Suzlon Energy Ltd is Rated Sell

Current Rating and Its Significance

The 'Sell' rating assigned to Suzlon Energy Ltd indicates a cautious stance for investors considering this stock at present. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. While the rating was established in late September 2025, it remains relevant today given the company's ongoing performance and market conditions.

Quality Assessment

As of 23 February 2026, Suzlon Energy Ltd holds an average quality grade. This suggests that while the company maintains a stable operational foundation, there are areas where it does not significantly outperform its peers. The return on equity (ROE) stands at a robust 40.4%, reflecting efficient utilisation of shareholder capital. However, the average quality grade implies that other qualitative factors such as management effectiveness, competitive positioning, or earnings consistency may not be sufficiently strong to warrant a more favourable rating.

Valuation Perspective

The valuation grade for Suzlon Energy Ltd is classified as very expensive. Currently, the stock trades at a price-to-book (P/B) ratio of 7.7, which is considerably high. Despite this, the stock is priced at a discount relative to its peers’ historical average valuations, indicating some relative value within the sector. The elevated P/B ratio signals that investors are paying a premium for the company’s assets, which may reflect expectations of future growth or profitability. However, such a valuation also raises concerns about downside risk if growth expectations are not met.

Financial Trend and Performance

The financial grade for Suzlon Energy Ltd is positive, supported by significant profit growth. The latest data as of 23 February 2026 shows that the company’s profits have surged by 176% over the past year, a remarkable improvement. This strong earnings growth is further underscored by a low PEG ratio of 0.1, suggesting that the stock’s price growth has not fully caught up with its earnings expansion. Despite this, the stock’s returns have been disappointing, with a one-year return of -19.42%, underperforming the broader BSE500 index, which has delivered 13.45% over the same period. This divergence highlights a disconnect between the company’s improving fundamentals and market sentiment.

Technical Outlook

From a technical standpoint, Suzlon Energy Ltd is mildly bullish. The stock has experienced short-term volatility, with a one-day gain of 0.29% but declines over longer periods: -3.61% over one week, -2.49% over one month, and -19.14% over three months. The mild bullishness suggests some underlying support levels and potential for recovery, but the prevailing downtrend over recent months tempers optimism. Investors should monitor technical indicators closely for signs of sustained momentum before considering entry.

Stock Returns and Market Comparison

As of 23 February 2026, Suzlon Energy Ltd’s stock returns reflect a challenging environment. The year-to-date return is -15.53%, and the six-month return is -23.84%. These figures indicate that the stock has struggled to gain traction despite the company’s improving profitability. The underperformance relative to the broader market index suggests that investors remain cautious, possibly due to valuation concerns or sector-specific headwinds.

Investment Implications

The 'Sell' rating signals that investors should approach Suzlon Energy Ltd with caution. While the company demonstrates strong profit growth and a positive financial trend, the very expensive valuation and recent price underperformance present risks. The average quality grade and mild technical bullishness do not provide sufficient confidence to offset these concerns. For investors, this rating suggests that holding or accumulating the stock may not be advisable at current levels, and alternative opportunities with better risk-reward profiles might be preferable.

Sector and Market Context

Suzlon Energy Ltd operates within the Heavy Electrical Equipment sector, a segment that often experiences cyclical demand influenced by infrastructure spending and energy policies. The midcap company’s performance must be viewed against sector trends and broader market dynamics. While the BSE500 index has shown resilience with a 13.45% return over the past year, Suzlon’s negative returns highlight company-specific challenges or investor concerns. This contrast emphasises the importance of fundamental and valuation analysis in stock selection within this sector.

Summary of Key Metrics

To summarise the key figures as of 23 February 2026:

• Mojo Score: 36.0 (Sell grade)
• Return on Equity (ROE): 40.4%
• Price to Book Value (P/B): 7.7 (very expensive valuation)
• Profit growth over past year: +176%
• PEG ratio: 0.1 (indicating undervaluation relative to earnings growth)
• Stock returns: 1Y -19.42%, YTD -15.53%, 6M -23.84%
• Market benchmark (BSE500) 1Y return: +13.45%

What This Means for Investors

Investors should interpret the 'Sell' rating as a signal to carefully evaluate Suzlon Energy Ltd’s risk and reward profile. The company’s strong profit growth and positive financial trend are encouraging, but the high valuation and recent price declines suggest limited upside potential in the near term. Those holding the stock may consider reassessing their positions, while prospective investors might wait for more attractive entry points supported by improved technical signals or valuation adjustments.

Looking Ahead

Going forward, monitoring Suzlon Energy Ltd’s quarterly earnings, sector developments, and broader market conditions will be crucial. Any sustained improvement in technical momentum or valuation metrics could warrant a reassessment of the current rating. Until then, the 'Sell' recommendation reflects a prudent approach based on the comprehensive analysis of the company’s current fundamentals and market performance.

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