Suzlon Energy Share Price Dips as it Enters ASM IV Framework

Suzlon Energy Share Price Dips as it Enters ASM IV Framework
Suzlon Energy Share Price Dips as it Enters ASM IV Framework
Suzlon Energy Share Price Dips as it Enters ASM IV Framework
Suzlon Energy Share Price Dips as it Enters ASM IV Framework

Suzlon Energy Share Price Dips as it Enters ASM IV Framework

Suzlon Energy Share Price Dips as it Enters ASM IV Framework

Suzlon Energy Share Price Dips as it Enters ASM IV Framework

Suzlon Energy, a prominent player in the renewable energy sector, experienced a 5% lower circuit for the second consecutive trading session on Tuesday, sending ripples through the market. This sharp decline occurred as the stock was included in the Direct Stage IV “ASM framework,” effective from October 9. The term “ASM” stands for Additional Surveillance Measures.

Early Morning Plunge

Suzlon Energy’s shares began the day down by 4.4% at ₹26.46 apiece, compared to the previous day’s closing price of ₹27.69 per share on the BSE. As selling pressure intensified in the early trading hours, the stock plummeted to reach a 5% lower circuit limit of ₹26.31 per share.

ASM IV Framework Impact

The decline in Suzlon’s share price can be attributed to its inclusion in the ASM IV framework, a regulatory mechanism designed to control price volatility and safeguard investors’ interests. This marks the final stage of ASM, where margin requirements surge to 100% for all clients, and the price band narrows down to 5% for the stock.

Suzlon Energy had been a shining star in the market, delivering impressive returns to investors. Over the last six months, the stock surged by over 230%, while year-to-date, it showed remarkable growth of more than 148%. Over the course of one year, Suzlon Energy’s share price soared by 243%, and in three years, it skyrocketed by an astonishing 791%, offering stellar returns to its investors.

In August, JM Financial initiated coverage on Suzlon Energy with a ‘Buy’ rating and set a target price of ₹30 per share, representing a 14% upside potential from the recent low. The brokerage firm believes that Suzlon Energy, with its leading market share, robust manufacturing capabilities, credible O&M services, and technological edge, is well-positioned to expand its order book and enhance project execution.

As Suzlon Energy progresses towards becoming debt-free, JM Financial expects the company to achieve impressive revenue and EBITDA growth with CAGRs of 31% and 38%, respectively, over FY23-26E. With favorable industry conditions, a healthier balance sheet, and a robust order book, Suzlon Energy is poised for strong performance in the future.

In the first quarter of fiscal year 2024, Suzlon Energy reported a significant 96% decline in its consolidated net profit, which stood at ₹101 crore, compared to ₹2,433.33 crore in the corresponding period last year. The company’s revenue from operations in Q1FY24 also dipped by 2% to ₹1,347.52 crore from ₹1,377.58 crore in the year-ago period.

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