Shares of Suzlon Energy have continued their stellar rally, achieving a 14-year peak in today’s session. This significant milestone comes as investors reacted positively to the company’s June quarter results, released post-market hours on Monday. Suzlon’s robust performance during this period has clearly boosted market confidence, leading to a surge in its stock price.
In the June quarter, Suzlon Energy recorded its highest wind turbine deliveries in seven years, reaching 274 MW, which marks an impressive 103% increase year-over-year. This achievement is a testament to the company’s strong operational capabilities and its commitment to meeting market demand. Revenue from operations surged to ₹2,016 crore, reflecting a 50% improvement from the previous year. This substantial growth indicates the company’s successful execution of its business strategies and its ability to capitalize on market opportunities.
Furthermore, Suzlon’s quarterly EBITDA hit ₹370 crore, the highest in seven years. This significant increase in EBITDA highlights the company’s improved operational efficiency and cost management. Another notable highlight from the June quarter results is the company’s profit after tax, which saw a remarkable 200% increase, reaching ₹302 crore. Suzlon’s net cash position also stood strong at ₹1,197 crore as of June 30, 2024, indicating a solid financial footing.
Suzlon’s order book at the end of the June quarter reached a record 3.8 GW, the highest in its history. This robust order book demonstrates the company’s strong market position and its ability to secure substantial contracts. Additionally, Suzlon has made significant strides in reducing its gross debt, which was significantly reduced to ₹101 crore in Q1 FY25, down from ₹6,391 crore in FY22. This reduction in debt underscores the company’s commitment to strengthening its balance sheet and improving its financial health.
Amidst this stellar performance, Suzlon Energy’s stock hit the 5% upper circuit limit in today’s trading session, reaching a 14-year high of ₹58 per share. The consistent rise in share value is largely due to the company’s strategic focus on reducing debt, efficient management of working capital, and consistent order wins. Following a lengthy period of decline from 2008 to 2019, Suzlon’s shares experienced a remarkable resurgence starting in 2020.
The stock achieved a 246% increase that year, followed by gains of 60% in CY21, 13% in CY22, and a substantial 260% in the previous calendar year. This year, the shares have further climbed by 51%, reflecting continued investor confidence in the company’s growth prospects.
Several domestic and international brokerage firms have affirmed their optimistic outlook on Suzlon’s growth prospects. For instance, ICICI Securities has set a target price of ₹60 per share and maintains a ‘buy‘ rating, indicating strong confidence in the company’s future performance. The positive market sentiment is also driven by favorable market conditions for India’s wind industry. India’s power demand is projected to rise substantially, with renewable energy sources expected to meet a significant portion of this growing demand.
India, as the world’s third-largest energy consumer and fourth-largest producer of renewable power capacity additions, has made considerable strides in the energy sector. The country’s installed power generation capacity stands at 442 GW as of March 31, 2024, with 199 GW derived from non-fossil fuel sources. Renewable energy contributed approximately 71% to the nation’s power capacity additions in the fiscal year 2023-24.
With the government’s ambitious target of achieving 500 GW of non-fossil fuel capacity by 2030, the wind and solar energy sectors are expected to drive this growth. Wind energy, currently contributing 10% (43 GW) of the total installed capacity, is projected to increase to 13% (100 GW) by 2030. Similarly, solar energy, which currently constitutes 19% (82 GW) of the total capacity, is expected to grow to 38% (293 GW) by 2030.
Suzlon’s impressive performance and the positive outlook for India’s renewable energy sector bode well for the company’s future. Investors remain optimistic about Suzlon’s growth trajectory, driven by its strong order book, strategic debt reduction, and favorable market conditions. As the company continues to capitalize on these opportunities, it is well-positioned to sustain its upward momentum and deliver value to its shareholders.
