Suzlon Energy shares jump 2%, surge over 16% in one month; what’s driving the rally?

The shares of Suzlon Energy rallied over 2.21 per cent on Thursday's trading session to ₹62.01 after brokerage firm JM Financial raised the target price for Suzlon Energy's stock to ₹71 from the previous ₹54, following the company's impressive performance in the first quarter ended June 2024.

“We believe that gradual building of momentum for higher execution, healthy order book, more healthy bid pipeline, strengthening of balance sheet and the organization are driving the company for the next-level of growth, “ said JM Financial in its report.

On Monday, Suzlon Energy reported a 200 per cent year-on-year increase in its consolidated net profit for the quarter ending June 2024, reaching ₹302 crore compared to ₹101 crore in the same quarter of the previous financial year.

The company's shares have delivered a multibagger return of 231 per cent over the past year and have risen by 64 per cent in the past six months. In last one month, the stock has grown over 15.69 per cent.

Despite this performance, domestic brokerage firm Nuvama has noted in its report that the rise in order inflows and profits has already been accounted for. Consequently, they have downgraded the stock to a ‘hold’ rating with a target price of ₹64.

Brokerage firm Anand Rathi also lowered rating to ‘hold’ with a higher 12-months target price of ₹69, led by impressive growth opportunities. “We raise FY26e earnings 3.4% to factor in the higher margins in the OMS segment. After the sharp stock run-up, we lower our rating to a Hold on 40x FY26e PE (35x earlier), given the company’s market dominance,” the brokerage firm said.

Suzlon achieved its largest-ever order book of 3,817 MW in the first quarter of FY25, significantly up from 1,433 MW in the first quarter of FY24. The orders feature a diverse mix: 88 per cent are from the 3MW series, 66 per cent from commercial and industrial customers, and 67 per cent are non-EPC scope, spanning across seven states. As Suzlon becomes eligible to bid for public sector unit tenders, such as those from NTPC, the company is expected to secure substantial orders in FY25 and beyond, aided by a likely decrease in competition.