Suzlon Energy shares climb 3% ahead of Q2 results; here's what JM Financial says

Shares of Suzlon Energy Ltd climbed 3 per cent in Thursday's trade ahead of it September quarter results. Suzlon Energy, which is engaged in manufacturing, project execution, operation and maintenance of wind turbine generators (WTGs), and sale of related components, is not widely tracked by analysts. But a total of 28,22,365 small individual investors owned some 24.09 per cent in the renewable energy solution provider as on September 30.

JM Financial, which recently initiated coverage on the stock, is expecting Suzlon's sales to grow 2 per cent in the September quarter but expects net profit to surge 94 per cent YoY due to a steep fall in interest expenses following the repayment of debt. It also sees Suzlon Energy to reap benefit from moderation in raw material cost.

In its results preview note, it expected Suzlon Energy to clock a profit of Rs 111.60 crore compared with Rs 57.40 crore in the corresponding quarter last year. It sees sales for Suzlon Energy to rose to Rs 1,464.20 crore from 1.437.80 crore in the year-ago quarter. Ebitda is seen rising 28 per cent YoY to Rs 216.70 crore from  Rs 169.70 crore.

The domestic brokerage has a target of Rs 30 on the stock. ICICI Securities has in June initiated coverage on the stock with a target of Rs 22. But the stock has breached that target. On Thursday, the scrip was trading at Rs 32.15 level, up 2.61 per cent. The scrip has climbed 292 per cent in the last six months, thanks to optimism over its robust order book and deleveraged balance sheet.

The vertically-integrated Suzlon Energy has 20 GW of wind energy capacity installed across 17 countries.Out of this it has 14 GW of wind energy assets. It has 6 GW of installed capacity outside India. Suzlon Energy commands a 30-35 per cent market share in the domestic market. JM Financial in August expected Suzlon to exceed 2.5-3GW of annual installations in the near to mid-term, as "the company is best placed to benefit from industry tailwinds," the domestic brokerage said.

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