Suzlon Energy Stock Plummets Amid Concerns Over Governance

Shares of Suzlon Energy have prolonged their downward trajectory, marking the eighth consecutive session of declines on Monday. The stock dropped by 5 percent, closing at Rs 70.98. This represents a decline of 15.23 percent over the past eight trading days, despite an earlier surge of 84.46 percent in the year 2024.

The renewable energy company recently faced an ‘advisory cum warning’ letter from leading stock exchanges BSE and NSE. According to a statement from the exchanges, the letter was prompted by a review of issues raised by a resigning independent director. It was noted that several instances of suboptimal corporate governance practices were identified, suggesting room for improvement within the company’s governance model.

The advisory board’s concerns followed the resignation of Marc Desaedeleer, an independent director of Suzlon, who on June 8, 2024, emphasized in his resignation letter that the company’s corporate governance standards did not fulfill expectations.

Despite receiving the advisory, Suzlon has stated that the letter does not have any material impact on the company’s financial, operational, or other activities.

Market analysts have expressed a bearish outlook on Suzlon’s stock. Shiju Koothupalakkal, a technical research analyst at Prabhudas Lilladher, noted that the stock has seen profit booking which led to the recent downturn, advising a focus on key support levels at Rs 70 and Rs 66. Meanwhile, AR Ramachandran, a SEBI-registered research analyst, indicated strong resistance at Rs 76.5, with potential further declines if the stock closes below Rs 70.

The stock price currently falls below short-term moving averages but remains above longer-term indicators, indicating mixed signals for investors. The relative strength index (RSI) stands at 33.11, suggesting proximity to an oversold status.

According to BSE data, Suzlon Energy’s price-to-equity (P/E) ratio is reported at 451.28, with a price-to-book (P/B) value of 26.78. Its earnings per share (EPS) are 0.16 and the return on equity (RoE) is 5.95. The latest reports also show a slight dip in promoter holdings, from 13.29 percent to 13.27 percent.

In related developments, Suzlon’s share price band was recently revised upwards from 5% to 10% by the stock exchanges, allowing for greater movement to manage volatility. Previously, the stock had been under the Additional Surveillance Measure (ASM) framework, which has since been adjusted as regulatory bodies aim to stabilize market activity amid governance concerns.