Is Suzlon a good buy for 2024?

Suzlon Energy, a leading Indian wind energy company, has been on a roller-coaster ride in recent years. After facing financial challenges, the company seems to be making a comeback. But is Suzlon a good investment for 2024? This article dives into the factors to consider before making a decision.

So what are some of the important parameters to consider to arrive at an answer?

What is the life time high of Suzlon?

It is perhaps good awareness to know what the lifetime high of Suzlon was.

The all time high of Suzlon was at INR 390.9 on 11 Jan, 2008. While it is not possible to reasonably hold this figure as a target but, it does give the impression that Suzlon has not been a perennial penny stock.

Why did the Suzlon Stock prices crash?

We have covered them at length in our Outlook series on Suzlon here. You can read the same here: https://www.vestmint.in/tag/suzlon/

In a nutshell, our understanding is this was the consequence of ambitious expansion (acquisition of Hansen Transmission, RePower / Senvion) and the financial crisis post 2008. The following decade saw Suzlon prices crashing to less than INR 10!

The ambitions of Suzlon led them to acquire large European energy companies that proved hard to assimilate operationally and culturally. The resolutions to these acquisitions tested Suzlon for patience, determination, and financial skill.

Does Suzlon pay Dividends?

Based on information available on Screener, it seems that Suzlon has not made dividend payouts at least since 2012.

If you want to be invested in an ambitious business, then this fact is perhaps not to be worried about. It seems Suzlon has reinvested profits into business to address profitability, control debt levels and future growth.

How has been the last 1 year of Suzlon prices?

The stock prices of Suzlon shot up nearly 6 times over a year. This rise started happening since the year end results in FY 2022-23.

This mostly seems to have been a consequence of Suzlon coming out of its debt crisis. That in the context of the Indian Governments focus on Renewable energy, the industry and investor segment converging on renewable energy has made the macroeconomic picture more favourable for Suzlon and other players in the space.

Read more about the Indian Government's focus on Renewable Energy: India Clean Energy: Progress & Policy, Renewable Energy Investment

Will Suzlon recover?

Over the last 1 year, it Suzlon had grown nearly 6 times. Even after a late correction, Suzlon still continues to be at more than 5x levels of its 2022-23 prices. It is a leading player in the Wind Energy sector in India. The company order book of Suzlon as known from public investor information seems strong to us.

And as Suzlon has come out of its debt problems, the company seems well placed to make the most out of the macro-economic circumstances.

Upcoming 2023-24 Yearly Results

The yearly results season has already started in the market. Suzlon's results should already be out soon. The results should give a hint of the discipline of execution, prospects, any growth in order books, debt situation and others.

Per Business Today's article here:

"For the March quarter, Anand Rathi expects Suzlon Energy to report an adjusted profit of Rs 262.20 crore, up 283 per cent. Sales are seen rising 52.4 per cent YoY to Rs 2,581.70 crore. Ebitda margin is seen at 12.6 per cent against 15.9 per cent in December and 13.7 per cent in the same quarter last year."

So, is Suzlon a good buy for 2024?

Honestly, we cannot answer this for sure. We can only share our sentiments based on the parameters drawn above.

Given the global and Indian macroeconomic scenario together with Suzlon's recovery since last year, it is likely Suzlon will do well. Of course, the longer your investment horizon, the safer it is likely to be.

Happy Investing!