Suzlon Energy surges 15% in 3 sessions, up 979% in 3 years; should you buy?

Just in today’s session, the stock hit its 52-week high of ₹36.16, trading at its 5 percent upper circuit for the third straight session (November 2,3 and 6).

The firm posted over 81 percent rise in the consolidated net profit to ₹102.29 crore for September quarter of 2023-24, mainly due to a decline in expenses. Its net profit in the year-ago period was ₹56.47 crore, according to a BSE filing by the company. The numbers of Suzlon Energy remained positive despite an exceptional loss of ₹35 crore during the quarter ending September 2023.

Its revenue, however, declined to ₹1,417 crore in Q2FY24 from ₹1,430 crore in the same period last year.

On the operating front, its earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 8 percent in the quarter under review to ₹224 crore compared to ₹207 crore in the previous year. The EBITDA margin also witnessed a significant increase, rising to 15.8% from 14.5% during the same quarter last fiscal.

Total expenses also dipped to ₹1,291.26 crore from ₹1,427.84 crore.

“At the end of Q2 FY24, our order book stands at a healthy 1,613 MW. Our service business continues to do well, while our forging and foundry business SE Forge consolidated on its foundation for future growth,” J P Chalasani, Chief Executive Officer, Suzlon Group, said.

Himanshu Mody, Chief Financial Officer, Suzlon Group, stated, “The company was anchored strongly with a net cash of ₹599 crore by September 2023 which is a significant shift from net debt of ₹1,180 crore in March 2023. On the back of a successful QIP conclusion in August 2023, the journey of making the company debt-free has been completed, thereby leading to further reduction in quarterly net finance cost by 61 per cent YoY (Year-on-Year). While proportional benefit from debt reduction initiatives can be seen in these results, the full impact will be felt from the next quarter onwards.”

Post the results, JM Financial retained its ‘Buy’ call on Suzlon Energy, with a revised target price of ₹37 ( ₹30 earlier), indicating an upside of just a little over 2 percent after the recent surge.

As per the brokerage, Suzlon Energy’s revenue was 3 percent lower than its estimates and the revenue growth was led by dispatches of 132MW of Wind Turbine Generator (WTG) and stable O&M revenue. Meanwhile, the firm’s Ebitda for the quarter was 4 percent higher than JM Financial’s estimates. Adjusted profit was facilitated by better margins and a reduction in interest cost, it added.

It further pointed out that Suzlon has an order book of 1,613MW, of which, 62 percent was for 3x MW turbines, the supply of which would start in the March quarter. Additionally, Suzlon Energy has won 50MW orders subsequently.

Suzlon Energy is focusing on high-value quality orders (better margins) with a strong counterparty, said JM, adding that the industry has a pipeline of 13GW renewables (including hybrid) projects, which includes 11GW of the wind energy component.

Multibagger

The stock has surged over 320 percent in the last 1 year and over 241 percent in 2023 YTD. Apart from the first 3 months of the year, the stock has given positive returns consecutively in the remaining 8 till now.

Just in November, the stock has rallied over 17 percent while between April and November, it has soared 358 percent. However, it lost over 25 percent in the first 3 months of the year.

Despite the recent rally, the stock is still almost 92 percent away from its record high of ₹430.90, hit on January 9, 2008. Meanwhile, it has advanced over 420 percent from its 52-week low of ₹6.95, hit on March 28, 2023.

In the long term, in the last 3 years, the stock has skyrocketed over 979 percent from ₹3.35 in October 2020. This means, an investment of ₹1 lakh three years ago, would have turned into ₹10.79 lakh today.

Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Updated: 06 Nov 2023, 01:26 PM IST