Suzlon Energy shares give multibagger returns of 340% in 1 year. Time to ride the next leg of rally?

Led by strong order inflows, a strengthening of balance sheet, and a debt-free status, a turnaround in renewable energy company Suzlon Energy has seen its shares rallying 340% in the last one year. And now the future looks cautiously bright with analysts seeing an upside potential of up to 43% in the counter.

“As long as the stock is trading above the 50-day SMA or Rs 41, the positive sentiment is likely to continue. On the higher side, the stock could move up to Rs 50. Further upside may also continue which could lift the stock to Rs 60-63,” said Amol Athawale, VP Technical Research at Kotak Securities.

After a medium-term correction eventually the stock took the support near 40 and reversed sharply. Post reversal, the stock is comfortably trading above 50 and 20-day SMA (Simple Moving Average) which is largely positive. In addition, on daily and weekly charts it has been holding an uptrend continuation formation, which is largely positive, added Athawale.

On the flip side, he said that the uptrend would be vulnerable below the 50-day SMA or Rs 41, and traders may prefer to exit from long trading positions.

A broad resistance for the stock is seen at Rs 50 levels while the broader support lies near Rs 38 mark.

"Post a multi-month range breakout, the price rallied from Rs 12 to Rs 50 levels in just 8 months after which it witnessed a price and time-wise correction, trading in a defined range, i.e., 50 on the higher side and 38 on the lower side. We feel price to propel the next leg of up move; it would be important for the stock to register a breakout above 50 levels. In the event of a breakout above the 50 mark, it will open the way for 60 levels. On the flip side, key support is seen at 42 and 38 levels," said Rohan Shah, Technical analyst at Religare Broking.

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Fundamentally, too, the company has got back into shape after a tumultuous period over the last decade. Over the past three years, it has reduced its debt from Rs 12,000 crore in FY20 to nil in FY24 through various debt-to-equity conversions.

The wind turbine manufacturer became net cash positive with a cash reserve of Rs 1,100 crore as of March 2024, after a successful equity raise worth Rs 2,000 in Q2FY24 for debt reduction.

Suzlon Energy has managed to maintain a strong balance sheet in FY 24 with a healthy order book and a healthier bid-pipeline.

Backed by an impressive Q4 performance, improvement in segment performance and impressive deliveries, domestic brokerage firm Anand Rathi Financial Services stood positive on the company's future outlook raising the stock's target price to Rs 58 while maintaining a 'buy' rating.

Further, given the strong outlook on order inflow and execution growth in the medium term, ICICI Securities had given a 'buy' rating to the stock and a target price of Rs 54.

Additionally, JM Financial stated that the company may benefit from the tailwinds such as government initiatives to achieve 500 GW of non-fossil fuel capacity by 2030.

The company's order book stands strong while the order pipeline seems healthier, added JM Financial as it gave a 'buy' view on the stock with a target price of Rs 54.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)