Suzlon Energy stock has slumped in the past few weeks as investors waited for its third-quarter earnings, and as global bond yields rose. It has dropped in the last seven consecutive weeks, moving to its lowest point since July 29. In this period, it has fallen by over 21% from its highest level this year, meaning that it has moved into a deep bear market.
Suzlon Energy strong results
The Suzlon Energy stock rose slightly on Tuesday and then pulled back after the company published its quarterly financial results.
These numbers showed that its total revenue rose to ₹2,121 crores in the quarter, a big increase from the ₹1,428 crore it made in the same period last year.
As a result, its profit rose to ₹201 crore from ₹102.4 crore. Cumulatively, the company’s half-year revenue surged to ₹4,165 crore from ₹2,790 crore a year earlier.
These results mean that Suzlon Energy’s business was doing well even as investments in wind energy slowed.
It is benefiting from numerous tailwinds. For one, its domestic demand remains at an elevated level as the country goes through major changes. The government is working on its Vision 2030, which will include data-consuming needs like urbanization, data centers, and electric mobility.
Suzlon Energy is also benefiting from the rising energy demand, which is expected to have a compounded annual growth rate (CAGR) of 7% to FY30.
Additionally, the company counts some of the top Indian firms like Adani Renewables, Brookfield Renewable Energy Partners, Jindal, and Bajaj as customers. It has a leading market share in India’s wind energy, equivalent to about 32% of the share.
Read more: Suzlon Energy share price has pulled back: buy this dip
Interest rates as a catalyst
Suzlon Energy share price has more catalysts ahead. First, it has lower manufacturing costs than Vestas Wind Systems and Siemens Energy, which will help it accelerate its market share in other countries. Its business model is highly beneficial since it a vertically integrated.
The other key potential catalyst for the stock is the fact that interest rates are expected to continue coming down in the coming months. In the US, the Fed has delivered a jumbo cut, and analysts expect it to continue the trend.
India has been a key holdout in cutting rates, but the central bank governor has hinted that cuts will start in the coming months. Wind and other large energy investments do well when interest rates are falling.
Additionally, it has a huge backlog of 4.7 GW of firm orders. Its results show that its wind order book rose to 5.1 MW, up from 1.6 MW in the same period last year. Most of these orders are the S144 model followed by the S120.
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Suzlon Energy share price analysis
Suzlon Energy chart by TradingView
The weekly chart shows that the Suzlon Energy stock price has been in a strong downward trend in the past few weeks after peaking at ₹85.70 in September.
Because of the previous surge, the stock remains significantly higher than the 50-week and 100-week moving averages. It is about 20% above the 50-week moving average and 62% higher than the 100-week moving average. As such, this retreat is likely because investors are taking profits.
The two lines of the MACD indicator have formed a bearish crossover. Also, the Relative Strength Index (RSI) is approaching the neutral level at 50. Other oscillators have pointed downwards in the past few weeks.
Therefore, the stock will likely continue falling in the near term, and then resume the uptrend. If this happens, the next point to watch will be the 50-week moving average at ₹55.2. In the future, the stock will likely bounce back and retest the resistance at ₹85.70.
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