Shares of Suzlon Energy zoomed on Friday’s intraday trades after brokerage firm ICICI Securities maintained a buy rating on the stock. Its shares gained 6.1 percent on Friday to reach an intraday high of ₹ 15.65 apiece on the National Stock Exchange (NSE). At 02:05 PM, its shares were trading at ₹ 15.30 apiece, up 3.39 percent.
The company’s shares staged a spectacular rally in the past three months. Investors earned multibagger returns of 117 percent as its share price increased from ₹ 7.05 apiece to the current level. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares about three months ago, the value of their holdings would have been ₹ 2.17 lakhs today!
ICICI Securities recently initiated coverage on the stock with a ‘Buy’ rating and a price target of ₹ 22 per share. This implies a potential upside of 43.79 percent as compared to its current share price. The brokerage believes that the company is best equipped to benefit from industry tailwinds.
Suzlon Energy manufactures wind turbine generators and related components and On June 5, 2023, the company said that it has surpassed 20GW of operational wind power, accomplished through the deployment of 12,647 wind turbines across 17 countries, spanning six continents. The company has an existing order book of 1.5 GW and this bodes well for execution in the next two years, according to the brokerage.
Explaining its rationale behind the huge upside, ICICI Securities said that a slew of policy actions by the Indian government would benefit Suzlon Energy, which is currently the market leader in the domestic market. It expects contracts of 3.5 GW and 4.5 GW for the financial years 2024 and 2025, as against 2.2 GW in the financial year 2022. Moreover, it expects an improvement in industry outlook with an expected compounded annual growth rate of 35 percent on policy actions, industrial demand and more round-the-clock contracts.
Last month, the company bagged a wind energy project from Vibrant Energy for 33 wind turbine generators featuring its new 3MW (each) series with a Hybrid Lattice Tubular tower for a 99 MW wind power project which is expected to be commissioned by FY25. It received another order of a 204 MW project from Serentica Renewables – a decarbonization platform that seeks to accelerate the energy transition for energy-intensive industries. Moreover, it received a large order to develop a 300 MW wind power project for Torrent Power.
Suzlon Energy is a small-cap company with a market capitalization of ₹ 16,178 crores. Its shares were trading at a price-to-earnings ratio (P/E) of 5.58, which is significantly higher than the industry P/E of 27.18, indicating that the stock might be undervalued as compared to its peers.
Retail investors hold a 73.35 percent stake in it, followed by its promoters with 14.50 percent, foreign institutions with 6.60 percent, domestic institutions with 5.47 percent and mutual funds with 0.08 percent.
Written By Simran Bafna
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