Suzlon Energy shares slump 5%, down 15% in last one month; Here’s why

Suzlon Energy Ltd witnessed a continued decline in its share price for the fourth consecutive day. The stock experienced a 5 percent drop, reaching its lower price band of ₹40.53, on Tuesday's trading session.

This decline was propelled by reports indicating that the Ministry of New and Renewable Energy (MNRE) is considering reintroducing "reverse auctions" for the auctioning of wind power capacity to energy firms.

According to reports, the ministry has issued a directive to companies such as NTPC, NHPC, SJVN, and other Public Sector Undertakings (PSUs) through a formal letter. The directive cites reasons including undersubscription and elevated tariff discovery observed in recent wind bids.

In the last five trading sessions, Suzlon Energy stock declined over 7.39 percent and in last one month, it slumped around 15 percent. Despite this recent downturn, it's worth noting that the stock has surged impressively over the year, boasting a remarkable rally of over 370%.

The BSE and NSE have implemented the long-term Additional Surveillance Measure (ASM) framework for Suzlon's securities. Such measures are applied by exchanges like BSE and NSE to alert investors to significant volatility in share prices, whether on a short-term or long-term basis.

NTPC, NHPC, and SJVN serve as Renewable Energy Implementing Agencies for developers such as Suzlon and Inox Wind, in addition to collaborating with state agencies.

Analysts in the financial sector are expressing concerns regarding the recent directives from the Ministry of New and Renewable Energy (MNRE), suggesting that they pose a negative outlook for both equipment suppliers and developers in the renewable energy sector. They argue that the anticipated decrease in tariffs could potentially diminish returns for prominent developers such as ReNew and NTPC. Additionally, they warn of potential margin pressure for equipment suppliers due to these regulatory changes.

Other energy stocks like Inox Wind was also trading 5 percent lower on March 5 to ₹525.