Suzlon snaps three-day fall; stock jumps 4% on bagging new order

Shares of Suzlon Energy gained nearly 4% on December 15 after the company bagged a fresh wind power project from a global utility company. The renewable energy solutions provider, however, did not disclose the name of the client and financial transaction involved in the deal.

Boosted by fresh order win, Suzlon Energy shares gained as much as 3.6% to hit an intraday high of ₹38.69. Early today, the largecap stock opened a tad higher at ₹37.44 against the previous closing price of ₹37.33, snapping three sessions losing streak. The counter lost 4.7% in the previous three sessions.

At the time of reporting, Suzlon share price was quoting at ₹38.09, up 2%, while the market capitalisation stood at ₹51,714 crore.

 In an exchange filing today, Suzlon says that it has secured a new order for the development of a 100.8 MW wind power project for a leading global utility company. As part of the deal, the company will install 32 wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower and a rated capacity of 3.15 MW each. The project is located in Gujarat.

The release notes that Suzlon will execute the project with a scope of supply, supervision, and commissioning. Additionally, it will also undertake post-commissioning operation and maintenance services.

Girish Tanti, Vice Chairman, Suzlon Group said, "This order is in line with Suzlon’s reputation for worldclass wind energy solutions enabling industry leading companies from across the globe to trust us with their wind energy projects. The power generated from this project will serve the people of Gujarat with clean, green, renewable power.”

“As India's ambitions to be carbon neutral take momentum we are committed to partnering with all stakeholders every step of the way. The Suzlon 3 MW series is the next stage evolution of our proven technology, customized for the Indian wind regime and 3.15 MW is one of the largest wind turbines in the country today," he adds.

JP Chalasani, Chief Executive Officer, Suzlon Group, says, “We are delighted to announce our first order with the leading global utility backed by an established global track record in renewable energy. This order is a testament to the quality and reliability of our technology and service solutions.”

Stock surges 500% in 8 months

The shares of Suzlon Energy has seen remarkable growth in the last nine months, surging over 500% from its 52-week low of ₹6.96 on March 28, to touch a 52-week high of ₹44 on November 17, driven by turnaround in its financial position and favourable sectoral tailwinds. The renewable energy stock has risen 248% in a year; 256% in the calendar year 2023; 163% in six months. The stock has fallen nearly 6% in the last one month as investor booked some profit at higher level.

As of September 30, 2023, the company had an order book of 1,613 Megawatt (MW) of which 62% was for 3.xMW turbines, the supply of which will start in Q4 FY24. Additionally, it bagged an order of the 3MW product series for the development of a 50.4 MW wind power project for Juniper Green Energy in October 2023.

In terms of project execution, Suzlon delivered 267MW of net volumes in H1 FY24 as compared to 312MW of net volumes in H1 FY23. The management has guided for doubling of dispatches in H2 FY24 vis-à-vis H1 FY24 (JMFe – 800MW for FY24). Going forward, the company expects annual addition of 4-5GW in FY24E and 6-7GW in FY25E in the country.

The industry outlook is also favourable as the government of India has set target of 500 GW of non-fossil fuel-based capacities, includes a healthy mix of wind and solar capacities, by 2030. The Ministry of New & Renewable Energy (MNRE) has also announced a renewable energy projects bidding trajectory of 50 GW per annum for FY24-28, which includes at least 10 GW of wind.

Rating update

In September, CRISIL raised the ratings of Suzlon Energy to 'CRISIL BBB+/A2' from 'CRISIL BBB-/A3' with a positive outlook for long-term and short-term facilities, citing the company’s strengthened financial position, operational excellence, and favourable sectoral tailwinds. The agency opined that healthy order book and delivery volumes would drive profitability of wind turbine generators (WTGs) business.

CRISIL expects that profitability of Suzlon (consolidated) would further grow and achieve EBITDA above ₹750 crore in fiscal 2024, driven by increasing fleet base of operations and maintenance (O&M) business and positive tailwinds in Indian wind sector leading to expectation of increase in execution volumes.

The agency said that the rating upgrade was a result of Suzlon's successful reduction of debt by repaying the entire term debt through the proceeds of a qualified institutional placement (QIP) of approximately ₹2,000 crore in August, 2023. The reduction in fund-based borrowings, steady cash flows from the operations and maintenance (O&M) services business, and improved business profile in the wind turbine segment have contributed to this upgrade.

As of September 30, 2023, Suzlon’s balance sheet strength improved with a positive consolidated net worth of ₹3,400 crore, primarily due to debt repayment over the last year. Post the QIP, there was no residual debt in the company, except for a nominal debt of ₹120 crore in one of the subsidiaries of the company. The company has a net cash balance of about close to ₹600 crore, with a gross cash balance of about ₹720 crore. 

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