Suzlon Energy Downgraded to 'Hold' by MarketsMOJO, But Shows Strong Growth and Market Outperformance

Suzlon Energy, a largecap company in the renewable energy industry, has recently been downgraded to a 'Hold' by MarketsMOJO on April 8, 2024. This decision was based on various factors, including the company's healthy long-term growth with an annual operating profit growth rate of 38.80%. Additionally, the company declared very positive results in December 2023 with a 98.49% growth in net profit and has consistently shown positive results for the past 12 quarters.
The company's operating profit to interest ratio is the highest at 17.34 times, and its PBDIT (profit before depreciation, interest, and taxes) is also the highest at Rs 247.63 crore. Furthermore, its operating profit to net sales ratio is the highest at 15.87%. These factors contribute to the company's mildly bullish stock range.

Suzlon Energy also has high institutional holdings at 23.98%, indicating that these investors have better capabilities and resources to analyze the company's fundamentals. Their stake in the company has also increased by 3.27% in the previous quarter.

In terms of market performance, Suzlon Energy has outperformed the market (BSE 500) with a return of 407.83% in the last year, compared to the market's return of 40.11%. With a market cap of Rs 57,581 crore, the company is the largest in the renewable energy sector, constituting 61.52% of the entire sector. Its annual sales of Rs 6,026.96 crore also make up 63.69% of the industry.

However, one concern for the company is its high debt to EBITDA ratio of 23.49 times, indicating a low ability to service debt. Additionally, the company's return on equity (average) is only 1.99%, signifying low profitability per unit of shareholders' funds. With a ROE of 9.9, the company also has a very expensive valuation with a price to book value of 16.4. However, the stock is currently trading at a discount compared to its average historical valuations.

Despite its high debt and low profitability, Suzlon Energy has shown impressive growth in the past year, with a 407.83% return and a 864.8% increase in profits. The company's PEG ratio, which measures the relationship between the stock's price, earnings, and growth, is also at a low 0.2, indicating that the stock may be undervalued. Overall, while the stock may not be a strong buy at the moment, it may be worth holding onto for potential future growth.