Unprecedented growth in the renewable energy industry makes India a fertile ground for investors. Experts analyse Suzlon Energy and Inox Wind for potential long-term opportunities.
India’s renewable energy industry is surging ahead with a staggering growth rate. The country currently boasts a total renewable energy capacity of around 170 GW. To enhance progress, the government has set a robust target of adding 250 GW of renewable energy capacity in the next five years, with the goal of achieving a total of 500 GW of clean energy by 2030.
With this promising forecast and the global trend leaning towards renewable energy, it is timely to assess which of the two stocks – Suzlon Energy and Inox Wind – offer better long-term investment opportunities.
Stock performance analysis
In the past year, Suzlon Energy has outperformed Inox Wind, with both stocks delivering multibagger returns. Suzlon’s stock has surged almost 215 percent, while Inox has rallied 143 percent. Despite Suzlon’s higher growth, Inox has outperformed in 2023 year-to-date (YTD), soaring over 96 percent.
Company Overview
Suzlon Energy, a global renewable energy solutions provider, manufactures wind turbine generators and operates in approximately 17 countries across Asia, Australia, Europe, Africa, and the Americas.
On the other hand, Inox Wind is an India-based integrated wind energy solutions provider that is engaged in the manufacture and sale of wind turbine generators.
Earnings analysis
In the June quarter, Suzlon Energy reported a year-on-year (YoY) decline in net profit. However, after making sustained efforts to reduce debt in FY23, Suzlon Energy has set its sights on funding operations and fulfilling commitments to customers and stakeholders in FY24.
Meanwhile, Inox Wind’s consolidated net loss for the March quarter narrowed compared to the previous fiscal, and total revenue rose over 59 percent. The company is in the news after approving a merger with its subsidiary, Inox Wind Energy.
Expert Opinions on Long-term Investment Opportunities
The consensus among experts seems to tilt in favor of Suzlon Energy for long-term investments. This conclusion is based on Suzlon’s significant market share, operational wind power capacity, reduced leverage, and orderbook promising future execution. However, Shrey Jain, Founder and CEO of SAS Online, holds a contrarian view favoring Inox Wind due to its healthier balance sheet and focused operations in the Indian market.
| Key Metrics/Company | Suzlon Energy | Inox Wind |
|---|---|---|
| Stock price increase in 1 year | ~215% | ~143% |
| Stock price increase in 2023 YTD | >68% | >96% |
| Current Stock Price (As of July 2023) | ₹17.85 | ₹213 |
| June quarter net profit (2023) | ₹100.90 crore (decline) | Not yet reported |
| Consolidated net loss (Q4, FY23) | – | ₹88 crore |
| Total revenue (Q4, FY23) | ₹1,347.52 crore | ₹162 crore |
| Ebitda margin for the quarter | 15.4% | – |
| Expected performance | Robust growth based on strong orderbook and reduced leverage | Anticipated tripling of performance, net debt-free soon |
Potential Outcome
The Indian renewable energy sector’s extraordinary growth and the government’s ambitious targets could serve as strong catalysts for these stocks. However, with global markets being unpredictable, any investment decisions should be taken cautiously, taking into account individual financial situations and risk tolerance.
The expert opinions expressed here provide a strong foundation, but it’s crucial for investors to conduct their research and consult with a financial advisor before making investment decisions. These analyses reveal trends and potential, but the market’s nature remains uncertain, and past performance does not guarantee future results.
