Suzlon Energy stock climbs to 52-week high, up 291% in a year; should you buy?

Morgan Stanley recently initiated coverage on Suzlon with an 'Overweight' rating with a target price of Rs 58.5 per share, citing it as a significant beneficiary of India's energy shift towards greener sources.

Shares of Suzlon Energy jumped 5 percent on July 24 to hit a 52-week high of Rs 55.70 on the National Stock Exchange (NSE), extending gains to the third straight session.

The stock has seen great interest from investors ever since several brokerages issued bullish calls on the counter, citing impressive debt reduction, efficient working capital management and a positive outlook.

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At 12:49 pm, Suzlon Energy shares was trading 3.4 percent higher at Rs 54.83 on NSE. The stock has delivered stellar returns in the last 1 year, rallying 291 percent, nearly quadrupling investors' money.

Technically, Suzlon Energy stock is hovering in the cycle of higher highs – and higher lows on the daily chart and has registered a fresh 52-week high.

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"Recently, the counter has decisively surpassed the swing high of 50.60 to claim new highs and seems poised to continue its upward march. On the technical front, the breakout zone of 50 should now provide a cushion to short-term blips, while the strong support lies around the 48-46 subzone", said Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One.

"Simultaneously, the technical parameters have reached the over-bought terrain; hence, caution is warranted at elevated zones. The undertone remains bullish and dips should augur well to accumulate the counter," Krishan told Moneycontrol.

According to domestic brokerage Nuvama Institutional Equities, Suzlon Energy is capable of maintaining its leadership in wind turbine generator (WTG)/turnkey EPC (Engineering, procurement, and construction) execution leading to 21 percent OB and 61 percent PAT CAGR over FY24–27E.

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The company is now well placed to capture its previous highs and sustain leadership, it had stated, adding that it expects Suzlon Energy to maintain a market share of around 30 percent and show a strong pickup in order intake and execution, the brokerage said as it maintained a 'buy' rating on the stock with a target price of Rs 52, which the counter has already surpassed.

The overall trend for Suzlon is bullish, with confluence from various technical indicators reinforcing the optimistic outlook. Given these signals, there is potential for the stock to achieve a target price of Rs 63 & Rs 65 in the near term, said Mandar Bhojane, Equity Research Analyst, Choice Broking

"It is advisable to consider buying on dips, particularly around Rs 52, capitalizing on potential retracements in the stock price. To prudently manage risk, implementing a stop-loss (SL) at Rs 49.4 is recommended. This precautionary measure is crucial to safeguard investments in the event of an unexpected market reversal," he added.

Brokerage Calls on Suzlon Energy

Earlier this month, Marc Desaedeleer, an Independent Director at Suzlon, tendered his resignation. In his resignation letter, he cited instances where the corporate governance standards practiced by the company did not align with his expectations. S

Specifically, he noted situations where communications lacked the level of openness and transparency he anticipated. READ MORE

ICICI Securities believes that the resignation letter doesn't suggest any financial or legal impropriety. The management is actively enhancing transparency and information-sharing processes.

With these measures in place, the management is optimistic about resolving corporate governance concerns and enhancing disclosures. The brokerage maintained a 'BUY' rating on Suzlon with a target price of Rs 60, implying a 13 percent upside from the previous close.

Additionally, Morgan Stanley recently initiated coverage on Suzlon with an 'Overweight' rating with a target price of Rs 58.5 per share, citing it as a significant beneficiary of India's energy shift towards greener sources.

Positioned well to capitalise on this transition, Suzlon could potentially secure wind orders totaling approximately 32 GW or $31 billion over the next five years, it said.

According to the international brokerage, Suzlon's earnings are expected to soar with a 57 percent CAGR from FY24 to FY27. Morgan Stanley analysts noted that Suzlon 2.0 is well-positioned to benefit from India's energy transition.

The company has become much stronger after deleveraging and leaner by reducing fixed operating costs, it said.

Also Read | Morgan Stanley initiates coverage on Suzlon, sees 22% upside amid India's energy transition

Suzlon achieved debt-free status by raising funds through various methods, including a QIP and a rights issue. By the end of the March quarter, the company had a net cash balance of Rs 1,100 crore.

FII/FPI increased holdings in Suzlon Energy from 17.83 percent to 19.57 percent in March 2024 quarter, and number of MF schemes increased from 17 to 23. Mutual Funds also increased holdings from 1.33 percent to 1.86 percent in the fiscal fourth quarter.

According to Bloomberg data, all five analysts that track Suzlon Energy have a 'buy' recommendation on the stock.

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