240% Gains In 1 Yr, 9x Growth In 18 Mths: Multibagger Midcap Energy Stock Hits Upper Circuit For 2nd Day

The shares of Suzlon Energy extended their upward momentum on September 11, gaining 5% to hit the upper circuit, signalling sustained bullish sentiment among investors. The surge comes in the wake of Morgan Stanley's reaffirmation of its 'overweight' rating on the stock, following the company's landmark win of India's largest wind energy order from NTPC Green Energy Ltd, a subsidiary of the state-run NTPC Ltd.

Suzlon Energy's stock has been attracting significant buying interest, largely driven by its strategic financial moves and improving fundamentals. The company, which has faced financial distress in the past, has made remarkable progress in its balance sheet management. In FY 2023-24, Suzlon raised funds and cleared approximately Rs 1,500 crore in debt, marking a major milestone in turning its net worth positive for the first time in a decade. Notably, global asset management giant BlackRock has recently taken a stake in Suzlon, further enhancing the stock's appeal.

Since April 2023, Suzlon Energy's stock has experienced a meteoric rise, surging ninefold in just 18 months. From a market capitalization of Rs 10,000 crore in early 2023, the company's valuation has now crossed Rs 1 lakh crore, highlighting the tremendous growth it has achieved in a relatively short period. This impressive rally has been fueled by a significant expansion in Suzlon's order book, which has grown eightfold during this period.

A key catalyst for this growth is Suzlon's recent order win from NTPC Green Energy, which is India's largest wind energy order to date. This deal not only strengthens Suzlon's position as a leading player in the renewable energy sector but also provides the company with a revenue stream to support its growth.

The strong performance of Suzlon Energy has prompted several brokerage firms to revise their target prices for the stock. ICICI Securities recently raised its target price to Rs 80 from Rs 70, while maintaining an 'Add' rating. The brokerage values Suzlon at 50 times its projected FY26 earnings of Rs 1.60 per share.

Suzlon's focus on raising capital to enhance its execution capacity and secure additional orders has been a key driver of its stock's performance. ICICI Securities also highlighted the company's ongoing efforts to sell non-core assets.

In another notable development, JM Financial recently commented on Suzlon Energy's sale of its iconic corporate headquarters, Suzlon One Earth, located in Pune. The sale of this non-core asset has been seen as a positive step towards strengthening the company's financial position. By adopting an asset-light strategy, Suzlon is better positioned to meet its growing working capital needs.

JM Financial noted that the sale of Suzlon One Earth would improve the company's operational efficiency, allowing it to focus on project execution while reducing its financial burden. With Suzlon paying an annual rent equivalent to 12% of the sale consideration, this move is seen as value-accretive, supporting the company's return on equity (ROE), which stands at 28% for FY24.

As of 1 pm on September 11, Suzlon Energy shares were locked at a 5% upper circuit, trading at Rs 81.95 per share on the National Stock Exchange (NSE). The stock has gained around 112% year-to-date, significantly outperforming the broader market, with the Nifty 50 index posting returns of just 14% over the same period. Over the past 12 months, Suzlon's stock has delivered a return of 241%, more than tripling investors' capital. The Nifty index rose by more than 28% during the same period.