Suzlon Energy shares trading at six-year high; time to buy, sell or hold?

Shares of Suzlon Energy Ltd are trading at nearly six-year high ahead of the board meet today to consider raising funds. On July 28, 2017, the renewable energy stock closed at Rs 17.63 on BSE. It traded below this level for six years. On July 4 this year, Suzlon Energy shares managed to hit a 52-week high of Rs 18.54 on BSE. But since then, they have seen profit-booking. In the previous session, the stock closed 1.09% higher at Rs 17.65. Market cap of Suzlon Energy rose to Rs 21,896 crore. The stock has surged 44.67% in the last one month and gained 191.74% in a year. The stock has rallied 242.72% in three years.

In the previous session, turnover and volumes were high for the Suzlon Energy stock with 761.78 lakh shares changing hands amounting to a turnover of Rs 130.75 crore on BSE.

In terms of technicals, the relative strength index (RSI) of the stock stands at 73.1, signaling it's trading in the overbought zone. Suzlon Energy shares have a beta of 1.6, indicating very high volatility in a year. The share is trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

On the outlook of the stock, Abhijeet from Tips2trades said, "Suzlon Energy looks bullish on the Daily charts with next resistance at Rs 19. A daily close below the support of Rs 15.8 could lead to Rs 13.2 in the near term."

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Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, “The stock has witnessed a decent rise from Rs 13.30 levels to touch the peak zone of Rs 18.45 from where it had slipped down slightly with profit booking seen and currently taking support near Rs 16.65 levels has once again indicated a decent pullback to improve the bias. The bias has once again shown improvement anticipating for further upward move with initial target of Rs 18.70 visible and thereafter, with further strength sustained can carry on the momentum to Rs 20.20 zone.” Meanwhile ICICI Securities has initiated coverage on Suzlon Energy with a buy call. It has assigned a target price of Rs 22 for the renewable energy stock.

“We believe Suzlon is best equipped to benefit from industry tailwinds. We expect a sharp uptick in earnings FY24E onwards. Suzlon has reduced leverage by restructuring its debt and by raising money through a rights issue. As a result, leverage is now merely 1x debt/EBITDA. Initiate with BUY and a target price of Rs 22 per share (assigning a multiple of 24x FY25E EPS)," the brokerage said.

Explaining the rationale behind its stance, it said, "The lowest-cost solution for an optimal decarbonised grid is a mix of wind, solar and battery storage capacities. Wind generates powerin monsoon and nights when solar generation is low. Also, we believe higher wind will lead to lower battery storage requirement for a decarbonised grid."

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"Suzlon has enjoyed a market share of 33%in India’s domestic market (based on total installations)(source: company). It has 20GW of operational wind power capacity globally and is well ahead of its competitors. Note that its existing order book at 1.5GW bodes well for execution through the next two years," added the brokerage.

Suzlon Energy is a provider of renewable energy solutions. The company is a producer of wind turbines. It offers a range of solar energy solutions, such as solar irradiance assessment, land acquisition and approvals, infrastructure and power evacuation, supply chain, installation and commission and life cycle asset management.

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