Suzlon Energy shares surged 45% in May; what's behind the rally in this renewable energy stock?

Shares of renewable energy solution provider Suzlon Energy on Wednesday rose sharply, extending their gains for the fourth consecutive session. The stock jumped 10.03 per cent today to settle at Rs 11.74. The counter has gained 45.30 per cent in the past one month. In May this year, the company bagged multiple orders and posted stellar fourth-quarter (Q4 FY23) results. Also, it today approved a resolution for the conversion of loans or debentures into equity, the company said in a post-market hours release.

Suzlon reported a consolidated net profit of Rs 320 crore for the March 2023 quarter, led by lower expenses. It recorded a consolidated net loss of Rs 193 crore in Q4 FY22. In the last fiscal, the company posted a consolidated net profit of Rs 2,887 crore against a net loss of Rs 166 crore in 2021-22. Total expenses slipped to Rs 1,628 crore in the March 2023 quarter from Rs 2,512 crore a year ago.

In addition, Suzlon reduced its net debt by 79.64 per cent to Rs 1,180 crore in Q4 FY23 compared to Rs 5,796 crore in the corresponding fiscal last year.

On the other hand, total income from operations fell to Rs 1,700 crore in Q4 from Rs 2,479 crore a year ago. Total income in the fiscal dipped to Rs 5,990 crore from Rs 6,604 crore in 2021-22. Revenue also declined to Rs 5,947 crore in the March 2023 fiscal against Rs 6,520 crore for the fiscal ended March 2022.

"The Board of Directors has approved an enabling resolution in terms of Section 62(3) of the Companies Act, 2013 for issuance of the equity shares of the company on conversion of loan/debentures into equity in the matter of loan granted/to be granted by various lenders as project-specific funding (working capital) subject however to the approval of the shareholders at the next general meeting," Suzlon stated.

On the technical setup, the stock traded higher than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 85.20. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 6.15. It has a price-to-book (P/B) value of 26.68.

The scrip has a one-year beta of 1.51, indicating high volatility on the counter.

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.

Meanwhile, Indian equity benchmarks halted their four-day winning run today, dragged by banks, financials, metals and energy stocks.