Suzlon share: A green energy giant in the making

Suzlon Energy Ltd., one of the leading wind turbine manufacturers in India, has been on a stellar run in the stock market in 2023. The company’s share price has surged more than 300% since the beginning of the year, from around ₹7 to ₹29, hitting a new 52-week high. The company has also turned net-worth positive after a decade and reduced its net debt by 80% YoY to ₹1,180 crore in FY23. What is driving this remarkable turnaround and what are the prospects for the future?

A strong order book and favourable industry tailwinds

One of the main reasons behind Suzlon’s impressive performance is its robust order book, which stands at 1,542 MW as of June 30, 2023. The company has secured several large orders from domestic and international clients, including a 252 MW order from CLP India for a wind energy project in Madhya Pradesh. The company has also launched a new 3 MW-S414 series of wind turbines, which contributes 51% of the current order book and offers higher efficiency and reliability.

Another factor that is boosting Suzlon’s growth is the favourable industry tailwinds, as the government has set an ambitious target of achieving 500 GW of non-fossil fuel-based capacity by 2030, out of which 100 GW will be from wind energy. The renewable energy sector is expected to witness strong demand and investment in the coming years, as India aims to reduce its carbon footprint and enhance its energy security. Suzlon, being one of the pioneers and market leaders in the wind energy segment, is well-positioned to capitalize on this opportunity.

A turnaround story with a bright future

Suzlon has also shown remarkable improvement in its financial performance and balance sheet in FY23. The company returned to profitability after six years, posting a net profit of ₹166.7 crore, compared to a net loss of ₹2,691.4 crore in FY22. The company also became net-worth positive after a decade, with a net worth of ₹1,100 crore as of March 31, 2023. The company achieved this by successfully completing its debt restructuring process with its lenders and raising ₹630 crore through a rights issue.

The company’s management has expressed confidence in its future prospects and has given a positive outlook for FY24. The company expects to achieve higher revenues, margins, and cash flows in FY24, driven by higher volumes, better product mix, operational efficiency, and lower finance costs. The company also aims to increase its market share, expand its product portfolio, explore new markets, and leverage its technological edge and innovation capabilities.

A multibagger potential with a high target price

Given the strong fundamentals, growth potential, and competitive advantage of Suzlon, many analysts and investors are bullish on the stock and have given it a ‘buy’ rating. Some analysts have even predicted that Suzlon share price could reach ₹300 by November 2023, implying a massive upside of over 900% from the current levels. They believe that Suzlon is undervalued compared to its peers and has a lot of scope for re-rating. They also cite the increasing awareness and preference for green energy among consumers and corporates as a positive catalyst for Suzlon.

Suzlon Energy Ltd. is a green energy giant in the making, with a strong order book, favourable industry tailwinds, improved financial performance, and bright future prospects. The company’s share price has been on a phenomenal rise in 2023 and has the potential to become a multibagger in the long term. Suzlon is a stock that every investor should keep an eye on.