American Superconductor Is A Diversified Wind, Grid Tech Play

• The share price of American Superconductor Corporation (NASDAQ: AMSC) have appreciated 25.76 percent over the past month, from $4.09 on December 15.
• Rodman & Renshaw’s Amit Dayal has initiated coverage of the company with a Buy rating and price target of $10.
• Dayal believes that the company’s products are based on differentiated proprietary technologies that help American Superconductor remain competitive in the wind and electric grid markets.

Analyst Amit Dayal elaborated that the company was benefiting from the increased wind energy demand in India, since the Indian government had announced a wind energy capacity target of 60 GW installed by 2022. This would more than double the current installed capacity.

“On the back of this mandate, AMCS' key customer in India, Inox, a significant player in the Indian wind market is in the process of doubling its current wind turbine manufacturing capacity from 800 MW/year to 1,600 MW/year,” Dayal mentioned.

Inox had announced a $40 million ECS order with American Superconductor in 2015, which was followed up in December 2015 with a supply agreement worth about $210 million and spanning 3-4 years, which could extend for an additional three years.

According to the Rodman & Renshaw report, “The anticipated doubling of Inox’s turbine manufacturing facility, the potential contract extension, and the subsequent joint development of the 3 MW ECS solution offer AMSC significant revenue growth opportunities over the next four to seven years.”

In addition, as the company’s revenues grow, Dayal believes that the economies of scale would offer meaningful margin expansion potential and a path to profitability.