Suzlon Right Issue (Right or Wrong)

In spite Of losing its wind man or founder Tulsi Tanti, The major wind energy producer Suzlon is going to issue rights or shares at an issue price of 5 rupees.

The company is going to issue 240 crore of rights to raise 1200 crore rupees.

Promoters of Suzlon have reconfirmed their participation in the right issue.

They coated that they will participate in the right issue to the full extent.

What Are the Right Issues?

The company needs money to operate. Money is initially raised by bankers, promoters, and shareholders.

in between the operations, companies may face cash problems.

In this case, companies issue additional shares for shareholders to buy.

But shareholders may not be interested in the company to additional shares.

Therefore to overcome this problem companies issue rights or shares at prices lower than the market price.

In the case of Suzlon, it is going to issue 240 crore of additional shares at the price of rs 5 per equity share.

In this way, the company will raise 1200 crore rupees by issuing additional shares.

Reason for Suzlon’s right issues?

Suzlon net profit comprision
Maya Shares

Suzlon is very consistent in losing money. There is no year when the company has not lost money from 2013 to 2022.

Love to Read-Suzlon Share Price Target 2025

if we look into capital work in progress we find that CWIP had decreased to only 20 crores.

Suzlon shows promising signs of reducing its debt.

The company has reduced its debt by 62% in the fiscal year 2021, And by 15% in the next year.

Yeah, it’s nice to reduce the debt because interest costs eat up the profit.

in the last 9 years, the company has reduced there from approximately 17 000 crores to 4000 crores.

Still, Suzlon has a debt burden of 4242 cr.

To overcome this debt burden company issued another rights share.

what is Suzlon’s right issue price?

Suzlon’s right issue price has been decided at 5 rupees.

company will provide five shares for every 21 shares to the shareholders at an issue price of 5 rupees.

What is the record date for Suzlon right issue?

The record date for Suzlon right issue is 4 October 2022.

Anyone who holds a share in their Demat account on 4 October 2022 or before the record date, is eligible to purchase additional shares of Suzlon at the issue price rate.

What is the subscription date for the Right issue of Suzlon?

The subscription of Suzlon’s right issue will start on 11th October 2022, and it will be open till 20 October 2022.

what is the subscription rate for Suzlon right issue?

shareholders need to pay 2.5 rupees per equity share at the time of applying.

The next 2.5 rupees will be paid when they will get their allotment.

Suzlon Right Issues (Right or Wrong)

Since the company is facing a cash problem due to heavy debt.

Because a lot of money is paid as an interest cost.

By issuing the right shares the company will get additional cash and it will help the company to reduce its debt.

as soon as it overcomes the problem of debt, it starts making money.

Because sales are increasing day by day and we know that this is the age of renewable energy.

And, Suzlon is a leader in wind energy production.

Therefore this issue may be right.

There are other sides to the coin too.

This issue will increase the number of shares in the market.

Many financial ratios depend upon the number of shares. They all will change.

For example, earnings per share (EPS) will decrease but we do not see any sudden decrease in the earnings.

Conclusion

I have analyzed Suzlon in greater detail.

You can refer to that article to understand the company deeply.

Love to Read-Suzlon Share Price Target 2025

because without knowing investing is dangerous.

Since Suzlon is reducing its debt continually it is a good sign for further growth opportunities.

Because as soon as the interest burden of the company will be wiped out the company will start making money.

And shareholders will award the stocks by raising the price.

This is from my side.

Please try to understand,

we try to provide the information about the stocks, this should not be considered as investing recommendation

This is not investing recommendation please take advice from a financial advisor before investing in any stock.

Thank you.

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