Suzlon Energy Ltd Result update: Q1FY24

Company Overview:

Suzlon Energy, established in 1995, is a prominent player in the wind energy industry, specializing in the manufacturing of wind turbine generators and the operation and maintenance of wind turbine generators. Over the years, Suzlon has made significant contributions to the renewable energy sector, boasting an impressive track record of installing over 20 gigawatts (GW) of wind energy across 17 countries. With 111+ wind farms and a combined capacity of 13,880 megawatts (MW), the company has firmly established itself as a global leader. Suzlon’s extensive clientele includes power utilities and electricity producers in both the private and public sectors.

 Products and Services:

Suzlon Energy offers a diverse range of wind turbine generators to cater to various wind regimes. Their product portfolio includes the S144 Wind Turbine Generator, designed for low wind regimes in India, the S133 Wind Turbine Generator, optimized for improved energy yield across all wind regimes, and the S120 Wind Turbine Generator, suitable for low wind sites. Additionally, the company has phased out older WTG models but continues to provide support, operation, and maintenance services for all installed wind turbines. Suzlon also extends its expertise in operations and maintenance services to multi-make WTGs, offering turnkey project services and solar energy solutions. Their services encompass wind project planning, wind resource assessment, infrastructure development, power evacuation, and technical planning and execution of wind power projects.

Client Portfolio:

Suzlon Energy has established partnerships with a wide array of prestigious clients, including ACC, Adani Renewables, Aditya Birla Group, Bajaj, GAIL, Hero, ITC, ONGC, Reliance, SBI, Tata, TVS, Vedanta, among others.

Valuation and Key Ratios:

Currently, Suzlon’s stock is trading at a multiple of 110x with a share price of 23.8, while the industry P/E stands at 46.2. The stock is trading at 27 times its book value. The company reports a Return on Capital Employed (ROCE) of 20.6% and a Return on Equity (ROE) of 15.1%.

Q1FY24 Results Updates: consolidated

In the most recent quarter, Suzlon Energy faced some challenges. Consolidated revenue fell by 2.15% YoY and 20.2% QoQ, totaling 1,350 Crores. However, the company managed to increase its gross profit by 9.72% YoY (despite a 7.33% QoQ decline), reaching 540 Crores, mainly due to an 8.72% YoY reduction in the cost of goods sold (COGS). This cost optimization resulted in a significant improvement of gross margins by approximately 400 basis points YoY and 600 basis points QoQ, settling at 40%. EBITDA decreased by 7.21% YoY and 14.56% QoQ to 199 Crores, with EBITDA margins remaining relatively stable at around 15%. EBIT also declined by 7.33% YoY and 5.12% QoQ to 144 Crores, with EBIT margins holding at 11%. Profit After Tax (PAT) took a significant hit, dropping 95% YoY and 68.47% QoQ to 101 Crores, primarily attributed to a substantial reduction in exceptional items by 99% YoY. PAT margins stood at 7%, down from 19% in the previous quarter, and earnings per share (EPS) for the quarter amounted to 0.07 Rs, a 95% YoY decline.

Conclusion:

Suzlon Energy, a pioneer in the wind energy sector, has demonstrated its commitment to sustainable energy solutions through its extensive wind farm installations and a diverse product and service portfolio. While the company faces challenges reflected in its recent Q1FY24 results, including declining revenues and profitability, it continues to provide essential services to a robust clientele. Suzlon’s ability to adapt to market dynamics and optimize costs will be critical to its future success in the renewable energy industry. Investors should closely monitor the company’s financial performance and strategic initiatives as it navigates the evolving energy landscape.