On November 8, 2024, MarketsMOJO rated Suzlon Energy with a “Sell” recommendation due to factors like low management efficiency and weak return on equity (ROE). Suzlon’s ROE stands at 6.38%, reflecting limited profitability on shareholder capital, and a high valuation, raising investor concerns.
Financial Performance of Suzlon Energy
Suzlon’s financials for September 2024 showed no improvement, with operating cash flow declining to ₹79.53 crore. Interest expenses surged by 25.85%, while profit before tax (PBT) dropped by -15.8%. Although the company’s ROE is at 21.9%, its high price-to-book value (PBV) of 18.8 makes the stock expensive. Compared to historical valuations, it currently trades at a discount.
Long-Term Stable Growth of Suzlon Energy
Over the long term, Suzlon has demonstrated consistent growth in operating profit, with a compound annual growth rate of 45.23%. However, recent technical trends are “sideways,” indicating no clear momentum in its stock price. Since the downgrade on November 8, 2024, Suzlon’s stock has declined by -6.49%.
Institutional Investors’ Increasing Stake
Institutional holdings in Suzlon now reach 30.7%, reflecting increased confidence from major investors. In the last quarter alone, institutional ownership rose by 4.83%, signaling trust in Suzlon’s fundamentals, which could be a positive indicator for retail investors.
Suzlon’s Performance Compared to BSE 500
Despite the recent downgrade, Suzlon Energy has outperformed the BSE 500 index over the past three years, consistently delivering solid returns. With a market cap of ₹90,475 crore, Suzlon holds the position of the second-largest company in the renewable energy sector, representing 28.87% of the industry. Its annual revenue of ₹7,881.65 crore accounts for 28.06% of the sector.
| Performance Indicator | Details |
|---|---|
| ROE | 6.38% |
| Operating Cash Flow | ₹79.53 crore |
| Interest Expenses | +25.85% |
| Profit Before Tax (PBT) | -15.8% |
| Price-to-Book Value (PBV) | 18.8 (high valuation) |
| Long-Term Operating Profit Growth | 45.23% CAGR |
| Recent Stock Performance | -6.49% since downgrade |
| Institutional Holdings | 30.7% (increase of 4.83%) |
| Market Cap | ₹90,475 crore |
| Annual Revenue | ₹7,881.65 crore |
| Share of Renewable Energy Sector | 28.87% |
Suzlon Energy’s performance reflects both potential and risks, with solid long-term growth and strong institutional backing, yet tempered by valuation concerns and recent downgrades.
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