Suzlon Energy’s shares have been on a remarkable run, capturing significant attention in the market as the stock hits levels not seen in over a decade. On Thursday, the stock advanced by 3.3%, reaching its highest point since January 2010.
This surge pushed Suzlon’s market capitalization beyond ₹1 lakh crore, settling at ₹1.02 lakh crore. The company’s consistent performance has been a key driver of this momentum, with the stock appreciating by an impressive 82% since March 2023.
The rally in Suzlon’s stock is part of a broader trend that has seen the company’s share price climb steadily over the past several months. Since March, Suzlon’s shares have closed positively each month, underscoring the sustained investor confidence in the wind energy company.
The stock’s 836% gain since March 2023 highlights the growing optimism surrounding Suzlon’s future prospects, driven by a combination of strong quarterly financial results, efforts to reduce debt, and significant order wins.
One of the factors contributing to the stock’s strong performance is the company’s robust order book. By the end of the first quarter of FY25, Suzlon’s order book had grown to 3.8 gigawatts (GW), the largest in the company’s history. This expansion in orders reflects the increasing demand for renewable energy solutions in India and Suzlon’s ability to capitalize on this trend.
Adding to the positive sentiment, Suzlon recently announced its plan to acquire a 76% stake in Renom Energy Services for ₹660 crore. This acquisition will be carried out in two tranches, with the first involving the purchase of a 51% stake for ₹400 crore, followed by an additional 25% stake within the next 18 months for ₹260 crore.
Renom Energy Services, which operates in seven windy states and has expertise in maintaining turbines from 14 different manufacturers, is expected to strengthen Suzlon’s position in the wind energy sector.
Global brokerage firm Morgan Stanley has also weighed in on Suzlon’s prospects, maintaining an “overweight” rating on the stock and setting a price target of ₹73.4 per share. The firm highlighted the attractive valuation of Suzlon, noting that the implied 4x price-to-sales ratio is more favorable compared to the company’s listed peers. This positive outlook from a major brokerage has likely contributed to the stock’s continued rise.
The broader context for Suzlon’s success is the increasing demand for power in India, particularly from renewable sources. As one of the world’s largest energy consumers and a leading player in renewable power capacity additions, India has set ambitious targets for its energy sector. The government aims to generate 1,900 billion units (BU) of electricity for the fiscal year 2024-25, a 9.3% increase from the previous year’s total. With renewable energy sources playing a crucial role in meeting this growing demand, companies like Suzlon are well-positioned to benefit from these trends.
India’s installed power generation capacity stood at 442 GW as of March 2024, with 199 GW coming from non-fossil fuel sources, making up 45% of the total capacity. In the fiscal year 2023-24, renewable energy sources contributed approximately 71% of the nation’s new power capacity additions. This shift towards renewables is expected to continue, with the government targeting 500 GW of non-fossil fuel energy capacity by 2030.
Suzlon’s recent performance and strategic moves underscore the company’s growing influence in the renewable energy sector. As India continues to push for greater adoption of clean energy, Suzlon’s strong order book, strategic acquisitions, and favorable market conditions suggest that the company’s upward trajectory may have more room to run. Investors seem to agree, as evidenced by the stock’s impressive gains and the continued positive sentiment surrounding the company’s future prospects.
