Suzlon Energy Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals and Expensive Valuation

Suzlon Energy, a leading player in the renewable energy industry, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, low ability to service debt, and expensive valuation.
According to MarketsMOJO, Suzlon Energy has an average Return on Equity (ROE) of 6.82%, indicating weak long-term growth potential. The company's Net Sales have only grown at an annual rate of 9.53% over the last 5 years, which is considered poor. Additionally, Suzlon Energy has a high Debt to EBITDA ratio of 5.27 times, indicating a low ability to service its debt.

The stock is currently trading at a discount compared to its historical valuations, but with a ROE of 18.2, it is still considered very expensive with a Price to Book Value of 25.5. However, over the past year, the stock has generated a return of 195.40%, while its profits have only risen by 256.2%, resulting in a PEG ratio of 0.5.

On a positive note, Suzlon Energy has declared very positive results for the last 14 consecutive quarters, with a growth in Net Profit of 18.96%. The company's PBDIT(Q) is also at its highest at Rs 370.08 crore, and its OPERATING PROFIT TO NET SALES(Q) is at 18.31%, both indicating strong financial performance.

Technically, the stock is currently in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend. Additionally, Suzlon Energy has a high institutional holding of 30.7%, indicating that these investors have better capability and resources to analyze the company's fundamentals.

Moreover, Suzlon Energy has consistently outperformed the BSE 500 index over the last 3 years, generating a return of 195.40%. With a market cap of Rs 1,02,595 crore, it is the largest company in the renewable energy sector, constituting 59.15% of the entire sector. Its annual sales of Rs 7,199.70 crore also make up 56.83% of the industry.

In conclusion, while Suzlon Energy has shown strong financial performance and consistent returns, its expensive valuation and weak long-term growth potential have led to a 'Sell' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.