What is the possible trajectory for Suzlon shares?

Suzlon was a poster child for the renewable energy space before 2008 financial crisis

Since the heydays, the company has been facing issues like

• Low cost of other renewable sources of energy like solar photovoltaics
• High capex cost linked to R&D and manufacturing
• Relatively low cost of crudeoil based fuels

This made life for Suzlon very difficult with the company being in deep red in terms of profitability.

In 2019, Union Bank classified Suzlon Energy’s loan account as non performing asset or NPA.

Post this, the company went into debt restructuring in 2020. This led to a haircut of 62% (of the owed Rs 13,800 crore) to the lenders (18 in total) led by State Bank of India(SBI)

Till here was the sad part but is it the end of the road for Suzlon?

Things started to turn around for the renewable energy focused company in 2022 with the following developments:

• In 2022, the SBI-led consortium sold loans worth Rs 8,000 core to Rural Electrification Corp (REC) and Indian Renewable Energy Development Agency (IREDA) (Link)
• India has amended the wind energy policy, which adversely impacted capacity addition between FY17-FY23 (Link)
• Ministry of new and renewable energy has announced a renewable energy project bidding trajectory of 50 gigawatt per annum (of 10 gigawatt will be wind from FY24 to FY28). Considering the experience and expertize, Suzlon is well positioned to capture the market opportunity

Taking this into account, brokerages and rating agencies have revised their outlook for the stock. The stock has given more than 300% return in the past one year.

Considering the commitment of Government of India to Net Zero by 2070, Renewable Energy Focus and Growing energy demand for standalone supply of energy – Wind along with Solar is set to see a huge jump in this and coming decade.

As stated earlier, Suzlon will be a beneficiary as it has been one of the oldest and trustworthy player in the wind energy space.

Any investor should consider adding it to their diversified portfolio after they have done their due diligence and understood their risk appetite(considering the stock has run-up a lot in the past year or so).

Hope you find this helpful

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