Suzlon Energy shares jump 5% on bagging new order

Shares of Suzlon Energy rallied 5% on Tuesday after the country’s largest renewable energy solutions provider secured a 47.6 MW wind energy order from The KP Group. This marks the second wind energy contract won by Suzlon in two months. In May, the company had secured a 69 MW wind energy order from the Indian subsidiary of a leading Nordic Energy Company.

The latest order is for the development of a 47.6 MW wind power project for The KP Group at Vagra in Bharuch district in Gujarat. The project is expected to be commissioned in 2024. The company, however, didn't disclose the value of the order.

Boosted by the development, Suzlon Energy shares gained as much as 5% to hit its upper circuit limit of ₹18.23 on the BSE. The counter saw surge in buying activities with 666 lakh shares changing hands over the counter compared to two-week average volume of 560.34 lakh stocks. The market capitalisation climbed to ₹22,579 crore.

Suzlon shares have witnessed strong rally in recent past as the company has reduced leverage by restructuring its debt and by raising money through a rights issue. The stock has delivered 235% returns to its shareholders in the last one year after hitting its 52-week low of ₹5.43 on July 28, 2022. It touched a 52-week high of ₹18.54 on July 4, 2023. In the last six months, the counter has gained 79%, while it added 18% in a month and 4% in a week.

In an exchange filing on Monday, Suzlon said it will supply their S133 wind turbines (equipment supply) and supervise execution commissioning of the project. Suzlon will also provide comprehensive operations and maintenance services post‐commissioning.

JP Chalasani, Chief Executive Officer, Suzlon Group said, “The power generated from this project will serve the Commercial & Industrial (C&I) consumer segment, which is a key segment to drive deeper penetration of renewables in India”.

“Suzlon is committed to partner with increasing number of Indian industries, driving them toward their net-zero targets while powering the nation with sustainable energy,” he said.

As per the release, every Suzlon turbine ranging over 80-90% on domestic content and manufactured in the country through a thriving domestic value chain is a testament to its contribution to the vision of an Aatmanirbhar Bharat.

Farukbhai Gulambhai Patel, chairman and managing director, KP Group said, “This project is in line with our goal to unlock India’s renewable energy potential and power the commercial and industrial sectors. As India’s leading renewable energy solutions provider with proven technology, Suzlon is the right partner for us. We have had a long and fruitful association with Suzlon in the past using their cost-effective Made-in-India solutions to create an ‘Aatmanirbhar Bharat’.”

Recently, ICICI Securities initiated coverage on the stock with a ‘Buy’ rating and target price of ₹22 per share which implies a multiple of 24 times its FY25 earnings per share (EPS). The agency believes that the wind turbine manufacturer is best equipped to benefit from industry tailwinds and will see a sharp uptick in earnings FY24E onwards.

“India has launched a 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, the market leader, is best suited to reap the benefits of the same,” the brokerage said in a report released on June 29.

Suzlon enjoys a market share of 33% in India’s domestic market (based on total installations), while it has 20 GW of operational wind power capacity globally and is well ahead of its competitors. The company’s existing order book stands at 1.5 GW, which bodes well for execution through the next 2 years.

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