Suzlon Energy, one of the leading global renewable energy solutions providers, today entered the elite group of Rs 1 trillion market capitalisation (market cap) firm after a strong rally in the stock price of the company.
The sharp rise in market cap of Suzlon Energy was on account of the allotment of equity shares in rights issue; conversion of optionally convertible debentures and conversion of bonds into equity shares.
The stock was trading at its highest level since January 21, 2010. It had hit a record high of Rs 430.92 on January 9, 2008. In past three months, the market price of Suzlon Energy has zoomed 90 per cent. In the past 15 months, it has skyrocketed 802 per cent from Rs 8.36 on May 9, 2023.
The Suzlon Group is one of the leading renewable energy solutions providers in the world with ~20.8 GW of wind energy capacity installed across 17 countries. The Group comprises of Suzlon Energy and its subsidiaries.
Suzlon is also India’s No. 1 wind energy service company with the largest service portfolio of over 14.8 GW in wind energy assets. The Group has ~6 GW of installed capacity outside India. Suzlon offers a comprehensive product portfolio led by the 2 MW and 3 MW series of wind turbines.
On Tuesday, August 6, Suzlon Group executed definitive agreements for the acquisition of a 76 per cent stake in Renom Energy Services Private Limited (Renom), in two tranches, from the Sanjay Ghodawat Group (SGG). Renom is the largest Multi Brand Operations and Maintenance service (MBOMS) provider in the country with assets of 1,782 MW in Wind, 148 MW in Solar, and 572 MW in BOP under maintenance across customer segments.
The future of India’s Renewable Energy industry is poised for exponential growth. At the Suzlon Group, the management said the company intends to acquire and build synergetic yet independent assets and companies, which will help the company lead the sector comprehensively wherein the sum of parts is larger than the whole in the years to come.
Meanwhile, since July 22, in the past 15 trading days, the stock has rallied 37 per cent after the company reported its highest quarterly earnings before interest, taxes, depreciation, and amortization (EBITDA) in 7 years at Rs 370 crore.
Suzlon’s revenue came in at Rs 2,021 crore as against Rs 1,348 crore, up 50 per cent year-on-year (YoY). In terms of volume, the company executed 274 MW vs. 135 MW YoY. The company reported a 3-fold jump in Q1FY25 consolidated net profit at Rs 302.29 crore, as compared to Rs 100.90 crore in the corresponding quarter a year ago. EBITDA margins came in at 18.4 per cent up 360 bps YoY. Current order backlog stands at 3817 MW vs 2929 MW QoQ.
Global Wind Energy Council (GWEC) expects India to reach 122GW of installed wind capacity by FY32E. Moreover, the government plans to conduct 10GW of exclusive wind tenders per annum until 2027. This signals an upcycle for wind OEMs like Suzlon Energy.
Analysts at Geojit Financial Services expect Suzlon to deliver 2.1GW of Wind turbine generators (WTG) in FY26E, resulting in 73 per cent CAGR from 0.7GW in FY24. The high-margin O&M segment stands to benefit as these new additions turn serviceable over the next 2-3 years, given high renewal rates with annual escalation clause built into it.
“In the FY24–26E period, Suzlon’s revenue CAGR & ROE are expected to surpass those of the industry peers. We anticipate order inflows to be strong in this period, supported by strong government tendering and from commercial and industrial (C&I) customers. Despite factoring in the risks in our execution numbers, we expect the revenue CAGR of 53 per cent to drive the EPS growth of 66 per cent CAGR, resulting in ROE improvement from 18.2% in FY24A to 26.9 per cent in FY26E,” the brokerage firm said. The stock, however, was trading above target price of Rs 73 per share.
Suzlon with its positive net worth has started bidding for PSU (including NTPC) tenders. Since 1 January 2023, a total of 56 tenders with 55.4GW for utility scale vanilla wind (including 1,110MW NTPC Gujarat) and various wind-combinations have been issued, which have an estimated wind component of at least 20GW, giving a healthy pipeline of opportunities going forward, according to analysts at JM Financial Institutional Securities.
The brokerage firm believes that gradual building of momentum for higher execution, healthy order book, more healthy bid pipeline, strengthening of balance sheet and the organization are driving the company for the next-level of growth.
First Published: Aug 09 2024 | 10:17 AM IST
