Suzlon Energy stock continues its bull run, gains 24% over 7 sessions following Q1 results

Investors continue to show significant interest in purchasing Suzlon Energy shares, even as the stock has been on a bull run for the past 16 months. This sustained interest highlights the market's confidence in the country's renewable energy sector, which is a key focus of the government's goal to achieve 500 GW of non-fossil fuel energy capacity by 2030.

Additionally, the market values Suzlon Energy's consistently strong performance each quarter, its focus on reducing debt, and its significant order wins, which have expanded its order book to 3.8 GW at the end of Q1FY25— the highest in the company's history.

The current order book is scheduled for execution up to FY26, with a significant portion expected to be delivered in FY25, as per management's guidance. The company anticipates commissioning between 5.0 and 5.5 GW of projects in FY25, with the potential to increase this to 6.5 and 7.0 GW in FY26 and further to 8 and 9 GW by FY27.

Following the company's strong turnaround in its operations, both foreign and domestic brokerage firms have raised their target prices for the stock multiple times, with the stock reaching these targets earlier than anticipated.

In addition to retail investors, institutional investors have also increased their stake in the company. By the end of the June quarter, domestic institutional investors (DIIs) held a 9.2% stake, up from 6.3% in Q4 FY24. Retail investors continue to hold the majority of the shares, with 56% of the company’s stake at the end of Q1 FY25.

On July 23, the company reported its June quarter results, with a 200% increase in net profit, reaching ₹302 crore. The company’s net cash position was ₹1,197 crore as of June 30, 2024. Following the Q1 results, the company’s shares experienced a significant uptrend over the next seven sessions, gaining 24% to ₹68.20 apiece, highest level since November 2009.

The company also achieved a substantial reduction in gross debt, which fell to ₹101 crore in Q1 FY25 from ₹6,391 crore in FY22, as highlighted in the earnings presentation. It has achieved its highest wind turbine deliveries in seven years, reaching 274 MW—a 103% increase compared to the previous year.

Revenue from operations surged to ₹2,016 crore, reflecting 50% year-over-year growth. The company’s quarterly EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) also reached ₹370 crore, marking its highest level in seven years.

Following the company's June quarter results, JM Financial has raised its target price for the stock to ₹71 from ₹54.

JM Financial notes that the company's momentum is driven by several factors, including improved execution capabilities, a strong order book, a healthy bid pipeline, and a solidifying balance sheet. These elements are positioning the company for substantial growth, according to their report.

As Suzlon becomes eligible to bid for PSU tenders such as those from NTPC, it is anticipated that the company will secure substantial orders in FY25 and beyond, aided by expected reductions in competitive pressure, it noted. 

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