Suzlon Energy shares jumped 9% in two straight sessions; is more steam left?

Shares of Suzlon Energy Ltd on Thursday extended their gains for the second straight session. The stock today surged 5 per cent to hit its upper circuit level of Rs 40.47. At this price, it has gained 8.76 per cent in two sessions.

Despite the mentioned rise, the stock was down 20.21 per cent from its one-year high price of Rs 50.72, a level seen last month on February 2. Even so, the counter has given multibagger returns by rallying 473.23 per cent as against its 52-week low price of Rs 7.06, hit on March 29, 2023, when it turned into a penny stock.

The stock saw heavy trading volume today as 1.03 crore shares changed hands on BSE. The figure was higher than the two-week average volume of 42.27 lakh shares. Turnover on the counter stood at Rs 41.40 crore, commanding a market capitalisation of Rs 55,045.44 crore.

Brokerage Anand Rathi has suggested an upside target price of Rs 49 on Suzlon Energy. "With a 32 per cent market share in India's wind turbines, Suzlon Energy turned net-cash in 9MFY24 for the first time since FY06. It has battled high debt from incessant acquisitions, the 2008 global financial crisis and anaemic domestic markets due to policy changes, which crimped its prospects," it stated.

We initiate coverage of the company with a 'Buy' recommendation, on 35 times FY26e PER, given its dominant market position, the brokerage added.

Suzlon Group has recently announced that CRISIL has upgraded its ratings to 'A‐' with Positive Outlook in alignment with the company's strengthened financial position, operational excellence and favourable sectoral tailwinds.

"The rating upgrade factors in, higher than expected improvement in the margins of WTG business while maintaining healthy cash flow generation from the O&M services business, and an uptick in the order book providing visibility for future revenues," it stated.

Bourses BSE and NSE have put the securities of Suzlon under the long-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

On technical setup, the counter traded higher than the 5-day, 10-, 20-, 150-day and 200-day simple moving averages (SMAs) but lower than the 30-day, 50-day and 100-day SMAs. The scrip's 14-day relative strength index (RSI) came at 50.84. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a negative price-to-equity (P/E) ratio of 1285. Earnings per share (EPS) came at 0.02.

As of December 2023, promoters held a 13.29 per cent stake in the company.