Suzlon Energy market cap hits ₹one lakh crore amid unbroken 5-month surge in stock price

Suzlon Energy shares have been demonstrating strong momentum in the market, reaching new multi-month highs as investors continue to show keen interest in this wind energy company.

In today's trading session, the stock advanced by 3.3%, reaching its highest level since January 2010, which pushed the company's market capitalization to cross ₹1 lakh crore, with the present standing at ₹1.02 lakh crore. This robust performance underscores the stock's consistent upward trend since March, with each month closing on a positive note. Over this period, the stock has appreciated by 82%.

Looking further back, since March 2023, the stock has maintained a strong upward trajectory, achieving an impressive gain of 836% to date. Investors have been optimistic about the company due to its strong quarterly financial performance, efforts to reduce debt, and significant order wins, which expanded its order book to 3.8 GW by the end of Q1 FY25—the largest in the company's history.

Attractive valuation

On Tuesday, Suzlon announced its plan to acquire a 76% stake in Renom Energy Services for ₹660 crore in two tranches from the Sanjay Ghodawat Group. The first tranche involves acquiring a 51% stake for ₹400 crore, followed by an additional 25% stake within 18 months for ₹260 crore.

Global brokerage firm Morgan Stanley has maintained an "overweight" rating on Suzlon, setting a price target of ₹73.4 per share. The firm highlights that the implied valuation of 4x price-to-sales is more attractive compared to Suzlon's listed peers. Additionally, Renom Energy Services operates in seven windy states and has expertise in maintaining turbines from 14 different manufacturers.

Gains momentum

India's power demand is expected to rise significantly, with renewable energy sources playing a crucial role in meeting this growing need. The Indian government has set an ambitious target of generating 1,900 billion units (BU) of electricity for the fiscal year 2024–25, representing a notable increase of approximately 9.3% from the 1,738.828 BU generated in the previous fiscal year.

As the world’s third-largest energy consumer and fourth-largest producer of renewable power capacity additions, India has made substantial progress in the energy sector. The country ranks fourth globally in wind power and fifth in solar power, with a total installed power generation capacity of 442 gigawatts (GW) as of March 31, 2024.

Out of this total, 199 GW comes from non-fossil fuel sources, making up 45% of the overall capacity. In the fiscal year 2023–24, renewable energy sources contributed approximately 71% to the nation’s new power capacity additions.

India's peak power demand has grown at an annual rate of over 5% over the past decade and is projected to keep increasing, driven by efforts to bring electricity to even the most remote villages. The country is expected to lead the world in energy demand growth through 2030, spurred by expanding economic activities and greater digitalisation across industrial, commercial, and residential sectors.

The goal of reaching 500 GW of non-fossil fuel capacity by 2030 has taken on added urgency, especially in light of recent developments underscoring the importance of energy security and the need for affordable, clean energy. To achieve this target, the government plans to tender 50 GW of renewable energy projects annually through FY 2027–28.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.