In a chat with ET Now, Parag Thakkar, Head Institutional Sales, HDFC Securities, shares his views on oil space and Suzlon. Excerpts:
ET Now: ONGC had very bad numbers but EBITDA was slightly okay and which is why the beaten down stocks stood out but oil marketing companies are having a fairly choppy ride as well.
Parag Thakkar: Every company in this space has its own issues. ONGC has a issue that crude has fallen on one hand so that outside India realisations have fallen significantly. In this quarter government has taken large share of subsidy from them so it remains a value buy but the problem is that you are not seeing the end of the tunnel plus you have a disinvestment overhang going on.
ET Now: Do you like Suzlon?
Parag Thakkar: Suzlon will have a huge operating leverage if they are able to solve their debt issues and they are in the middle of solving it. So, they have reduced the debt dramatically in last few weeks itself. At the same time the equity has also got diluted significantly. Suzlon was going through a huge working capital issues because they had at one stage orders of 25,000 crore but they were not able to execute it because there was no working capital available.
Now with all these problems resolved, the order book is just 7650 crore but and so in the peak they have solved around 2800 megawatts now they are not able to sell even 1000 megawatts so the moment they go to 2000 megawatts say in next two to three years time, the glory will be back. That's why it is a good long term buy. In short term I would say because of the huge dilution there is very little left on the table.
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