Why Suzlon Energy Share Price is Rising

India's renewable energy sector has been a hotbed of investment in recent years.

The country's strong push towards clean energy, coupled with government incentives and falling costs, has made renewable energy a lucrative investment sector.

Suzlon Energy, a prominent player in the wind energy domain, has been a standout performer in the markets. The company has transformed from a laggard to a leader, delivering multibagger returns of 181.2% in the past year alone.

2024 has continued this upward trajectory, with the stock surging 45.5% so far. July saw a relatively subdued performance, with the share price inching up only 2.4% in the past month.

However, today the winds have changed. Today Suzlon share price touched its record high.

What has triggered this renewed interest in Suzlon Energy?

Let's delve deeper into the factors driving this upward momentum.

#1 Strong Quarterly Results

Suzlon Energy reported strong growth in its consolidated net profit for the quarter ended 30 June 2024. For the said quarter, its net profit stood at Rs 3 billion (bn), a 200% increase from Rs 1 bn in the same quarter the previous year. The rise in profits was driven by strong growth in revenue.

The company's revenue from operations for this quarter stood at Rs 20.2 bn, up 50% from Rs 13.5 bn a year earlier. Its total revenues received a boost due to record high wind turbine deliveries.

The earnings before interest, taxes, depreciation, and amortisation (EBITDA) for Q1 FY25 was Rs 370 bn, an 86% increase from Rs 2 bn in Q1 FY24. It is the highest quarterly EBITDA in seven years. The EBITDA margin for the quarter improved to 18.4% from 14.8% in the previous year.

Significant milestones for the company during the April-June quarter included the highest Q1 deliveries in seven years at 274 MW. The company also reported its largest-ever order book of 3.8 GW since its inception 29 years ago.

In the June quarter, Suzlon Energy achieved its highest wind turbine deliveries in seven years, reaching 274 MW, marking a 103% increase year-over-year. Suzlon's net cash position was Rs 1,197 bn as of 30 June 2024.

#2 Sectoral Tailwinds

The renewable energy sector, especially wind energy, is experiencing significant growth. Power demand is anticipated to rise significantly. Renewable energy is expected to account for 90% of power capacity additions from FY25 to FY28.

This aligns with the Indian government's goal of achieving 50% power generation from renewable sources by 2030.

The wind energy sector is set for a substantial boost, with 30 GW of new wind capacity projected to be added between FY25 and FY28. This is almost three times the capacity added in the previous four years.

The Ministry of New and Renewable Energy (MNRE) has detailed plans to auction 10 GW of wind projects annually. This initiative aims to enhance the country's wind energy capacity significantly.

Additionally, a considerable investment of Rs 2.5 trillion is being made in infrastructure to connect new 60 GW wind zones from December 2022.

These developments indicate strong sectoral tailwinds, providing a favorable environment for companies like Suzlon Energy to grow and thrive.

What Next?

Suzlon Energy has outlined several growth strategies and targets for FY25 to capitalise on the sector's favorable conditions and strengthen its market position.

The company plans to leverage its robust balance sheet to drive growth.

Suzlon aims to significantly ramp up its delivery volume of wind turbine generators (WTGs). This increase will help the company meet the rising demand for wind energy solutions.

The company is focusing on enhancing profitability in its WTG business. By improving operational efficiency and cost management, the company aims to achieve better financial performance.

It plans to focus on hybrid projects that combine wind energy with other renewable sources and storage solutions. This approach aims to optimise energy generation and provide reliable power supply.

The company is prioritising the development of a local supply chain for next-generation turbines. This strategy will ensure cost competitiveness and improve the efficiency of its operations.

It is also working on integrating different energy sources into the distribution grid. This integration will enhance the reliability and stability of the power supply.

Suzlon Energy plans to expand its operations to meet the growing demand for wind power. This expansion includes exploring new markets and increasing its footprint in existing ones.

These strategic initiatives and growth targets position Suzlon Energy to capitalise on the rapid growth of the renewable energy sector, particularly wind energy, and continue its strong performance in the coming years.

For a detailed analysis of Suzlon, we recommend you watch the video below in which Co-head of Research at Equitymaster Rahul Shah analyses the company.

How Suzlon Energy Shares has Performed Recently

In the past six months, shares of the company have rallied over 36.7% and it in past year it gave multibagger returns of 181.2%.

On a year-to-date basis, Suzlon Energy has surged over 45.5%, while in the past month, shares are up 2.4%.

The company touched its 52-week high of Rs 57.8 on 23 July 2024 and its 52-week low of Rs 17.4 on 27 July 2023.

About Suzlon Energy

Suzlon is a renewable energy solutions provider.

The company is involved in the business of manufacturing, project execution and operation and maintenance of wind turbine generators and sale of related components.

The company's client portfolio includes power utilities and electricity producers in both the private and public sectors.

To know more, check out Suzlon's financial factsheet and quarterly results.

You can compare Suzlon Energy with its peers:

Suzlon Energy vs Siemens

Suzlon Energy vs Inox Wind

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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