Investors who purchased Suzlon Energy shares just one year ago have reaped higher returns than those who held their investments in the stock for a five-year period. The company, which is the largest renewable energy solutions provider in India, saw its shares climb from ₹7.15 apiece to ₹13.95 apiece in the last one-year period, resulting in a staggering gain of 95.10%.
In contrast, investors who patiently held their Suzlon Energy shares for five years, typically regarded as a significant investment horizon, have been rewarded with an 80% return.
The surge in Suzlon Energy's stock price over the last one-year can be attributed to a combination of factors, including the successful acquisition of multiple wind power projects coupled with a robust financial performance.
These accomplishments have not only captured the attention of retail investors but have also prompted them to increase their stake in the company during the March 2023 quarter. According to data from Trendlyne, retail investors boosted their stake by 0.30% in Q4FY23, bringing their total stake to 72.3%.
The company is a subsidiary of Suzlon Group, engaged in the business of manufacturing, project execution, operation and maintenance of wind turbine generators (WTGs), and the sale of related components.
The company's client portfolio includes power utilities and electricity producers in both the private and public space.
On June 05, Suzlon Group announced that it has achieved the milestone of 20 GW of wind energy installations through 12,467 wind turbines installed across 17 countries, spanning six continents.
Strong Order Wins
In May, the company secured a significant order from Vibrant Energy for the development of a 99 MW wind power project. The order includes 33 wind turbine generators (WTGs) from Suzlon's new 3 MW series, featuring the innovative Hybrid Lattice Tubular (HLT) tower.
Additionally, the company announced another major order during the same month from Serentica Renewables, a platform focused on decarbonization. Suzlon Energy will install 68 WTGs with a Hybrid Lattice Tubular (HLT) tower and a rated capacity of 3 MW each for Serentica’s 204 MW wind power project coming up at Koppal in Karnataka.
Furthermore, in the same month alone, Suzlon Energy secured another large order from Torrent Power Limited to develop a 300 MW wind power project. This is the sixth and largest order for the new Suzlon 3 MW series.
As part of this order, the company will install 100 wind turbine generators (WTG) with a rated capacity of 3 MW each, utilizing the Hybrid Lattice Tubular (HLT) tower.
For all the above-mentioned projects, the company also provides erection and commissioning services as well as comprehensive operations and maintenance services post-commissioning.
In the quarter ending in March, the company witnessed a significant turnaround as it reported a consolidated net profit of ₹320 crore, a remarkable improvement compared to a net loss of ₹290 crore recorded in the same quarter of the previous year.
It ended FY23 with a net profit of ₹2,887 crore as compared to a net loss of ₹177 crore in FY22. Although revenue from operations dipped to ₹5,971 crore in FY23 from ₹6,582 crore in FY22, the company's bottom line profits were bolstered by a substantial decrease in operating expenses.
Looking ahead, the company's growth prospects appear promising, driven by regulatory changes and an increasing demand stemming from the government's renewable energy initiatives and the commercial and industrial (C&I)/corporate market, as highlighted by domestic brokerage firm Nuvama Professional Clients Group.
The Government of India's push towards resilient renewable energy (with a mix of only solar, or only wind, or both wind and solar) to achieve round-the-clock RE, with or without storage, has resulted in regulatory changes to promote wind energy.
It has led to an increase in the installed capacity of wind energy to 100 GW (13% share in total capacity) from 43 GW (10% share), according to the brokerage.
Moreover, revenue growth and profitability are expected to gain momentum in FY25, as regulatory changes implemented earlier in 2023 will enhance the company's order book and revenue, particularly starting from FY24/FY25.
The brokerage also pointed out that operation and maintenance services (OMS) are steady over ₹700 crore business, growing annually as its installed base increases.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.