Suzlon Energy Shares Fall 10% in a Month: Should Investors Consider Averaging Now?
Suzlon Energy is one of the major players in India’s renewable energy sector and has seen its stock fall by over 10% in the last month, leading to discussion on whether this is a buying opportunity for investors. With the stock trading around Rs 63.68 in today’s trade, market experts feel that investors should look to average at lower levels, especially considering the price and time corrections that are expected in the short term for the company.
Stock Performance and Moving Averages
Currently, Suzlon’s stock is trading below some of the major short-term moving averages that include 5-day, 20-day, 30-day, 50-day, and 100-day simple moving averages. However, the stock price trades above the 10-day, 150-day, and 200-day SMAs, which reflects short-term weakness with long-term stability. The Relative Strength Index (RSI) is at 45.31, so it is neither overbought nor oversold but is more towards the neutral zone. In technical analysis, if the RSI is below 30, then it is said to be oversold and above 70 is overbought.
Should Investors Average Down?
The question that everybody is asking is whether they should buy more shares at these levels. According to market experts, investors who are taking a long-term view would look at averaging at these lower levels. Should the stock price correct further into the range of Rs 45-47, for example. “Suzlon is undergoing price and time corrections,” said Osho Krishan, senior research analyst, Angel One. He identified support at Rs 60-58, which will likely hold things together in the near term. A breakout above Rs 75 would mean a start of the recovery cycle.
Fundamental Analysis
Suzlon Energy’s fundamentals are a mixed bag. However, the company has reported impressive year-on-year growth in earnings despite short-term volatility in its stock price. The renewable energy provider witnessed a 95.72% jump in consolidated net profit for the second quarter of FY25 to Rs 200.2 crore from Rs 102.29 crore in the same quarter last year. Revenue too rose by 47.68% to Rs 2,092.99 crore from Rs 1,417.21 crore, reflecting robust operational growth.
But Suzlon is valued at a relatively high price-to-earnings (P/E) ratio of 288.86, so it may be that the stock is expensive to the P/E ratio. Apart from this, the price-to-book value of the company is 22.38 and EPS at 0.22. The EPS may be saying that the stock is trading at a premium to its financials.
The Road Ahead: What Analysts Are Saying
Even though the correction has recently happened, the analysts believe that Suzlon could witness a revival if the stock can break the resistance levels. The range of Rs 72-75 is considered a crucial resistance zone, and breaking through those levels might help it get into the strong rally mode. “If the stock can break through the Rs 75 level, we may see further upward movement,” Krishan says.
But caution remains. Aditya Arora of Adlytic Research says, “While the stock has gone up a lot from 2020, some time will be taken in digesting the gains taken over the last few years. The stock moved from Rs 3 to Rs 80, almost a 25x growth, and now it is taking some time to consolidate. Sellers are currently aggressive, and the stock could trade lower for some time,” he explains.
Patience and Caution
Current levels will be an entry opportunity for the existing investors to average down in case the stock falls into the Rs 45-47 zone. However, prospects should exercise caution, as in the near term the stock might continue to be quite volatile. With several support levels in place and a possible break above Rs 75, Suzlon Energy will continue to remain a strong contender for India’s growing renewable energy market. Long-term investors may still find value; however, they should prepare themselves for the highs and lows of investing in the stock while it is still experiencing corrections.
As always, the risk tolerance, time horizon, and overall portfolio strategy must be carefully evaluated before any decision is made by the investors.
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