Suzlon Energy shares

Suzlon Energy Stock Rises 2% After Sealing India’s Largest Wind Energy Contract with NTPC

Suzlon Energy, a leader in the renewable energy sector, recently made headlines by securing India’s largest-ever wind energy order of 1,166 MW from NTPC Green Energy Ltd. This significant achievement not only strengthens Suzlon’s position in the renewable energy landscape but also contributed to a notable 2% rise in its stock value on September 9, 2024. This order further boosts Suzlon’s growing order book, bringing it close to 5 GW of cumulative projects.

In this blog, we explore Suzlon’s latest accomplishments, its strategic moves, and the stock’s remarkable performance over the past year.

Suzlon Bags India’s Largest Wind Energy Order

Suzlon Energy has secured a major win in the renewable energy space, bagging an order from NTPC Green Energy Ltd. for 1,166 MW of wind energy projects. NTPC Green Energy, the renewable energy arm of NTPC, entrusted Suzlon with installing 370 wind turbine generators (WTGs) equipped with S144 technology. These WTGs, each with a rated capacity of 3.15 MW, will be installed across two NTPC Renewable Energy Ltd. projects and one project under Indian Oil NTPC Green Energy Pvt. Ltd.

This monumental order brings Suzlon’s cumulative order book to nearly 5 GW as of September 2024, cementing its leadership in India’s wind energy market.

Key Project Features:

Wind Turbine Technology: Suzlon will utilize S144 WTGs with Hybrid Lattice Tubular (HLT) towers.
Rated Capacity: Each WTG will have a capacity of 3.15 MW.
Projects: The turbines will be installed across three projects by NTPC Renewable Energy Ltd. and Indian Oil NTPC Green Energy Pvt. Ltd.

Strategic Acquisition: Renom Energy

In addition to this major wind energy order, Suzlon has made significant strides in strengthening its operational capacity. The company recently announced the completion of its acquisition of a 51% equity stake in Renom Energy, making Renom a subsidiary of Suzlon. This move is a part of Suzlon’s long-term strategy to expand its portfolio and secure a larger share of the renewable energy market.

Earlier in August, Suzlon’s Board had approved the acquisition of a 76% stake in Renom Energy Services, a deal valued at ₹660 crore. The acquisition will be completed in two phases: the first phase involves acquiring 51% of Renom’s shares for ₹400 crore, followed by the purchase of an additional 25% for ₹260 crore over the next 18 months.

This acquisition aligns with Suzlon’s efforts to strengthen its services and execution capacity as it continues to secure large-scale projects.

Suzlon’s Financial and Stock Market Performance

Suzlon Energy’s stock has shown impressive growth in 2024. On September 9, its shares surged by over 2%, trading at ₹76.56 on the National Stock Exchange (NSE) by 10:53 am. This marks a 2.6% increase compared to the previous session’s close.

Key Stock Performance Insights:

2024 Year-to-Date Performance: Suzlon’s stock has gained approximately 95%, significantly outperforming the Nifty’s 16% returns during the same period.
12-Month Performance: Suzlon’s stock has soared by 213% over the past year, tripling investor returns compared to Nifty’s 28% rise.

Analyst Views and Future Outlook

ICICI Securities recently revised its target price for Suzlon Energy, raising it from ₹70 to ₹80. The firm maintains an ‘Add’ rating on the stock, attributing the increase to Suzlon’s strengthened financial position and improved order execution capacity. ICICI Securities values Suzlon at 50 times its estimated FY26 earnings of ₹1.60 per share.

The capital raised by Suzlon through its recent projects and asset sales is expected to fuel future growth, enabling the company to secure additional orders and improve its operational efficiency. Notably, Suzlon’s strategy to sell non-core assets, outlined in April 2022, has been a key factor in bolstering its financial standing.

Asset-Light Strategy: A Value-Accretive Move

Suzlon’s sale of its iconic corporate office, Suzlon One Earth, has also been viewed favorably by analysts. Domestic brokerage JM Financial noted that this move enhances the company’s operational efficiency and financial strength. With Suzlon opting to lease back the office space at an annual rent equivalent to 12% of the sale consideration, this sale aligns with the company’s growing working capital needs for project execution.

Conclusion:

Suzlon Energy’s recent achievements in securing India’s largest wind energy order and acquiring a majority stake in Renom Energy underscore the company’s forward-looking growth strategy. The firm’s commitment to renewable energy solutions, coupled with its strategic asset sales and acquisitions, has solidified its position as a key player in India’s green energy landscape.

With an expanding order book, improved financials, and an asset-light approach, Suzlon is well-positioned to capitalize on the growing demand for renewable energy in India. Investors have taken note, with Suzlon’s stock performance reflecting strong confidence in the company’s future.

FAQs:

1.What is the significance of Suzlon’s wind energy order from NTPC Green Energy Ltd.?

A. Suzlon secured India’s largest wind energy order of 1,166 MW, which will boost its cumulative order book to nearly 5 GW.

2.What technology will Suzlon use for its NTPC projects?

A. Suzlon will install S144 wind turbine generators with a capacity of 3.15 MW each across three projects.

3.How has Suzlon’s stock performed in 2024?

A. Suzlon’s stock has gained 95% in 2024, outperforming Nifty’s 16% growth during the same period.

4.What is the status of Suzlon’s acquisition of Renom Energy?

A. Suzlon has completed the acquisition of a 51% stake in Renom Energy, with plans to acquire an additional 25% over the next 18 months.

5.How does Suzlon’s asset-light strategy benefit the company?

A. Suzlon’s sale of its corporate office, Suzlon One Earth, allows the company to focus on its growing project needs, aligning with its asset-light strategy.