Suzlon Energy shares up 28% in 13 sessions, hit 5% upper circuit in 6 of them – here’s why

Continuing their upward trend, Suzlon Energy shares hit the 5% upper circuit limit at ₹69.60 apiece in today's trade for the sixth time in the last 13 sessions. During this period, the stock has gained 28.3% to trade at a level not seen since January 2010.

Investors have been bullish on the company, given its consistently strong financial performance each quarter, its focus on reducing debt, and the significant order wins, which expanded its order book to 3.8 GW at the end of Q1 FY25—the highest in the company's history.

Today's rally came after the company announced on Tuesday that it would 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.

Renom is the largest multibrand operations and maintenance service (MBOMS) provider in the country, with assets of 1,782 MW in wind, 148 MW in solar, and 572 MW in BOP under maintenance across customer segments.

It offers comprehensive operations and maintenance services for all technologies and capacities of wind turbines and solar assets, managing about 2.5 GW of assets across India, as the company's filing. 

This strategic acquisition aims to establish Suzlon's market leadership in the wind energy O&M service business, with the wind energy sector expected to exceed 100 GW by 2030. Suzlon's in-house OMS will focus on the current Suzlon fleet in India of approximately 15 GW and a growing order book, while Renom will continue to target the non-Suzlon wind turbine services market of around 32 GW and growing in India.

This acquisition gives the Suzlon Group comprehensive presence and penetration into the non-Suzlon segments of the Indian Wind Energy Services industry.

Girish Tanti, Vice Chairman, Suzlon Group, said on the acquisition, “With India’s target to achieve 500 GW of renewable energy installations by 2030, we shall see a multitude of different technologies and wind turbines of various makes in the market going ahead."

"Renom has emerged as the single largest player in this domain with great strength and potential to tap further into this market segment. This acquisition aligns with Suzlon Group’s vision of leveraging growth while safeguarding our country’s renewable energy assets, irrespective of their original make," he added.

Morgan Stanley remains 'overweight' on Suzlon

Global brokerage firm Morgan Stanley maintains an "overweight" rating on Suzlon, with a price target of ₹73.4 per share. The firm notes that the implied valuation of 4x price-to-sales is more attractive than that of Suzlon's listed peer. According to the brokerage, Renom Energy Services has a presence in seven windy states and expertise in maintaining turbines from 14 different manufacturers.

Earlier, JM Financial raised its target price for the stock to ₹71 from ₹54 following the company's June quarter numbers.

The firm cites several factors driving Suzlon's momentum, including enhanced execution capabilities, a strong order book, a healthy bid pipeline, and a strengthened balance sheet.

These elements are positioning the company for substantial growth, according to JM Financial.

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.