Suzlon Energy shares hit upper circuit; here's why JM Financial pegs the multibagger at Rs 54

Shares of Suzlon Energy Ltd continued to hit upper circuit during the trading session Thursday after announcing its results for the December 2023 quarter in the previous trading session. The multibagger counter has been hogging limelight as Dalal Street after becoming a debt-free entity after paying off its debts through a QIP and a rights issue.

Suzlon Energy reported a 160 per cent jump in its quarterly net profit on year-on-year (YoY) basis at Rs 203.2 crore in October-December 2023 period, compared to a bottomline of Rs 69.8 crore in the year ago period. The manufacturer of Wind turbines reported a 7 per cent YoY rise in revenue at Rs 1,560.5 crore.

Ebitda for the quarter came in at Rs 247.6 crore, reporting a growth of 17.7 per cent compared to the same period last year. Ebitda margin expanded by 140 basis points from last year to 15.9 per cent for the quarter.

Suzlon Energy reported a rise in revenue led by dispatches of 170 MW of wind turbine generator (WTG) and stable O&M revenue. EBITDA for the quarter came in at Rs 250 crore, reflecting a 15.9 per cent Ebitda margin. Adjusted PAT came in at Rs 200 crore primarily driven by low amortization of the moulds for S120 2.1 MW WTGs, said JM Financial

"We expect Suzlon to deliver revenue, Ebitda and PAT CAGR of 42 per cent, 43 per cent and 176 per cent, respectively over FY23-26E," JM said. To expedite wind energy additions, various policy initiatives have been taken viz. state-specific sub-bids for wind, pooling of tariff for uniform RE tariff, RPO trajectory, waiver of ISTS charges for 25 years for RE projects, it said.

Following the announcement of results, shares of Suzlon Energy extended its rally and rose another 5 per cent to Rs 48.31, hitting its 52-week high, at Rs 48.31 on Thursday, with a total market capitalization of more than Rs 65,500 crore. The scrip had settled at Rs 46.01 on Wednesday, rising 5 per cent in the previous trading session.

Shares of Suzlon Energy surged as much as 600 per cent from its 52-week low at Rs 6.96 hit in March 2023. The stock has rallied about 425 per cent in the last one year, while the counter has rallied up to 150 per cent in the last six months. It has gained 25 per cent in the last one month period.

Suzlon has received 2,290 MW of orders during 9MFY24. During January 2024, 867 MW of additional orders were received, taking total order inflows to a healthy 3,157 MW up to January 2024 with a diversified mix. The company won the largest ever order in India for the supply of WTGs for a 642 MW wind power project on January 24 from ABC Cleantech (ACPL), JM added.

Management considers the current order book as the recognition of Suzlon’s engineering and execution capabilities. Currently, 15 GW of renewable projects are under bidding, which include 9 GW firm and dispatchable renewable energy and 2.6 GW pure wind projects, giving a healthy pipeline of opportunities going forward.

Given the challenges of land-acquisition in scaling up of project execution, the brokerage has maintained estimates for FY25E and FY26E in spite of better than expected order book, improvement in financial health, favorable policy environment and very healthy bidding pipeline, it added while maintaining 'buy' rating on the stock with a target price of Rs 54.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

Also read: Stock recommendations by analyst for February 1, 2024: Exide, DCW and Trident

Also read: Top 5 stocks to watch on February 1: Paytm, Glenmark Pharma, Adani Enterprises and more

Also read: India Cements shares dive 9% on reports of ED search for FEMA violations