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The stock of Suzlon Energy Ltd showed an impressive increase in its stock price when it touched the upper circuit of 5% at ₹62.22 on November 19, 2024. The revival of this stock occurred after Morgan Stanley shifted its position from “Equal-weight ‘to” ‘Overweight’ for the company, setting a price target of ₹71. The brokerage went further to point to the better market position of Suzlon apparels as well as the general industry trends.
The shares have risen by 7% to the previous five trading days, but have been down by 12% to the previous month. However, on a broader scale, it has delivered impressive returns:
Increase of 41% in the past half a year
62% year-to-date (YTD)
47% growth over the last year
However, in a similar vein, the Nifty 50 index is down 0.16% in five trading sessions and a relatively hefty 4% in the past month, thereby highlighting Suzlon’s rather better than average performance.
Suzlon Energy showcased strong financial growth in Q2 FY25:
Revenue: ₹2,093 crore, an increase of 48% YoY from ₹1,417 crore,” the TOI quoted it for Q2 FY24.
EBITDA: ₹294 crore, an increase of 31% YoY with a margin of 14.1%.
Net Profit: ₹201 crore, what represents an incredible YoY growth of 96%.
Order Book: More than 5 GW that features a large 1.1 GW order with NTPC.
The company reported stellar results in Q1 FY25 as well:
Net Profit: ₹302 crore, which is a three times increase compared to ₹101 crore for Q1 FY24.
Revenue: ₹2,016 crore, up 50% YoY.
Suzlon Energy's profitability and efficiency indicators remain robust:
Profit Margin: 12.24%
Return on Equity (ROE): 23.70%
Return on Assets (ROA): 8.70%
The company’s prudent order selection and focus on execution have bolstered these figures.
Morgan Stanley Rating Upgrade: International brokerage firm identified Suzlon Energy to have a wide business moat and extrapolated it to expect the firm to achieve 35-40% market share by FY27, fueled by lower competitive intensity.
Wind Energy Opportunities: India, which is aspiring to become a 100% renewable power generation hub, has the potential to install 32GW of wind over the next five years which will be a 31 billion dollar market for wind OEMs.
Acquisition of Renom Energy: By entering into this strategy Suzlon is now in a position to take advantage of over 32 GW of non-Suzlon O & M business opportunity and thus strengthens its standings in the wind energy domain.
Analyzing the stock price of Suzlon Energy, there is a great bearish pressure since the high of ₹86 in September 2024.The Immediate Support is identified at ₹ 50 which is a daily time frame horizontal support level. Another secondary support lies at the ₹46 ascending trendline.
If the stock gives bullish reversal signals at these levels it could again rejuvenate the uptrend and head towards new highs.
On the positive side, the areas of probable resistance levels are the ₹68 level. This is a short term resistance level that has been formed by the high’s in the latest trend. The ₹71 resistance is another key level to watch since it aligns with Morgan Stanley’s price target for the year.
Suzlon Energy’s recent rally and favorable industry trends make it an attractive option, though investors should weigh short-term volatility against long-term prospects.
Buy: For investors seeking exposure to the renewable energy sector, Suzlon’s growing market share, strong order book and favorable industry outlook offer significant upside potential.
Hold: For existing investors, holding the stock at current levels is advisable, especially with upcoming support levels around ₹50 and ₹46 offering potential re-entry points for further accumulation.
Sell: Traders looking to book profits may consider exiting if the stock fails to sustain above the ₹50 level.
Suzlon Energy Ltd stands at the forefront of India’s renewable energy revolution, with strong financial growth, a robust order book and increasing market share. While recent price corrections have created opportunities for investors, technical analysis suggests caution at current levels. Long-term prospects remain promising, driven by industry tailwinds and strategic initiatives.
Suzlon Energy is a compelling choice for those looking to invest in India’s clean energy transition, but market participants should closely monitor technical indicators and broader market trends.
