Suzlon Energy downgraded to 'Hold' by MarketsMOJO due to high debt and low profitability

Suzlon Energy, a largecap company in the renewable energy industry, has recently been downgraded to a 'Hold' by MarketsMOJO on January 15, 2024. This decision was based on various factors, including the company's healthy long-term growth and positive results for the last 11 consecutive quarters.
One of the key reasons for the downgrade is the company's high debt to EBITDA ratio of 23.49 times, indicating a low ability to service debt. This could potentially impact the company's financial stability in the long run.

However, Suzlon Energy has shown a strong performance in the market, with its stock being in a mildly bullish range. It has also outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, generating a return of 336.85%.

The company's market cap of Rs 60,564 crore makes it the biggest player in the renewable energy sector, constituting 66.70% of the entire sector. Its annual sales of Rs 5,924.51 crore also account for 63.44% of the industry.

Despite its high valuation with a price to book value of 17.3, Suzlon Energy is currently trading at a discount compared to its average historical valuations. Its return on equity (avg) of 1.99% also signifies low profitability per unit of shareholders' funds.

In conclusion, while Suzlon Energy has shown strong market performance and positive results, its high debt and low profitability may be a cause for concern. Investors are advised to hold onto their stocks and monitor the company's financial stability in the future.