Mumbai: Suzlon Energy Ltd continued its downward trend for the fifth consecutive session, with its shares hitting the lower circuit limit on Wednesday amidst significant selling pressure. This decline has seen the Suzlon Energy stock plummet by 24 percent from its 52-week high of Rs 50.72 reached on February 2.
On Wednesday, the stock was locked at Rs 38.53, representing a 5 percent decline within the lower circuit limit. Over the course of the past five days, the stock has witnessed a 15 percent decrease. Market data indicates that there were sell bids for 17,52,559 shares on BSE, with no buy bids in sight.
Recent analysis from JM Financial suggests that MNRE (Ministry of New and Renewable Energy) has reverted to the previous bidding method of ‘reverse auctions,’ unexpectedly limiting the bid size to 600MW for conventional wind tenders.
According to JM Financial, MNRE has instructed bids to be issued on a nationwide basis by SECI, NTPC, NHPC, SJVN, and state agencies. However, despite the policy uncertainty, the brokerage firm believes that Suzlon Energy is unlikely to be severely impacted. They anticipate a high likelihood of policy reversal in the future, considering that the market demand surpasses the industry’s manufacturing capacity and execution capability.
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Despite the current policy ambiguity, JM Financial maintains a BUY rating on Suzlon Energy shares with a target price of Rs 54, based on a 27x FY26E EPS. This recommendation is supported by the company’s strengthening order book, improved financial health, and a promising bidding pipeline. Notably, Suzlon Energy shares have surged by 349 percent over the past year.
In a strategy note dated February 13, Axis Capital highlighted insights from its meeting with Suzlon Energy, indicating that India may witness wind capacity additions of less than 3GW in FY24. This projection contrasts with the 2.28GW commissioned in FY23, with a similar amount commissioned in the current fiscal year until January 2024.
Axis Capital further stated that despite potential improvements in the final two months of the fiscal year, wind capacity additions may still fall short of their previous estimate of 4.0GW. Suzlon currently holds a 29 percent market share of wind turbines commissioned in the first nine months of FY24. Looking ahead, Suzlon anticipates India to commission 5-6GW of wind capacity in FY25, considering challenges related to transmission evacuation and land acquisition. While land acquisition can take up to 6-9 months, Suzlon assures that availability of windy sites or cranes is not a concern.
The note from Axis Capital also points to a substantial increase in transmission spending planned between 2022-2027, which is expected to alleviate evacuation challenges. By FY27-28, Suzlon foresees the potential for 8-10GW per annum of wind capacity commissioning in India, although achieving such levels before that timeframe seems unlikely.
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