ICICI Securities Initiates Buy On Power Sector Penny Stock, Sees 44% Upside Potential

ICICI Securities initiates a Buy on Suzlon Energy Ltd. with a target price of Rs 22 apiece. The brokerage sees a 44% strong upside potential in the share price, considering the given target price and the current market price of the stock.

Suzlon Energy Ltd. is a Power sector company primarily engaged in manufacturing wind turbine generators and related components.

Winds of change

According to ICICI Securities, The Indian power grid needs more wind in its mix. The need to enhance wind capacity addition (post subdued activity in the recent past) has finally dawned upon the stakeholders. Grids are looking for a solution to meet demand effectively while containing carbon emissions. The supply of renewables can be increased by setting up a mix of wind, solar and battery storage capacities. Optimal solutions for the grid to meet demand by using renewables includes higher wind in the mix (of ~8GW per annum) led by the complementary nature of generation and cost curves of the wind. As a result, India has launched series of policy initiatives: 1) single-stage closed bidding (vs reverse e-auction), 2) 10GW of wind auction per annum, and 3) wind-specific RPOs etc. "These policies are likely to generate tailwinds for the industry and, we believe, Suzlon Energy (Suzlon), the market leader, is best suited to reap the benefits of the same. Also, the 'net debt / EBITDA' ratio on Suzlon's balance sheet has declined to ~1x (from ~10x in FY22). Initiate with BUY," the brokerage has said.

Initiate with BUY

ICICI Securities said, "We believe Suzlon is best equipped to benefit from industry tailwinds. We expect a sharp uptick in earnings FY24E onwards. Initiate with BUY and a target price of Rs22 per share (assigning a multiple of 24x FY25E EPS)."

Stock Movement

The shares of Suzlon Energy last traded on BSE at Rs 15.33 per share, 3.86% higher compared to its previous close. The shares jumped 10.53% in the past 1 week. It jumped 43.67% in the past 1 month and 92.83% in the past 3 months, respectively. It gave 144.50% multibagger return in the past 1 year. In 3 years, it gave 226.87% positive return and 122.50% in the past 5 years.

The stock traded its 52-week high at Rs 15.76 apiece on Jun 13, 2023, and 52-week low at Rs 5.43 apiece on Jul 28, 2023, respectively.

Suzlon Energy is a midcap penny stock with a market capitalisation of Rs 19,018.18 Crore.

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.