The promoters and the promoter group have re-confirmed their participation in the proposed rights issue and have expressed their intention to subscribe to the full extent of their rights entitlement. Accordingly, the company will continue to follow the schedule for the proposed rights issue set out in its letter of offer dated 28th September 2022 (“LOF”). An addendum to the LOF will follow in due course,” Suzlon Energy says in a BSE filing today.
The company issued this statement as investors turned cautious after the demise of Tulsi Tanti, the founder, president and CEO of Suzlon Group, who suffered a cardiac arrest on October 1 and passed away on the same day. Tanti was a pioneer in the Indian renewable industry and also the face of the company. He spearheaded the wind revolution in India, with the founding of Suzlon Energy in 1995. Under his able leadership, the company established and went beyond benchmarks, emerging as a prominent player in the global renewable energy market.
“Tulsi Tanti was a key man in spearheading the smooth running of Suzlon operations... with the sad demise of Mr. Tanti, there will be some change in the strategy & execution. As there is renewed revival in green energy space, Suzlon can take the advantage of tailwinds ... but the demise of Mr. Tanti is a great loss for the company,” says Kranthi Bathini, Equity strategist- WealthMills Securities.
Recently, the renewable energy company announced to raise ₹1,200 crore through rights issue to the eligible equity shareholders of the company. The issue will open for subscription on October 11 and will close on October 20. The entitlement for the rights equity shares will be in the ratio of 5 rights equity shares for every 21 fully paid-up equity shares held by the eligible equity shareholders on the record date, which is on Tuesday, October 4. The last date of on-market renunciation of rights entitlements is October 14.
As per the exchange filing, Suzlon will issue up to 2,400,000,000 partly paid-up equity shares for cash, at a price of ₹5 per rights equity share (including a premium of ₹3 per rights equity share) aggregating up to ₹1,200 crore. Post completion of the issue, the number of outstanding equity shares of the company will increase from 1,007.31 crore to 1,247.31 crore (assuming full subscription and receipt of all call monies with respect to equity shares allotted pursuant to the rights issue).
The funds raised through the issue will be partially used to repay loans and meet general corporate purposes, subject to receipt of consent from its lenders. Suzlon Group, which has a ₹2,800 crore debt refinance led by Rural Electrification Corporation (REC), aims to repay ₹900 crore of its loans through the capital raised via rights issue. The debt repayments will get the debt levels down to around ₹1,800 crore by the end of the current financial year. In June 2020, the company carried out debt restructuring and reduced its debt to around ₹3,000 crore from ₹12,400 crore.
For the April-June quarter of the current financial year (Q1 FY23), the company reported multi-fold growth in its consolidated net profit to ₹2,433 crore as compared to ₹3 crore in the same period last year, helped by exceptional gains. Total income increased to ₹1,378 crore in the quarter, up 21% from ₹1,135 crore a year ago. EBITDA grew 39% year-on-year to ₹214 crores in Q1 FY23, while EBITDA margin stood at 15.6%.
Suzlon Energy is one of the leading renewable energy solutions providers in the world with a presence in 17 countries. Headquartered in Pune, the company has the largest wind-installed base as a wind energy OEM with approximately 13.45 GW of installed capacity in India as of June 30, 2022. Besides, it has an installed capacity of approximately 5.96 GW outside India, aggregating to a global installed capacity of approximately 19.41 GW globally.
At the time of reporting, Suzlon Energy shares were trading 0.25% lower at ₹7.98 apiece on the BSE, paring opening gains. The stock opened higher and gained as much as 3% to ₹8.24, against the Friday’s closing price of ₹8. Meanwhile, the BSE benchmark Sensex was trading 494 points lower at 56,932 levels, following weak cues from global peers.
