Suzlon Group’s Credit Rating Upgrade

Suzlon Group's Credit Rating Upgrade Image/Bloomberg
Suzlon Group's Credit Rating Upgrade Image/Bloomberg
Suzlon Group's Credit Rating Upgrade Image/Bloomberg
Suzlon Group's Credit Rating Upgrade Image/Bloomberg

Suzlon Group’s Credit Rating Upgrade

Suzlon Group’s Credit Rating Upgrade

Suzlon Group’s Credit Rating Upgrade

Suzlon Group, India’s leading renewable energy solutions provider, announced a significant upgrade in its credit ratings by CRISIL. CRISIL boosted Suzlon’s ratings to ‘A-’ with a Positive Outlook, on March 27, 2024. CRISIL Ratings upgraded its ratings on the bank facilities of Suzlon to ‘CRISIL A-/Positive/CRISIL A2+’ from ‘CRISIL BBB+/Positive/CRISIL A2’.

Comment from CFO and Stock Performance

Commenting on this achievement, Himanshu Mody, Chief Financial Officer of Suzlon Group, said, “We are delighted with the bank facilities rating upgrade by CRISIL, which is aligned with our efforts to achieve financial flexibility, and indicative of the robust financial position of the company. Achieving this milestone reflects our continuous focus on sound financial management, operational excellence, and sustainable growth.” The stocks of Suzlon Energy were trading in the green, up 4.07 per cent at ₹38.60 on March 27, on BSE at 11:51 am. The company enjoys a market capitalisation of ₹51,128.20 crore. Suzlon energy stock price is still over 20 per cent down from its 52-week high of ₹50.72.

Market Concerns and Long-term Prospects

Suzlon’s stock price has experienced some recent volatility due to market concerns surrounding the Ministry of New and Renewable Energy’s (MNRE) potential return to “reverse auctions” for wind power capacity allocation. While this policy shift could impact profitability in the short term, Suzlon’s long-term prospects remain positive.

SEBI’s Warning and Rating Highlights

Meanwhile, SEBI’s chairperson, Madhabi Puri Buch earlier this month, highlighted concerns about stretched valuations observed in both small- and mid-cap stocks, emphasizing the risks associated with the prolonged rally in these segments. Her warning about the bubble in small and mid-cap stocks, indicating off-the-charts valuations and potential price manipulation, contributed to the sharp decline in small-cap stocks, including Suzlon Energy.

The rating upgrade highlighted Suzlon’s performance, particularly exceeding expectations with improved margins in its wind turbine generator (WTG) business. CRISIL also noted the company’s continued healthy cash flow generation from operations and maintenance (O&M) services, along with a growing order book that provides strong visibility for future revenue streams.

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