Bullish on renewables sector, mutual funds back Suzlon Energy and Inox Wind in August

Leading wind energy solution providers Suzlon Energy and Inox Wind emerged as the top choice of the country’s mutual fund managers in August. According to Nuvama Institutional Equities, fund managers bought Rs 1,240 crore worth of Suzlon Energy and Rs 380 crore worth of Inox Wind shares last month. Shares of Suzlon Energy and Inox Wind have gained 109 per cent and 82 per cent, respectively, so far in 2023.

Market watchers believe that moving past the painful period, Suzlon Energy continues to have a 30-35 per cent market share in the domestic market driven by technological superiority and reliable operation & maintenance (O&M) services. On the other hand, Inox Wind has a total manufacturing capacity of over 2GW and an O&M portfolio of over 3.1GW.

Sharing its view on Suzlon Energy, JM Financial in a report said, “With industry tailwinds in place, a deleveraged balance sheet and a robust order book, we expect a strong pick-up in the company’s performance going forward. We initiate coverage on the stock with a ‘Buy’ rating and a September 2024 target price of Rs 30 per share.” Shares of Suzlon Energy traded at Rs 22.20 on September 13. On the other hand, Systematix Institutional Equities is bullish on Inox Wind with a target price of Rs 262.

“Several strategic initiatives that Inox Wind has taken to strengthen its balance sheet and turn net debt free by FY25 are Inox Green IPO, asset monetization, infusion of promoter’s preference share capital and block sale of equity stake by the promoter. The company has neither defaulted on debt repayments nor resorted to debt restructuring - a huge distinguishing factor over peers. It enjoys strong group backing with one of the highest promoter share in its shareholder base amongst the listed companies in the wind industry,” Systematix Institutional Equities said.

Among the other key additions across mutual fund industry were HDFC Bank (Rs 5,780 crore), Coforge (Rs 4,900 crore) and Bharti Airtel (Rs 2,540 crore), while they cut their stake in Supreme Industries (Rs 1,670 crore), Ashok Leyland (Rs 1,420 crore) and State Bank of India (Rs 1,420 crore) in August.

Besides Suzlon Energy, the domestic fund managers also added Concord Biotech (Rs 560 crore) and ACC (Rs 520 crore) in the midcap space. On the other hand, they cut their stake in Zee Enterprises, LIC Housing Finance, Escorts Kubota, and Crompton Greaves.

Coming to the small-cap space, data further showed that mutual fund also raised their stake in SBFC Finance (Rs 850 crore), and SJS Enterprises (Rs 350 crore). In contrast, they reduced their stake in VIP Industries, Campus Activewear and MTAR Technologies.

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