Suzlon Energy vs SJVN: Switching to renewable energy sources is an urgent necessity. With a growing population, income, and needs, electricity demand is increasing by the day. Climate change is wreaking havoc on the world, and shifting away from reliance on coal and oil and towards renewable sources appears to be a better way forward. Some companies look to leverage this opportunity. In this article, we will compare the renewable energy companies Suzlon Energy and SJVN.

Suzlon Energy

Suzlon Energy  Logo Image

Company Overview

Tulsi Tanti founded Suzlon in 1995, and it has since expanded to become a major global supplier of renewable energy solutions. Suzlon has installed over 20.3 GW of wind energy in 17 countries across six continents over the last two decades.

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The Suzlon Group is the main shareholder of Suzlon Energy Limited and its various subsidiaries. The Suzlon Group’s manufacturing footprint is spread across India and covers 14 facilities. Suzlon’s workforce stood at nearly 6,000 employees.

In India, Suzlon is a market leader with 111+ wind farms and an installed capacity of over 14,330 MW. In nine states, including Gujarat, Rajasthan, Maharashtra, and Tamil Nadu, it has built some of Asia’s largest operational onshore wind farms.

Segment Analysis

The company generated revenue from the sale of wind turbine generators (60.17%), foundry and forging (7.93%), operations and management systems (31.76%), and others (0.14%) in FY23.

SJVN

SJVN Logo image

Company Overview

SJVN Limited was incorporated on May 24, 1988, as a joint venture of the Government of India (GOI) and the Government of Himachal Pradesh (GOHP) as a Mini Ratna, Category-I, under the administrative control of the Ministry of Power, Govt. of India. SJVN stands for Satluj Jal Vidyut Nigam. The Government of India owns 55.00% of SJVN, the Government of Himachal Pradesh owns 26.85%, and the general public owns 18.15%.

Since completing India’s largest 1500 MW Nathpa Jhakri Hydro Power Station in Himachal Pradesh, the company has completed ten projects totaling 2152 MW of installed capacity and 123 km of transmission line.

SJVN is looking to increase its presence by implementing or operating power projects in Himachal Pradesh, Uttarakhand, Bihar, Maharashtra, Uttar Pradesh, Punjab, Gujarat, Arunachal Pradesh, Rajasthan, Assam, Odisha, Mizoram, and Madhya Pradesh in India, as well as Nepal.

Segment Analysis

Electricity generation is the revenue stream recognized by the company. Contracts, project management, and consulting work are minimal. SJVN operates and is present in India through power stations.

The Government of Himachal Pradesh accounts for 25.23% of revenue, the Power Development Department (J&K) accounts for 12.33%, U.P. Power Corporation accounts for 17.16%, Punjab State Power accounts for 9.72%, and the remaining customers account for 35.56% of revenue in FY23.

Industry Analysis

Following global climate change issues, the Indian renewable energy sector is growing. Prime Minister Narendra Modi’s initial target of installing 175 GW of renewable energy capacity by 2030 has now been increased to 450 GW. The National Hydrogen Mission will cost $2.4 billion and will produce 5 million metric tonnes of hydrogen by 2030, with an additional budget of $36 million.

India has already met its target of 40% installed electric capacity from non-fossil fuels by November 2021, making it the world’s fourth-largest installed capacity of solar and wind power.  

Power generation from solar and wind projects is likely to be cost-competitive relative to thermal power generation in India in 2025–2030. As the economy grows, electricity consumption is projected to reach 15,280 TWh in 2040 from 4,926 TWh in 2012. Most of the demand will come from the real estate and transport sectors.

The country plans to reach 450 GW of installed renewable energy capacity by 2030, with 280 GW (over 60%) expected from solar power. By 2030, the ambitious target of 450 GW will provide investment opportunities worth $221 billion.

Suzlon Energy vs SJVN Financials

Revenue and Net Profit

Suzlon and SJVN’s revenues in FY23 were Rs. 5,970.53 crores and Rs. 2,938.35 crores, respectively, compared to Rs. 6,581.78 crores and Rs. 2,417 crores in FY22. 

Suzlon and SJVN’s net profits in FY23 were Rs. 2,887.29 crore and Rs. 1,359.30 crore, respectively, compared to Rs. -176.55 crore and Rs. 989.80 crore in FY22.

When comparing revenue, Suzlon’s peak revenue in the previous five years was in FY23, and it has been increasing since FY21, following a dip in FY20. SJVN revenue has remained relatively stable over the last five years, with a 2.57% CAGR.

Suzlon made decent profits in FY23 and FY21, thanks to exceptional gains from exiting subsidiaries and profits from restructuring foreign currency convertible bonds (FCCB). In contrast, losses were high from FY19 to FY22, excluding FY21. SJVN made consistent profits even though it did not grow over 5 years.

Particulars/Financial YearRevenue (Cr.)
SuzlonSJVN
2022-23₹ 5,970.53₹ 2,938.35
2021-22₹ 6,581.78₹ 2,417
2020-21₹ 3,345.72₹ 2,485.39
2019-20₹ 2,972.85₹ 2,644.66
2018-19₹ 5,024.69₹ 2,654.05
CAGR (4 Years)4.41%2.57%

Particulars/Financial YearNet Profit (Cr.)
SuzlonSJVN
2022-23₹ 2,887.29₹ 1,359.30
2021-22₹ -176.55₹ 989.80
2020-21₹ 103.59₹ 1,645.72
2019-20₹ -2,691.84₹ 1,566.76
2018-19₹ -1,537₹ 1,366.56
CAGR (4 Years)--0.13%

Profit Margins

Suzlon and SJVN OPMs were 13.93% and 77.06% in FY23, respectively, compared to 12.58% and 74.08% in FY22.

Suzlon and SJVN’s net profit margins were 2.80% and 46.26% in FY23, respectively, compared to -3.98% and 40.95% in FY22. 

Suzlon’s operating margins fluctuated and were negative in FY19 and FY20 before improving in FY21, but the downward trend continued. SJVN maintained higher margins than Suzlon.

Suzlon’s net profit margins declined in FY19, FY20, and FY22. The margins were volatile over 5 years. The higher margins in FY21 and FY23 were due to exceptional gains; otherwise, the margins would have been negative in FY21 and slightly positive in FY23. SJVN has higher margins than Suzlon and has been on a downward trend since FY21.

Particulars/Financial YearOPM (%)
SuzlonSJVN
2022-2313.93%77.06%
2021-2212.58%74.08%
2020-2115.96%74.19%
2019-20-28.92%77.94%
2018-19-1.53%76.03%
Average (5 Years)2.40%75.86%

Particulars/Financial YearNPM (%)
SuzlonSJVN
2022-232.80%46.26%
2021-22-3.98%40.95%
2020-213.14%66.22%
2019-20-91.77%57.97%
2018-19-30.88%51.67%
Average (5 Years)-24.13%52.61%

Return Ratios

Suzlon and SJVN RoE in FY23 were 262.69% and 10.06%, respectively, compared to 112.88% and 9.08% in FY22.

Suzlon and SJVN RoCE were 112.88% and 9.08% in FY23, respectively, compared to 23.04% and 8.81% in FY22.

Suzlon’s RoE over 5 years is stagnant and declining. The negative net worth and loss caused the positive ratios in FY19 and FY21. The exceptional gains in FY23 provided a significant boost to the ratio. SJVN’s performance has been consistent from FY19 to FY21, but it has dipped further in recent years.

Suzlon’s RoCE shows better debt utilization and decent returns from FY21 to FY23, but the ratio remains low due to high debt and interest costs. SJVN, on the other hand, exhibits the same trend as RoE, but RoCE exceeds RoE. SJVN’s returns have declined in FY22 and FY23.

Particulars/Financial YearRoE (%)
SuzlonSJVN
2022-23262.69%10.06%
2021-224.96%7.63%
2020-21-3.05%13.25%
2019-2024.38%13.45%
2018-19-12.45%
Average (5 Years)-11.36%

Particulars/Financial YearRoCE (%)
SuzlonSJVN
2022-23112.88%9.08%
2021-2223.04%8.81%
2020-2138.85%15.24%
2019-20-50.56%16.74%
2018-19-6.76%15.53%
Average (5 Years)23.49%13.08%

Debt Analysis

Suzlon and SJVN D/E ratios in FY23 were 1.73 and 1.01, respectively, compared to -1.79 and 0.53 in FY22. 

Suzlon and SJVN interest coverage was 1.35 and 4.85 times, respectively, in FY23, compared to 1.96 and 6.84 times in FY22. 

Suzlon’s D/E ratio is negative from FY19 to FY22 due to negative shareholding and high debt, which is nearly two times the equity. SJVN’s debt is high and has been increasing from FY19 to FY23, with the most recent year’s debt accounting for half of the capital structure.

Suzlon’s interest coverage has remained low and negative as a result of consistent losses and high-interest costs. SJVN has a comfortable ratio, and the increase in debt has had an impact on it in recent years.

Particulars/Financial YearD/E
SuzlonSJVN
2022-231.731.01
2021-22-1.790.53
2020-21-2.020.17
2019-20-1.190.18
2018-19-1.360.19
Average (5 Years)-0.920.41

Particulars/Financial YearInterest Coverage
SuzlonSJVN
2022-231.354.85
2021-221.966.84
2020-210.2922.79
2019-20-0.36.73
2018-19-0.998.16
Average (5 Years)0.469.87

Key Metrics

Let us take a look at some of the key metrics of Suzlon Energy and SJVN.

ParticularsSuzlon EnergySJVN
CMP₹ 43.25₹ 129.2
Market Cap (Cr.)₹ 58,463 ₹ 36,995
P/E (TTM)94.3929.66
EPS (TTM)₹ 0.41₹ 2.84
RoE (%)9.95%7.09%
RoCE (%)18.41%5.44%
Price to Book Value15.532.31
Enterprise Value (Cr.)₹ 52,904.15₹ 46,239.25

Suzlon Energy vs SJVN – Future Plans

Suzlon Energy

  • Suzlon is attempting to reclaim its market leadership position and increase its market share in the face of rising competition from other conglomerates, such as Adani and Tata.
  • One of the most important priorities is to strengthen its balance sheet to reduce debt and fund working capital requirements.
  • Suzlon expects to lower its levelized cost of energy (LCOE) based on market conditions by improving technology and products.

SJVN

  • SJVN intends to diversify its portfolio by undertaking various projects as part of the government’s 24/7 electricity initiative.
  • Based on the Green Hydrogen Policy, the company intends to establish R&D in Himachal Pradesh.
  • SJVN expects to improve its financial performance and cash flows by undertaking projects like adding 3765 MW during FY24 and 1598 MW in FY25.

Conclusion

As we near the end of Suzlon Energy vs. SJVN, let us take a quick look at the comparison. Both companies have potential. In most ways, SJVN outperforms Suzlon. Government support for renewable energy, on the other hand, creates opportunities for Suzlon and SJVN.

Suzlon’s financials need to improve, and the recent reduction in debt by raising equity from QIBs may hold the company’s future. SJVN has government backing, and power generation with growing demand can hold potential and help increase margins further. What do you think about the potential of these companies? Let us know your views in the comments section below.

Written by Santhosh

the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make a well-informed investment.


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