Turns Rs 50,000 Investment Into Rs 1.70 Lakh In 10 Months; Energy Stock Hits New 1-Year High; Buy Or Sell?

Wind and solar energy solutions provider, Suzlon Energy has been on the roll since the start of 2023, with more buyers than sellers taking the stock at sky-high levels and emerging as multi-bagger. The stock has journeyed from Rs 10 to nearing Rs 35 price level in 10 months, turning an investment of Rs 50,000 to a corpus of nearly Rs 1.7 lakh. Last week, the stock even locked at new 52-week highs after its Q2 earnings.

The stock is also currently at its nine-year high.

Suzlon earned a consolidated net profit of Rs 102.29 crore in Q2FY24, attributable to owners, nearly doubling from a PAT of Rs 57.43 crore in the same quarter a year ago. However, revenue from operations witnessed a mixed performance, coming at Rs 1,417.21 crore in Q2FY24, down from Rs 1,430.38 crore in Q2FY23 but higher from Rs 1,347.52 crore in Q1FY24.

Girish Tanti, Vice Chairman, Suzlon Group, said, "I am delighted to note that our current product portfolio led by the S120 2.1 MW and S144 3.0 MW to 3.15 MW wind turbines continue to see enthusiastic response from our customers demonstrating their faith in Suzlon's technology. Our Q2 FY24 results are a direct reflection of
our efforts to strengthen our fundamentals to leverage the tailwinds of the sector from a position of strength."

After the Q2 results, Suzlon's share price ended at Rs 34.44 apiece, up by 5% on BSE. This would be the new 52-week high of Suzlon's share price along with its 5% upper circuit. The current market cap of the company is Rs 46,753.11 crore. Notably, Suzlon's shares are up for three consecutive days.

On BSE, at the start of January, Suzlon shares were less than Rs 11 per piece. Since then, the stock has zoomed by a whopping 221.27%. Using the Axis Direct calculator, an investment of Rs 50,000 at the start of January, will take the funds to a corpus of nearly Rs 1.67 lakh crore to date.

There is more upside in Suzlon shares and hence this corpus and returns will rise further.

In its research report, JM Financial said that Suzlon's management has guided for doubling of dispatches in 2HFY24 vis-à-vis 1HFY24 (JMFe - 800MW for FY24). Going forward the company expects an annual addition of 4-5GW in FY24E and 6-7GW in FY25E in the country.

The brokerage pointed out that Suzlon has installed the first prototype of its S144-140/160 - 3.xMW turbine at 160mts hub height in Gujarat. Going forward, the company's focus remains on executing its current order book and commercialization of its 3-3.15MW series turbine in FY24. It has already dispatched 5-6 nos. of 3.xMW turbines with major dispatches expected in 4QFY24. The order book will continue to have a similar mix of 2.1MW and 3.xMW turbines in FY25 and FY26 due to lower LCOE.

Giving an industry outlook, JM Financial said, "The 2030 GOI target of 500GW of non-fossil fuel-based capacities
includes a healthy mix of wind and solar capacities. Under the uniform renewable tariff mechanism, wind capacity will come up in all 8 windy states, significantly opening up the availability of land and evacuation infrastructure. The MNRE has also announced a renewable energy projects bidding trajectory of 50GW per annum for FY24-28, which
includes 10GW of wind. Hybrid projects and the C&I market shall further drive up the demand for wind, which will be over and above this 10GW p.a. plan."

Overall, JM's note said, "We expect Suzlon to deliver revenue and EBITDA CAGR of 38% and 43% respectively over FY23-26E. We have revised our estimates for FY25E/26E upwards driven by healthy order inflow, better execution visibility and an improving product portfolio. We maintain our BUY rating on the stock with a revised TP of INR 37/sh (based on a 25x Sept'25E EPS)."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.