During Friday’s trading session, the shares of one of the leading renewable energy solutions providers in the world surged by around 4.4 percent to hit an intraday high at Rs. 68.32 on BSE.
Stock Performance
With a market cap of Rs. 88,905.2 crores, the shares of Suzlon Energy Limited opened in the green at Rs. 66.9, up by nearly 2.2 percent, as against its previous closing price of Rs. 65.46.
The stock has delivered positive returns of nearly 74.6 percent in one year, as well as around 41.8 percent returns in the last six months. So far in 2024, the shares of Suzlon Energy have given positive returns of about 70 percent.
Recent Developments
The company bagged India’s largest wind energy order from NTPC Green Energy Limited (NGEL) for 1166 MW, and the electricity generated will power around 3 million households.
As part of the agreement, Suzlon will install a total of 370 wind turbine generators (WTGs) of the S144 model, with Hybrid Lattice Tubular (HLT) towers, each with a rated capacity of 3.15 MW.
These turbines will be deployed at two projects of NTPC Renewable Energy Limited, a wholly owned subsidiary of NGEL, and one project of Indian Oil NTPC Green Energy Pvt. Ltd., a group company of NGEL, all located in Gujarat. This achievement brings Suzlon’s total order book to nearly 5 GW as of 3rd September 2024.
Market Outlook
The company projects wind installations of 5 GW in FY25, rising to 6-7 GW in FY26 and 9-10 GW annually thereafter, driven by India’s renewable energy demand from industrialization, urbanization, and E-mobility. Management highlights its end-to-end wind energy solutions, underscoring a strong competitive advantage.
Order Book in Q2 FY25
As of October 2024, Suzlon’s wind energy order book reached 5,131 MW, marking a 3.2-fold increase from 1,613 MW in September 2023.
The company now holds its highest-ever domestic order book of 5.1 GW, supported by a robust pipeline that offers a clear revenue outlook. In Q2 FY25, Suzlon secured its largest single order of 1,166 MW from NTPC. The management plans to complete the entire 5.1 GW order book within 18-24 months.
Future Outlook
The company’s manufacturing capacity of 3.1 GW is set to expand to 4.5 GW by the end of FY25. WTG business gross margins are anticipated in the mid-to-late teens, while OMS business margins are projected around 65 percent. Management aims to maintain these margins despite growth in capacity.
Brokerage Target & Outlook
The global brokerage firm Morgan Stanley initiated a ‘buy’ rating on Suzlon Energy Limited and assigned a target price of Rs. 71 per share. The brokerage believes that the company has strong business and its position as a key beneficiary of India’s energy transition. The company boasts a robust 5.1 GW order backlog executable over the next two years, with a prudent focus on orders with higher offtake visibility.
Moreover, the market share of Suzlon is expected to improve to 35-40 percent by FY27 in India, according to Morgan Stanley, which also forecasts India’s wind additions to generate 32 GW of demand worth $31 billion for wind OEMs between FY25 and FY30.
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Financials
Suzlon Energy reported a significant growth in the revenue from operations, experiencing a year-on-year increase of nearly 48 percent, rising from Rs. 1,421 crores in Q2 FY24 to Rs. 2,103 crores in Q2 FY25.
Similarly, the company’s net profit increased by 97 percent YoY from Rs. 102 crores to Rs. 201 crores, over the same period. EBITDA for Q2 FY25 increased by 30.6 percent YoY to Rs. 294 crores, up from Rs. 225 crores in Q2 FY24, but the EBITDA margins declined from 15.9 percent to 14.1 percent, at the same timeframe.
Key Financial Ratios
In terms of key financial metrics, Suzlon Energy currently has a Return on Equity (RoE) of 28.8 percent and a return on capital employed (RoCE) of 24.9 percent. Additionally, the company’s debt-to-equity ratio stands at 0.06.
Shareholding Pattern
As per the September 2024 shareholding pattern, the Promoters hold a 13.25 percent stake in the company, Foreign Institutional Investors (FII) hold a 23.72 percent stake, while Retail Investors and Domestic Institutional Investors (DII) hold a 54.02 percent and 9.02 percent stake in Suzlon Energy, respectively.
About the company
Suzlon Energy Limited is primarily engaged in the business of manufacturing, project execution and operation and maintenance service (OMS) of Wind Turbine Generators (WTGs) and the sale of related components of various capacities.
The company currently have a 32 percent cumulative market share, with 20.9 GW global installed Wind energy capacity, and owns WTG Technology & in-house R&D, a well-established product portfolio.
Written by Shivani Singh
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