Suzlon Energy Ltd’s shares fell sharply, closing down 5% at ₹75.75. This decline marks the sixth consecutive day of losses for the renewable energy company. The drop follows a warning letter issued by the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), which raised concerns about the company’s corporate governance practices after the resignation of an independent director.
Main Points
Background of the Decline
The advisory letter from the exchanges highlighted potential lapses in corporate governance, particularly related to the resignation of Marc Desaedeleer, who expressed concerns about the company’s adherence to expected standards. The BSE and NSE stated that they had reviewed responses from Suzlon regarding these issues and found instances where better practices could have been implemented. They cautioned that any future non-compliance would be taken seriously and could lead to further action.
Despite this recent setback, it is noteworthy that Suzlon’s stock has seen a remarkable increase of approximately 96.86% in 2024 prior to this decline. The stock had reached a high of ₹86 just a day earlier, driven by positive investor sentiment following a significant order from NTPC Green Energy, which was expected to enhance earnings visibility for the coming years.
The trading volume for Suzlon shares was notably high today, with around 65.92 lakh shares changing hands on BSE, surpassing the two-week average volume of 51.88 lakh shares. This surge in trading activity coincided with a market capitalization of ₹1,03,359.31 crore.
From a technical standpoint, analysts suggest that the stock appears bearish on daily charts. Research analyst AR Ramachandran indicated that if the downward trend continues, the stock could potentially drop to around ₹68 in the near term. Currently, Suzlon’s share price is trading below its 5-day, 10-day, 20-day, 30-day, and 50-day simple moving averages (SMAs), but above its longer-term SMAs such as the 100-day and 200-day.
- Current Share Price: ₹75.75
- Market Capitalization: ₹1,03,359.31 crore
- P/E Ratio: 506.91
- P/B Ratio: 30.09
- Earnings Per Share (EPS): ₹0.16
- Return on Equity (RoE): 5.95%
- 14-Day Relative Strength Index (RSI): 41.76 (indicating bearish conditions).
Investors are now closely watching how Suzlon will respond to this advisory letter and whether it will take steps to improve its governance practices. The company has stated that it believes the advisory letter will not materially impact its financial or operational activities. However, market sentiment remains cautious as traders evaluate potential risks associated with corporate governance issues.
With Suzlon’s shares having previously surged due to favorable contracts and market conditions, analysts suggest that this recent downturn may present an opportunity for cautious investors looking to enter at lower price points. The stock’s performance in the coming days will depend on both market reactions to the advisory letter and broader trends in the renewable energy sector.
