This popular stock is down 18%: Should you invest?
What's the story
Suzlon Energy, a favorite among retail investors in the renewable energy sector, has witnessed a massive decline of over 18% in less than three months. The stock has already lost 5% this August, after falling by 9.3% in July and another 5.3% in June. The recent sell-off was triggered by the company's June-quarter numbers missing analysts' estimates and the exit of Group Chief Financial Officer Himanshu Mody.
Market response
Stock down 32% from its 52-week high
Suzlon's stock has also fallen 32% from its 52-week high. Analysts have expressed concerns over the company's installations lagging behind deliveries in recent quarters. JM Financial highlighted that the current installations have remained at just 20% of deliveries for the last three quarters, raising execution concerns. Despite these challenges, Motilal Oswal remains optimistic about Suzlon's business momentum, citing a potential upside to order inflow and margins as local content requirements come into play.
Growth outlook
Record-high order book ensures revenue visibility
Suzlon boasts a record-high order book of 5.7GW, ensuring revenue visibility for the next two to three years. The firm has maintained its earlier guidance of 60% growth in key parameters like deliveries, revenue, and EBITDA for FY26. It expects India to add another 6GW of wind energy capacity in FY26 and 7-8GW in FY27.
Regulatory impact
Suzlon likely to benefit from recent ALMM wind list
The Ministry of New and Renewable Energy (MNRE) has recently issued the Approved List of Models and Manufacturers (ALMM) for wind, making it mandatory to source important turbine components from approved manufacturers. Suzlon, with a market share of about 40%, is likely to be one of the major beneficiaries. The Central Electricity Authority (CEA) projects India's wind power capacity will grow to 73GW by FY27 and further to 122GW by FY32.