Suzlon Energy shares jump 4% on bagging new order; zoom 370% in 7 months

Suzlon Energy shares have witnessed remarkable growth this year, thanks to turnaround in its financial position, operational excellence, and favourable sectoral tailwinds. The share price of the country’s largest wind turbine manufacturer has risen more than 370% in the last seven months, rebounding from its 52-week low of ₹6.96 touched on March 28, 2023. The stock hit 52-week high of ₹34.10 on October 23, 2023.

On Friday, shares of Suzlon Energy gained as much as 4.5% to ₹32.90, while the market capitalisation rose to ₹43,875 crore. Early today, the stock opened at ₹31.99 against the previous closing price of ₹31.47 on the BSE. In the last one year, Suzlon Energy shares delivered nearly 300% returns to its shareholders, while it gave over 200% in the calendar year 2023. The largecap stock has risen 294% in six months and 26% in a month.

Suzlon Energy shares got a boost today after the renewable energy solutions provider said that it secured an order of the 3 Megawatt (MW) product series for the development of a 50.4 MW wind power project for Juniper Green Energy.

“Suzlon will install 16 wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower of their new product with a rated capacity of 3.15 MW each. The project is located at Dwarka district in Gujarat and is expected to be commissioned in 2025,” it says in a BSE filing today.

As per the company, this is the repeat order for its largest turbine rated 3.15 MW, S144‐140m from the 3 MW series. As part of the agreement, Suzlon will supply the wind turbines (equipment supply) and execute the project including, erection and commissioning. Suzlon will also provide comprehensive operations and maintenance services post‐commissioning, it adds.

Suzlon's 3 MW turbines feature a 144‐meter rotor diameter and are designed to unlock low wind sites and deliver improved energy yield suitable for all Indian wind regimes. With the primary objective of increasing generation, reducing the cost of energy, and contributing to an Aatmanirbhar Bharat, this series marks a significant milestone for the company and the country's wind energy sector, the company says in the filing.

Last month, CRISIL upgraded the ratings of Suzlon Energy to 'CRISIL BBB+/A2' from 'CRISIL BBB-/A3' with a positive outlook for long-term and short-term facilities, citing the company’s strengthened financial position, operational excellence, and favourable sectoral tailwinds. The positive outlook was on the back of expectation that a healthy order book and delivery volumes would drive profitability of the Wind Turbine Generators (WTGs) business.

CRISIL expects that profitability of Suzlon (consolidated) would further grow and achieve EBITDA above ₹750 crore in fiscal 2024. This is expected to be driven by increasing fleet base of operations and maintenance (O&M) business and positive tailwinds in Indian wind sector leading to expectation of increase in execution volumes. “These strengths are partially offset by the relatively high operating leverage in the WTG business, its working capital-intensive operations and financial history of the company,” it added.

The agency said that the rating upgrade was a result of Suzlon's successful reduction of debt by repaying the entire term debt through the proceeds of a qualified institutional placement (QIP) of approximately ₹2,000 crore. The reduction in fund-based borrowings, steady cash flows from the operations and maintenance (O&M) services business, and improved business profile in the wind turbine segment have contributed to this upgrade.

As of March 31, 2023, the term debt of Suzlon Energy stood at ₹1,765 crore on the back of scheduled repayments of term loan and additional reduction of ₹900 crores from rights issue in October 2022. Furthermore, the company’s networth turned positive as on March 31, 2023 on the back of refinancing (gain on derecognition of OCDs & CCPS) and rights issue of ₹1,200 crore in fiscal 2023.

On August 14, 2023, the company approved the allotment of equity shares to Qualified Institution buyers aggregating to ₹2,000 crore. The company subsequently utilised the required amount to repay its entire debt, significantly improving the financial risk profile of the company.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)