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Suzlon Energy, a prominent player in the renewable energy sector, experienced a 5% dip in its share price on the day preceding the announcement of its Q3 earnings. This decline follows a 20% drop since the release of its Q2 results on October 28th of the previous year. The current market capitalization stands at ₹69,711 crore, reflecting the volatility impacting the company's valuation. Despite the recent downturn, Suzlon Energy's stock has shown impressive growth over longer periods, with a 19.71% increase year-on-year and a remarkable 460% gain over the past two years. This underscores the inherent risk and reward associated with investing in this sector, particularly given the fluctuating nature of renewable energy markets and the impact of global economic conditions.
Analysts from prominent financial institutions have offered varying projections for Suzlon Energy's Q3 performance. Nuvama Institutional Equities predicts a 77% year-on-year (YoY) increase in revenue, reaching ₹2,762.9 crore, alongside a 31% quarter-on-quarter (QoQ) rise. Their forecast for EBITDA is equally optimistic, projecting a 67% YoY and 40% QoQ increase to ₹413.1 crore. Furthermore, they anticipate a substantial 55% YoY and 58% QoQ growth in core profit after tax, reaching ₹315.4 crore. JM Financial presents a slightly different outlook, estimating a 59% YoY surge in net profit to ₹322.2 crore. They project a more significant YoY revenue increase of 87% to ₹2,915 crore, coupled with a 39% QoQ growth. EBITDA, according to JM Financial, is expected to increase by 65% YoY and 39% QoQ, settling at ₹408.1 crore, while the EBITDA margin is projected to remain steady at 14%. The divergence in these predictions highlights the complexity of forecasting performance in a dynamic market like renewable energy.
The company's previous quarter results paint a positive, albeit volatile picture. Suzlon Energy reported a 95.72% YoY surge in its second-quarter consolidated net profit, reaching ₹200.20 crore compared to ₹102.29 crore in the same period of the previous year. Revenue from operations also demonstrated significant growth, increasing by 47.68% to ₹2,092.99 crore from ₹1,417.21 crore. However, the subsequent 20% decline in the share price since then serves as a reminder of the unpredictable nature of the stock market and the susceptibility of renewable energy companies to market fluctuations. The stock’s performance has been characterized by notable highs and lows. It reached a 52-week high of ₹86.04 on September 12th of the current year, only to plummet to a 52-week low of ₹35.49 on March 14th. This volatility is further underscored by a beta of 1.2, indicating a higher susceptibility to market swings than the average stock. The current trading price is below all major moving averages, a bearish indicator signifying downward price momentum in both the short and long term.
The discrepancies between the analysts' projections and the recent market behavior raise several questions about the factors driving Suzlon Energy's share price. While robust projected profit growth points towards a potentially positive outlook, the actual earnings report will play a crucial role in determining investor sentiment. The degree to which the Q3 results align with analyst expectations will significantly influence whether the current bearish trend reverses or persists. External factors, including government policies related to renewable energy, global economic conditions, and competition within the renewable energy sector, will also exert influence on Suzlon Energy's future performance. Investors must carefully consider these elements in their assessment of the company's long-term prospects. Overall, Suzlon Energy's journey underscores the inherent risks and rewards of investments in volatile, high-growth sectors such as renewable energy. While substantial potential exists, careful analysis and risk management are paramount for successful investing in this space.
Source: Suzlon Energy Q3 earnings: Stock falls 5% today, down 20% since Q2 results