Suzlon Energy vs SJVN – Finance, future plans and more

Suzlon Energy vs SJVN: A transition to renewable energy sources is urgently needed. As population, income and demand increase, the demand for electricity is increasing day by day. Climate change is wreaking havoc on the world, and it seems like a better way to move away from dependence on coal and oil and toward renewable energy sources. Some companies are trying to capitalize on this opportunity. In this article, we will compare renewable energy companies Suzlon Energy and SJVN.

Suzlon Energy

Company Overview

Tulsi Tanti founded Suzlon in 1995 and has since grown into a leading global provider of renewable energy solutions. Over the past 20 years, Suzlon has installed more than 20.3 GW of wind energy in 17 countries and six continents.

The Suzlon Group is the majority shareholder of Suzlon Energy Limited and its various subsidiaries. Suzlon Group’s manufacturing operations are spread across India and include 14 facilities. Suzlon has nearly 6,000 employees.

In India, Suzlon is the market leader with over 111 wind farms and an installed capacity of over 14,330 MW. Asia’s largest onshore wind power plant has been built in nine states, including Gujarat, Rajasthan, Maharashtra, and Tamil Nadu.

segment analysis

The company generated revenue through the sale of wind turbine generators (60.17%), castings and forgings (7.93%), operations and management systems (31.76%), and other (0.14%) in FY23.

S.J.V.N.

Company Overview

SJVN Limited was established on 24 May 1988 as a joint venture between the Government of India (GOI) and the Government of Himachal Pradesh (GOHP), Mini Ratna, Category-I under the administrative control of the Ministry of Power. Government of India. SJVN stands for Satluj Jal Vidyut Nigam. The Government of India owns 55.00% of SJVN, the Government of Himachal Pradesh owns 26.85% and the general public owns 18.15%.

Following the completion of India’s largest 1500 MW Nathpa Jhakri hydroelectric power plant in Himachal Pradesh, the company has completed 10 projects with a total installed capacity of 2152 MW and 123 km of transmission lines.

SJVN operates in India by implementing or operating power projects in Himachal Pradesh, Uttarakhand, Bihar, Maharashtra, Uttar Pradesh, Punjab, Gujarat, Arunachal Pradesh, Rajasthan, Assam, Odisha, Mizoram and Madhya Pradesh. We plan to expand our presence. Nepal.

segment analysis

Power generation is a recognized source of revenue for the company. Contracting, project management, and consulting work are minimized. SJVN operates in India through power plants.

The Himachal Pradesh government accounts for 25.23% of the revenue, the Department of Power Development (J&K) accounts for 12.33%, UP Power Corporation accounts for 17.16%, Punjab State Power accounts for 9.72% and the remaining customers account for 35.56% of the revenue. In FY23.

industry analysis

India’s renewable energy sector is growing in response to global climate change issues. Prime Minister Narendra Modi’s initial target of installing 175 GW of renewable energy capacity by 2030 has now been increased to 450 GW. The National Hydrogen Mission will cost $2.4 billion and produce 5 million metric tons of hydrogen by 2030 with an additional budget of $36 million.

India has already achieved its target of installing 40% electricity capacity from non-fossil fuels by November 2021, making it the fourth largest solar and wind installed capacity in the world.

By 2025-2030, power generation from solar and wind projects in India is likely to be cost-competitive with thermal power generation. As the economy grows, electricity consumption is expected to reach 15,280 TWh in 2040, from 4,926 TWh in 2012. Most of the demand will come from the real estate and transportation sectors.

The country plans to reach 450 GW of installed renewable energy capacity by 2030, with 280 GW (more than 60%) expected to come from solar power. The ambitious target of 450 GW by 2030 would provide investment opportunities worth $221 billion.

Suzlon Energy vs SJVN – finance

Sales and Net Profit

Suzlon and SJVN’s FY23 revenue was Rs. 5,970.53 crores and Rs. 2,938.35 crores respectively compared to Rs. 6,581.78 crores and Rs. In fiscal year 22, it is $241.7 billion.

Suzlon and SJVN’s FY23 net profit was Rs. 2,887.29 crore and Rs. 1,359.30 crore each compared to Rs. -176.55 crore and Rs. 989.80 crore in FY22.

When comparing revenue, Suzlon’s highest revenue over the last five years was FY23, and has been increasing since FY21 after falling in FY20. SJVN revenue has remained relatively stable over the past five years, at a compound annual growth rate (CAGR) of 2.57%.

Suzlon delivered significant returns in FY23 and FY21, thanks to outstanding gains from subsidiary exits and gains from foreign currency convertible bond (FCCB) restructuring. On the other hand, except for FY21, losses were large between FY19 and FY22. SJVN has been consistently profitable despite not growing for five years.

profit

Suzlon and SJVN OPM recorded 13.93% and 77.06% respectively in FY23, compared to 12.58% and 74.08% in FY22.

Suzlon and SJVN’s net profit margins were 2.80% and 46.26%, respectively, in FY23 and -3.98% and 40.95% in FY22.

Suzlon’s operating margins were volatile and negative in FY19 and FY20 before improving in FY21 but continuing the downward trend. SJVN maintained a higher margin than Suzlon.

Suzlon’s net profit margin declined in FY19, FY20 and FY22. Margins have been volatile over five years. The higher margins in FY21 and FY23 were due to exceptional profits. Otherwise, margins would have been negative in FY21 and slightly positive in FY23. SJVN has higher margins than Suzlon and has been declining since FY21.

rate of return

Suzlon and SJVN RoE in FY23 were 262.69% and 10.06%, respectively, compared to 112.88% and 9.08% in FY22.

Suzlon and SJVN RoCE recorded 112.88% and 9.08% respectively in FY23, compared to 23.04% and 8.81% in FY22.

Suzlon’s five-year RoE has been stagnant and declining. In FY19 and FY21, the positive ratio was driven by negative net worth and losses. Excellent profits in FY23 improved the ratio significantly. SJVN’s performance was consistent from FY19 to FY21, but has declined further in recent years.

Suzlon’s RoCE shows better debt utilization and adequate returns from FY21 to FY23, but the ratio is still low due to high debt and interest expenses. On the other hand, SJVN shows the same trend as RoE, but RoCE outperforms RoE. SJVN’s returns declined in FY22 and FY23.

debt analysis

The Suzlon and SJVN D/E ratios in FY23 were 1.73 and 1.01, respectively, compared to -1.79 and 0.53 in FY22.

Suzlon and SJVN interest coverage was 1.35x and 4.85x respectively in FY23 compared to 1.96x and 6.84x in FY22.

Suzlon’s D/E ratio is negative from FY19 to FY22 due to negative equity ratio and high debt, which is almost twice the equity. SJVN’s debt is high and has been increasing from FY19 to FY23, with debt in the most recent year accounting for half of its capital structure.

Suzlon’s interest coverage remained low and negative due to ongoing losses and high interest costs. SJVN has comfortable ratios, and debt growth in recent years has had an impact on this.

key indicators

Let’s take a look at some of the key indicators for Suzlon Energy and SJVN.

Suzlon Energy vs SJVN – What’s next?

Suzlon Energy

• Suzlon is trying to regain its market leadership position and increase its market share in the face of increasing competition from other large companies such as Adani and Tata.
• One of our most important priorities is to strengthen our balance sheet to reduce debt and fund our working capital requirements.
• Suzlon expects to lower the levelized cost of energy (LCOE) according to market conditions through technology and product improvements.

S.J.V.N.

• SJVN plans to diversify its portfolio by undertaking various projects as part of the government’s 24/7 power plan.
• Based on the green hydrogen policy, R&D is planned to be established in Himachal Pradesh.
• SJVN expects to improve its financial performance and cash flow by undertaking projects, including adding 3765 MW in FY24 and 1598 MW in FY25.

conclusion

As we near the end of Suzlon Energy and SJVN, let’s take a quick look at their comparison. Both companies have potential. In most respects, SJVN outperforms Suzlon. On the other hand, government support for renewable energy creates opportunities for Suzlon and SJVN.

Suzlon’s financial position should improve and the company’s recent debt reduction through increased stake in QIB could dictate the company’s future. SJVN is backed by the government and any advancements in growing demand could help it hold potential and further increase its margins. What do you think about the potential of these companies? Let us know your thoughts in the comments section below.

Written by Santosh

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