Suzlon Energy snaps 3-day losing streak, locked in 5% upper circuit

Suzlon Energy climbed 5 percent to hit the upper circuit on November 23, snapping a three-day losing run during which it lost 12 percent.

The gain came after the Suzlon Energy management highlighted its strategic emphasis on non-EPC orders, along with a commitment to in-built operations and maintenance services (O&M) contracts at JM Financial India Conference 2023 on November 21.

As one of the 65 companies featured on Day 1 of the conference, Suzlon Energy reported a significant increase in its share of orders from the Commercial & Industrial (C&I) segment, rising to 64 percent in the September quarter from 55 percent in the previous quarter.

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The stock was locked at Rs 39.20 on the National Stock Exchange, up 5 percent from the previous close. A total of 10 crore shares traded on BSE and NSE, compared to the one-week average of 13 crore.

The stock has zoomed 266 percent this year, outperforming the benchmark Nifty, which gained around 8.5 percent.

Earlier this month, JM Financial gave a “buy” rating to Suzlon Energy with a target price of Rs 37, driven by healthy order inflow, better execution visibility and an improving product portfolio. The stock has already surpassed the target price.

“The company has an order book of 1.6 GW as of September 30, 2023 out of which 62 percent is for 3.x MW turbines, the supply of which will start in Q4 FY24. The company continues to focus on high-value quality orders (better margins) with a strong counterparty,” the brokerage said in a report during the conference.

Its service business continues to do well with 14.3GW capacity under service. It expects an annual addition of 3-4GW in FY24E and 5-6GW in FY25E in the country.

In an earlier report, JM Financial analysts said Suzlon’s balance sheet strength had improved with a positive consolidated net worth of Rs 3,400 crore at September-end, primarily due to debt repayment over the last year.

After the qualified institutional placement (QIP) offer, there was no residual debt in the company except Rs 120 crore for one of the subsidiaries.

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Suzlon Energy has a net cash balance of about close to Rs 600 crore, with a gross cash balance of about Rs 720 crore.

In the September quarter, there was a 55 percent on-year reduction in the finance cost on account of debt repayment.

“Going forward, the interest cost is expected to sharply reduce, thus improving the profitability,” the brokerage said, adding the full benefit would start flowing in from Q3 FY24.

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