Suzlon Energy shares approach 52-week high on nod to QIP issue; buy, sell or hold?

Shares of renewable energy firm Suzlon Energy Ltd hit upper circuit of 5% for the second consecutive session today. The rally in the Suzlon Energy stock came after the firm announced the launch of a qualified institutional placement (QIP) offering on Tuesday to raise as much as Rs 2,000 crore.  

The stock was stuck in the upper circuit of 5% at Rs 20.53 on BSE in early deals today against the previous close of Rs 19.56 on BSE. The stock has gained 10% in the last two sessions. On Tuesday too, the stock ended 5% higher at Rs 18.63 on BSE after shareholders of the firm approved the QIP issue during market hours.  

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In the current session, market cap of Suzlon Energy rose to Rs 25,501 crore. Turnover and volumes were high for the Suzlon Energy stock with 494.99 lakh shares changing hands amounting to a turnover of Rs 101.08 crore on BSE.     

With today’s rally, the stock has approached the 52-week high of Rs 20.80 hit on on July 25, 2023. The Suzlon Energy stock hit a 52-week low of Rs 6.60 on October 13, 2022.    

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In terms of technicals, the relative strength index (RSI) of the stock stands at 62.6, signaling it's trading neither in the overbought nor in the oversold zone. Suzlon Energy shares have a beta of 1.6, indicating very high volatility in a year. Suzlon Energy stock is trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.        

Here's look at what experts said on the outlook of the stock trading near its 52-week high. 

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Abhijeet from Tips2trades said,"Suzlon Energy is bearish  on the Daily charts with next resistance at Rs 19.4. Investors should book profits at current levels or hold till Daily support of Rs 17.7 is broken on a closing basis."   

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher said, “The stock has picked up well from Rs 8 levels and recently found consolidation near the  Rs 17-18.50 zone after it touched the high of 20.80 levels. The near term support is maintained near Rs 17 level and above Rs 20.80, a fresh breakout would be indicated for further upside targets of Rs 26 and Rs 34 levels.”   

Osho Krishan, Sr. Analyst - Technical & Derivative Research at Angel One said, “Suzlon has massively soared more than two times in the current financial year on the back of robust volumes. On the technical chart, the stock has witnessed several pivotal breakouts and currently hovering at new 52-week highs. The recent rally was vertical in nature, which snubbed in between price-wise corrections. The technical parameters indicate the counter is in the over-bought territory and one should not be carried away with the ongoing momentum. As far as levels are concerned, a series of support is placed around Rs 17 odd zone on an immediate basis, followed by sacrosanct support of 14-15. On the flip side, a substantial hurdle could be seen around the Rs 20-24 zone in the comparable period.”   

Manoj Dalmia, CEO of Proficient Equities said, “Despite the company's reduced debt, it faces challenges with a low interest coverage ratio and high borrowing costs. Risk-averse investors are advised to refrain from purchasing at current levels, instead considering buying above Rs 21. On the other hand, those with a higher risk appetite may consider purchasing with a tight stop loss, as a close above Rs 21 could potentially drive the stock to Rs 30. The company's prospects appear promising, as the board has approved a capital raise of Rs 2000 cr through QIP to repay debt. Nevertheless, investors should diligently monitor fundamentals and remain vigilant for any potential red flags moving forward.”   

The board of the green energy firm on August 9 announced the launch of qualified institutions placement of equity shares to an extent of up to Rs 1,500 crore, with an option to retain oversubscription of up to Rs 500 crore. 

Suzlon Energy said its committee set the floor price of the QIP at Rs 18.44 a piece. It is based on the pricing formula prescribed under Regulation 176(1) of the SEBI ICDR Regulations and in accordance with the special resolution dated August 8 passed by the shareholders of the company by way of postal ballot.  Pursuant to Regulation 176(1) of the SEBI ICDR Regulations, the company may offer a discount of not more than 5 per cent on the floor price so calculated for the issue, Sulzon Energy noted. 

The floor price of Rs 18.44 per share was 5.7 per cent lower to Suzlon’s Wednesday closing price of Rs 19.56 per share on BSE. 

The company will use the funds from QIP to cut debt substantially amid its ongoing efforts to turn around the business.  

On July 7 this year, board of the firm had approved QIP to raise up to Rs 2,000 crore.   

Suzlon Energy is a provider of renewable energy solutions. The company is a producer of wind turbines. It offers a range of solar energy solutions, such as solar irradiance assessment, land acquisition and approvals, infrastructure and power evacuation, supply chain, installation and commission and life cycle asset management. 

 

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