Suzlon Energy's Rs 2,000 Crore Fundraising Plan Puts Shares in the Spotlight

Suzlon Energy has announced a fundraising plan to raise Rs 2,000 crore, attracting attention and spotlighting its shares. The method involves issuing entirely paid-up equity shares, convertible bonds, non-convertible debt instruments, and other instruments through private offerings or qualified institutions' placement. Investors are eagerly watching the developments.

Suzlon Energy's Rs 2,000 Crore Fundraising Plan Puts Shares in the Spotlight

The amount represents nearly 10 percent of the market capitalization (m-cap) of the BSE500 firm of Suzlon Energy and it intends to raise up to Rs. 2000 Crore.

On Friday Suzlon Energy closed at Rs. 17.89, up 1.36 percent. The stock is up 66.88 percent year-to-date. After ICICI Securities gave the statement that Suzlon Energy is best equipped to benefit from industry tailwinds, Suzlon Energy came into the news or spotlight.
After the wind energy firm said that its board approved raising funds up to Rs. 2,000 crore on Monday Suzlon Energy Ltd. is in focus which represents nearly 10 percent of the market capitalization (m-cap) of the BSE500 firm. Suzlon Energy made an announcement after post-hours of Monday that there was the probability of seeing some action today in the stock.

The immediate support for the stock stays in the Rs 14-15 level while the store faces upside resistance at Rs 19-20 levels. The stock is up 66.88 percent year-to-date and the strip closed at Rs. 17.89 on Friday and up 1.36 percent.

In a recent filing with the stock exchange, Suzlon announced that its board has approved the issuance of a certain number of fully paid-up equity shares and/or convertible bonds (CBs), and/or non-convertible debt instruments, and/or any other instruments, or a combination thereof. These offerings will be conducted through one or more private placements or qualified institutions placements or a combination of both. The total value of these offerings will not exceed Rs 2,000 crore.

Suzlon Energy, in the March 2023 quarter, reported a consolidated net profit of Rs 319.99 crore, primarily driven by lower expenses. This marks a significant improvement compared to the consolidated net loss of Rs 205.52 crore in the quarter ending on March 31, 2022. However, the company's total income from operations decreased from Rs 2,478.73 crore to Rs 1,699.96 crore in the same period. Additionally, total expenses declined from Rs 2,511.70 crore to Rs 1,628.39 crore in the March 2023 quarter compared to a year ago.
Suzlon Energy has garnered attention recently with ICICI Securities initiating coverage on the stock. The brokerage firm believes that Suzlon Energy is well-positioned to benefit from favorable industry conditions. It predicts a significant increase in Suzlon Energy's earnings from FY24 onwards. The brokerage firm has set a share price target of Rs 22 for the stock, valuing it at 24 times the FY25 EPS.

According to ICICI Securities, Suzlon Energy has successfully navigated a challenging journey over the past decade, marked by a decline in industry volumes and high leverage resulting from the Repower acquisition in 2008. However, after undergoing a series of debt restructuring measures, Suzlon Energy has significantly reduced its net debt from Rs 13,000 crore in FY20 to Rs 1,200 crore as of March 2023. Moreover, the industry as a whole is experiencing a revival due to various policy actions.
ICICI Securities emphasizes that the Indian power grid requires a greater contribution from wind energy. After a period of subdued activity, stakeholders have finally recognized the need to enhance wind capacity additions.


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