Suzlon Energy share price that has been on an uptrend and having risen almost four folds in the last year, however, was locked in lower circuit on Monday, down almost 5%. The Suzlon Energy stock was put on Direct stage IV “ASM framework” with effect from October 9, 2023. ASM stands for Additional Surveillance measures.
The market regulator Securities and Exchange Board of India (SEBI) and Exchanges, in order to safeguard interest of investors and enhance market integrity introduce various enhanced pre-emptive surveillance measures. Experts say that this is a mechanism to control the price movement to protect investors. However, the liquidity of stock gets impacted.
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ASM IV is the final stage and the margin requirement raises to 100% for all clients while the price band narrows to 5% for the stock.
“Any stock that is it is placed under the ASM list becomes less attractive for traders ,” said Deepak Jasani Head of retail Research at HDFC Securities.
Hence profit booking may be seen in any such stock that comes under ASM list. The stock prices can stabilize also in a few days once profit booking by traders is over. This will need to be watched for in the case of Suzlon.
While the unusual price movement may have led to the decision of the exchanges and regulators, analysts generally have been positive on the company on improving fundamentals. The company’s debt reduction plans and strong order flows have increased investor confidence too. However, execution also needs to improve, said analysts
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The analysts at Kotak Institutional Equities in a September report had said that “Our reverse-valuation analysis based on Suzlon’s current market capitalization suggests that Suzlon will need to deliver 5-8 GW of annual wind turbine capacity to justify its current stock price. The company has a 33% market share in the total installed wind electricity base. The government has set a target of adding 8 GW of wind capacity annually until FY2030, to meet its renewable targets. As such, Suzlon will need to gain a significant market share in the wind generation sector, to meet the current market expectations, observed Kotak analysts.
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Updated: 09 Oct 2023, 04:05 PM IST