Amid governance hiccups, Suzlon gains wind in its sails

livemint.com:

Suzlon Energy Ltd seems set to maintain its post-turnaround momentum, aided by a favourable macroeconomic environment, healthy financials, and a robust order book. This is despite concerns over ‘corporate governance’ issues following the sudden resignation of an independent director.

Shares of the wind energy company hit their 5% lower circuit limit on 10 June after Marc Desaedeleer resigned from the board due to concerns regarding compliance and transparency. In his resignation letter dated 8 June, Desaedeleer said while he was pleased with Suzlon’s operational and financial performance, there have been several situations where “the corporate governance standards applied by the company did not meet my expectations including situations where communications lacked the level of openness and transparency I would have liked to see".

In a call on 9 June, Suzlon explained that Desaedeleer's decision was not motivated by any financial irregularities or legal violations. It added that the company would implement changes to address the issues raised by Desaedeleer.

Analysts concur that the resignation was over procedural issues and does not indicate serious corporate governance lapses. "Given the emphatic assurance of maintaining good corporate governance from the management during the post-resignation conference call, complimented by the favourable macros, healthy financials, improving the pace of execution and still a healthy board composition, we continue to maintain our rating ‘buy’ with target price of ₹54 (based on a 30x FY26 estimated earnings per share)," JM Financial Institutional Securities said in a note.