Suzlon Energy shares update on subsidiary merger; stock down 5%

Suzlon Energy Ltd on Monday shared an update regarding amalgamation of its wholly-owned subsidiary Suzlon Global Services Ltd with itself. "We refer to our letter dated May 2, 2024, submitted under Regulation 30 of the Listing Regulations, intimating that the Board of Directors of Suzlon Energy Ltd at its meeting held on May 2, 2024 has considered and approved the scheme of amalgamation involving merger by absorption of Suzlon Global Services Ltd, a wholly-owned subsidiary, with Suzlon Energy Ltd, and their respective shareholders and creditors," the company said.

"The company being a direct wholly-owned subsidiary, there is no requirement of obtaining any 'No-Objection Letter' or 'Observation Letter' to the scheme from the stock exchanges," it added.

Suzlon has listed seven factors as the rationale behind this restructuring exercise. They include stronger financial position; unified contracting; elimination of inter-company outstanding; efficient utilisation of resources; streamlining group structure and benefit of combined resources; efficiency in the business operations of the Wind Turbine Generation and Operations and Maintenance (OMS) businesses; and sharing of best practices in sustainability, safety, health and environment.

The renewable energy solutions provider also mentioned that there will be no change in the existing shareholding pattern of Suzlon post this rejig. Suzlon Global Services manages operation and maintenance of the wind turbine generators.

Suzlon Energy shares today slipped 4.82 per cent to hit a day low of Rs 37.95. Turnover on the counter came at Rs 5.30 crore, commanding a market capitalisation (m-cap) of Rs 53,055.06 crore.

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 lower than the 5-day, 10-, 20-, 30-, 50-, 100-day and 150-day simple moving averages (SMAs) but higher than 200-day SMA. The scrip's 14-day relative strength index (RSI) came at 39.16. 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 1,301 against a price-to-book (P/B) value of 15.25.

As of March 2024, promoters held a 13.29 per cent stake in the company.