Suzlon Energy hits over 5-year high; zooms 105% in 7 weeks

Shares of Suzlon Energy (Suzlon) hit an over five-year high of Rs 16.86, as they rallied 10 per cent on the BSE in Monday’s intra-day trade amid heavy volumes. In past two trading days, the stock has surged 20 per cent after the brokerage firm ICICI Securities initiated the coverage on Suzlon with ‘Buy’ rating and a target price of Rs 22 per share.

The average trading volumes at the counter jumped nearly two-fold today. A combined 430.91 million equity shares changed hands on the NSE and BSE till 10:27 AM.

In past seven weeks, the stock of the country’s largest renewable energy solutions provider has zoomed 105 per cent from level of Rs 8.24 on May 15, 2023. It now trades at its highest level since January 2018. The stock had hit a record low of Rs 1.51 on March 26, 2020. It had hit all-time high of Rs 431 on January 9, 2008.

The Suzlon Group is one of the leading renewable energy solutions providers in the world with 20 GW of wind energy capacity installed across 17 countries. Suzlon is India’s No. 1 wind service company with the largest service portfolio of ~13.9 GW of wind energy assets.

The group has 5.9 GW of installed capacity outside India. The 3 MW Series wind turbine technology platform is the latest addition to its comprehensive product portfolio.

Last month, Suzlon announced that it crossed 20 GW wind energy installations milestone through 12,467 wind turbines installed across 17 countries that spans across six continents, solidifying Suzlon's position as a significant player in the global wind energy landscape.

With steadfast dedication to technological advancements, strategic partnerships, and sustainable growth, Suzlon is poised to lead the renewable energy revolution in India, the management said.

The Indian power grid needs more wind in its mix. The need to enhance wind capacity addition (post subdued activity in the recent past) has finally dawned upon the stakeholders. Grids are looking for a solution to meet demand effectively while containing carbon emissions. The supply of renewables can be increased by setting up a mix of wind, solar and battery storage capacities. Optimal solutions for the grid to meet demand by using renewables includes higher wind in the mix (of ~8GW per annum) led by the complementary nature of generation and cost curves of the wind.

As a result, India has launched series of policy initiatives: 1) single-stage closed bidding (vs reverse e-auction), 2) 10GW of wind auction per annum, and 3) wind-specific RPOs etc, analysts at ICICI Securities said.

These policies are likely to generate tailwinds for the industry and, the brokerage firm believes, Suzlon, the market leader, is best suited to reap the benefits of the same. Also, the ‘net debt / EBITDA’ ratio on Suzlon’s balance sheet has declined to ~1x (from ~10x in FY22). Analysts believe Suzlon is best equipped to benefit from industry tailwinds and expect a sharp uptick in earnings FY24E onwards.