Kotak’s insightful analysis reveals that the market capitalisation of Suzlon Energy has surpassed the expected value creation from incremental capacity addition over the next several years. Even in the most optimistic scenario, there is little likelihood of the company realizing such potential opportunities in the near term. These findings provide valuable insights for investors looking to make informed decisions.
Kotak Institutional Equities conducted a reverse-valuation exercise on Suzlon Energy Limited and found flaws in the market’s approach to the company’s valuation.
According to Kotak’s analysis, Suzlon’s remarkable increase in market capitalisation has already surpassed the projected value creation from the company’s incremental capacity addition for the next several years, not to mention the potential opportunities in the best-case scenario.
As per the broking firm’s observation, the stock price of Suzlon, an electricity generation equipment supplier, has been on a sharp rise over the last few months due to the expected significant increase in generation capacity.
The brokerage is confident that wind-based generation capacity will see a notable boost in the coming years. This is due to the government’s ambitious targets and the significant improvement in Suzlon Energy’s financial position. As such, investing in wind energy could prove to be a wise move for those looking to capitalize on this growing trend.
Suzlon Energy has experienced an incredible year, with shares surging by an impressive 260% since the beginning of 2023. This marks the company’s best calendar year to date. However, on Wednesday, the stock witnessed a slight dip of 3% to trade at ₹38.50.
It’s worth noting that Suzlon Energy went public towards the end of 2005, with an IPO price of ₹510. However, the company’s share price took a significant hit and fell to an all-time low of ₹2 in 2019. Despite the challenges, the company has made an impressive comeback, demonstrating its resilience in the face of adversity.
