Suzlon Share Price: An Examination of the Opportunities and Performance of a Renewable Energy Champion
Introduction
Suzlon Energy Limited is a global renewable energy solutions company and one of the industry leaders. Suzlon has vertically integrated in-house manufacturing units and delivers end-to-end solutions through designing, developing, manufacturing, and installing wind turbine generators (WTGs). In addition to that, Suzlon also offers long-term operation and maintenance (O&M) solutions, hence it is a master enterprise in the clean energy venture.
Today we are going to discuss Suzlon’s business, recent performances, and whether its share price is reasonably revaluing its opportunity for growth.
About Suzlon Energy
Suzlon participates in the entire value chain of wind power projects, from planning to execution. Its operations comprise:
Manufacturing: Suzlon develops and manufactures key components of wind turbines such as rotor blades, tubular towers, generators, control systems, gears, and nacelles.
Installation & O&M: The firm undertakes installation and provides long-term operations and maintenance of wind farms in India and overseas.
Project Execution: Suzlon offers complete wind project solutions including wind resource assessment, infrastructure development, and evacuation of power. [screener]
Suzlon Share Price and Key Financials
Market Cap: ₹78,414 Cr
52-Week High/Low: ₹86.0 / ₹36.8
Stock P/E: 67.0
Book Value: ₹3.32
ROCE: 24.9%
ROE: 28.8%
Face Value: ₹2.00
Dividend Yield: 0.00% [screener]
Benefits of Investing in Suzlon share
Debt Reduction: Suzlon has been able to cut its debt significantly, leaving it almost debt-free, hence improving its financial health.
Strong Profit Growth: The company has registered an impressive 19.7% CAGR profit growth over the last five years.
Strong Future Prospects: Analysts expect Suzlon to deliver solid quarterly performance, which means there may be upside potential in its share price.
Increasing Renewable Energy Demand: With the global move towards clean energy gaining momentum, Suzlon can be anticipated to benefit from rising demand for wind energy solutions.
Cons and Risks to Watch Out for
Overvaluation: Suzlon stocks are trading at 17.4 times book value, which could be a warning sign of overvaluation.
No Dividend: Despite being always profitable, the company does not pay dividends, which is a drawback for yield-oriented investors.
Low Promoter Holding: Promoter holding is very low at 13.2%, and this raises the issue of stability in ownership.
Increasing Debtor Days: Debtor days of the company have risen from 83.4 to 102 days, which can indicate cash flow issues.
Low Tax Rate: Suzlon’s low tax rate may be a cause of concern for its tax management strategy.
Future Prospects and Investment Potential
Suzlon is favorably positioned to take advantage of growing global interest in clean energy. With a keen debt reduction, increased profitability, and sustained growth trend, Suzlon’s stock price has the potential to continue appreciating. However, its high valuation and non-dividend payment can render it less appealing to conservative investors.
Conclusion
Suzlon Energy is among the biggest renewable energy players with a healthy growth history. Despite having its share price reflecting its prospects, investors should weigh its pros and cons prior to investing decisions.
Tip: Monitor Suzlon’s quarterly reports and debt policies to understand its long-term viability.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a professional before making any investment decisions.
