Suzlon Energy Ltd. has demonstrated a notable upturn in its stock performance, with shares gaining 16.03 percent over the last three months. This surge has helped the Indian wind turbine manufacturer reduce its one-year losses to 19.28 percent, signaling a potential catch-up after a period of underperformance compared to its international counterparts.
The positive movement in Suzlon's stock comes amidst a challenging period for many global wind energy sector players. Data compiled by Bloomberg indicates that several prominent manufacturers, including Denmark's Vestas Wind Systems Ltd., Chinese giants Goldwind Science and Ming Yang Smart Energy, and Germany's Nordex SE, have experienced declines of up to 37 percent over the same three-month period.
Global Peers Face Significant Declines
- Ming Yang Smart Energy was the hardest hit, with its stock falling 37 percent.
- Nordex SE, despite being a multibagger over the past year with a 113 percent gain, slipped 12 percent in the last three months.
- Goldwind Science saw a 16 percent drop in three months but still boasts a 103 percent return over the past year.
- Vestas Wind Systems declined 9 percent in three months, maintaining a 70 percent gain over the year.
In comparison, Suzlon's domestic peer, Inox Wind Ltd., also saw a 7 percent decline over three months and a 53 percent drop over the past year.
Valuations and Market Focus
Suzlon Energy currently trades at 29.74 times its trailing 12-month earnings, a valuation that is either higher than or comparable to most of its global competitors. For instance, Vestas trades at 23.09 times earnings, Goldwind Science at 27.69 times, and Nordex SE at 28.75 times. Ming Yang Smart Energy commands a higher price-to-earnings multiple of 49.12 times.
The company's market capitalization stands at $7.63 billion, placing it within a peer range of $3.45 billion to $27.13 billion. Notably, Suzlon's earnings are heavily concentrated in India, with 97 percent derived from its domestic market. This contrasts with companies like Vestas, which generates more than half its revenue from Europe, the Middle East, and Africa, and Goldwind, which derives 75 percent from China.
Analyst Outlook for Wind Turbine Stocks
Analysts generally hold a positive outlook for wind turbine manufacturers, including Suzlon, projecting returns ranging from 12 to 85 percent over the next 12 months. Based on estimates from 12 analysts, Suzlon has an average target price of Rs 66.25 per share, suggesting a potential upside of 24.48 percent. Ming Yang offers the highest potential return at 85 percent, while Goldwind and Nordex are expected to deliver returns of 30.47 percent and 21.24 percent, respectively. Vestas is anticipated to provide a return of 12.63 percent.