Suzlon Energy's stock has spent the past month losing ground, falling 12.2% to around Rs 47.35 from Rs 53.92 a month ago. The decline has extended the weakness that followed the company's Q1 results, when the stock fell sharply after investors focused on a drop in profitability despite record first-quarter deliveries.
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Harshal Dasani, Business Head at INVAsset PMS, said the stock's decline has come in stages, with each leg down finding a fresh trigger. The latest concern, he said, came from the Q1 earnings, where revenue rose 22.3% to Rs 3,830 crore on deliveries of 506 MW, while EBITDA remained almost flat at Rs 595 crore. EBITDA margin fell to 15.6% from 19.2% a year earlier, while net profit declined 5.9% to Rs 305 crore.
1. Record Deliveries, But Margins Took A Hit
The margin decline has become the central issue for investors. Dasani attributed the pressure to Suzlon 2.0 investment expenses along with supply-chain and geopolitical costs in the turbine business.
For a stock that had commanded a high valuation on expectations of a sustained earnings recovery, the question now is whether the company can convert its large order book into earnings without giving up too much margin.
2. Suzlon 2.0 Spending Is Under Watch
The additional investment linked to Suzlon 2.0 has raised questions over how quickly margins can recover. Dasani said the market is looking for evidence in the next few quarters that this spending is normalising and margins are moving back towards historical levels.
The company's order book still provides visibility beyond two years of deliveries, according to Dasani. That keeps the longer-term demand story intact, while execution and profitability have become the immediate measures investors are watching.
3. Momentum Trade Has Unwound
The stock's weakness also comes after a period when Suzlon had become a crowded retail momentum trade. Dasani said the stock recorded 11 losses in 12 sessions as that momentum unwound. Sector-wide execution issues around transmission and land have added to the pressure, while investors have also rotated towards sectors offering greater earnings certainty.
Suzlon's stock is now about 27% below its 52-week high of Rs 64.95, according to the market data in the accompanying chart.
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