Suzlon Energy’s market capitalisation reaches ₹1 lakh crore amid 5-month continuous rally in stock prices

Suzlon Energy shares are showing strong market momentum, hitting new multi-month highs, with investors continuing to show strong interest in the wind energy company.

The stock rose 3.3% in today’s trading session, reaching its highest level since January 2010, pushing the company’s market capitalization above ₹1 lakh crore, which is currently ₹1.02 lakh crore. This solid performance underlines the stock’s steady upward trend since March, with each month closing in the black. The stock has appreciated by 82% during this period.

Looking further back, the stock has maintained a strong upward trajectory since March 2023, posting an impressive 836% gain to date. Investors were bullish on the company due to its strong quarterly financial results, debt reduction efforts, and significant order wins that increased its order backlog to 3.8 GW by the end of Q1 FY25 – the largest in the company’s history.

Attractive pricing

Suzlon on Tuesday announced plans to acquire a 76% stake in Renom Energy Services ₹660 crore in two tranches from Sanjay Ghodawat Group. The first tranche comprises acquisition of 51% stake ₹400 crore, followed by additional 25% stake in 18 months ₹260 rupees.

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

It’s gaining momentum

India’s energy demand is expected to increase significantly and renewable energy sources will play a key role in meeting this growing demand. The Government of India has set an ambitious target of generating 1900 billion units (BU) of electricity for the fiscal year 2024-25, a significant increase of about 9.3% over the 1738,828 BU generated in the previous fiscal year.

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

Of this total, 199 GW comes from non-fossil sources, accounting for 45% of the total capacity. In fiscal year 2023-24, renewables contributed about 71% of new capacity additions in the country.

India’s peak energy demand has grown at a rate of more than 5% per year over the past decade and is expected to continue to grow, driven by efforts to bring electricity to even the most remote villages. The country is expected to lead the world in growth in energy demand by 2030, driven by expanding economic activity and greater digitalization in industrial, commercial and residential sectors.

The goal of achieving 500 GW of non-fossil fuel capacity by 2030 has become even more urgent, especially in light of recent events underscoring the importance of energy security and the need for affordable, clean energy. To achieve this goal, the government plans to tender 50 GW of renewable energy projects annually by fiscal year 2027-28.

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