Suzlon Energy's stock down 23% from 52-week high; will it bounce back or there's more pain?

Shares of Suzlon Energy Ltd on Monday resumed fall after a single-day halt. The stock fell 2.64 per cent to settle at Rs 66.34. At this price, it has declined 22.90 per cent from its one-year high value of Rs 86.04, a level seen on September 12, 2024. Despite the mentioned drop, the scrip has rallied 72.40 per cent on a year-to-date (YTD) basis.

On the earnings front, the renewable energy solutions provider reported a 95.72 per cent year-on-year (YoY) surge in its second-quarter consolidated net profit for the financial year 2024-25 (Q2 FY25). During the quarter under review, profit came at Rs 200.20 crore as against Rs 102.29 crore in the year-ago period. Revenue from operations moved up 47.68 per cent to Rs 2,092.99 crore in Q2 FY25 from Rs 1,417.21 crore in the corresponding period last year.

Suzlon said it posted a consistent YoY growth in EBITDA (earnings before interest, taxes, depreciation, and amortisation) at Rs 294 crore. EBITDA margin and net margin stood at 14.1 per cent and 9.6 per cent, respectively. It mentioned that its order book was at an all‐time high of 5.1 GW, including the country's largest wind order from NTPC.

Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking, said, "Suzlon looked weak on daily charts. Investors should exit as the stock can slip towards Rs 60 level."

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "Suzlon is currently undergoing a price and time correction after an impressive rally. From a technical viewpoint, there are several support levels in place, particularly between the Rs 65 and Rs 60-58 subzone, which can provide a foundation for stability. Additionally, while the recent negative crossover between the 21-day and 50-day exponential moving averages (DEMA) suggests some caution, it also presents an opportunity for potential recovery. If the stock can break through Rs 75 level, we may see an upward movement beyond the current range. This could set the stage for renewed growth."

Sebi-registered research analyst AR Ramachandran said, "A daily close below support of Rs 65 could lead to a downward target of Rs 59.5 in the near term. Strong resistance will be at 73.5."

Kushal Gandhi, Technical Analyst at StoxBox, said "The share price of Suzlon has been experiencing intermediate profit booking, leading to a 23 per cent retracement from its recent highs. It has been trading in a structure of lower highs and lower lows, with no signs of recovery as of yet. Maintaining Rs 68.13 level will be essential to attract bullish momentum. With shorter-term moving averages acting as overhead resistance and a decline in both price and earnings per share strength, we recommend waiting for further confirmation before anticipating a reversal in trend."

The counter traded lower than the 5-day, 10-, 20-, 30-, 50-day and 100-day simple moving averages (SMAs) but higher than the 150-day and 200-day SMAs. The scrip's 14-day relative strength index (RSI) came at 35.90. A level below 30 is defined as oversold while a value above 70 is considered overbought.

According to BSE data, the company's stock has a price-to-equity (P/E) ratio of 301.55 against a price-to-book (P/B) value of 23.36. Earnings per share (EPS) stood at 0.22 with a return on equity (RoE) of 7.81. As of September 2024, promoters held a 13.25 per cent stake in the company, which is slightly lower from 13.27 per cent in the previous quarter.