JM Financial has retained its 'Buy' recommendation on Suzlon Energy Ltd, with a revised target price of Rs 37 on the stock from Rs 30 earlier, following the renewable energy solutions provider's September quarter earnings. Suzlon Energy shares hit an upper circuit limit at Rs 34.44 in Friday's trade. This was in addition to a 5 per cent circuit limit the Suzlon Energy stock witnessed on Thursday. Suzlon Energy said its profit for the September quarter grew 78.11 per cent year-on-year (YoY) to Rs 102.29 crore compared with Rs 57.43 crore in the same year-ago period.
Revenue from operations slipped 0.92 per cent to Rs 1,417.21 crore in Q2 FY24 from Rs 1,430.38 crore in the corresponding period last year.
JM Financial said Suzlon Energy's revenue was 3 per cent lower than its estimates. Revenue growth was led by dispatches of 132MW of Wind Turbine Generator (WTG) and stable O&M revenue, it said. Ebitda for the quarter was 4 per cent higher than JM Financial's estimates. Adjusted profit was facilitated by better margins and a reduction in interest cost, it said.
JM Financial noted that Suzlon Energy has an order book of 1,613MW, out of which 62 per cent was for 3x MW turbines, the supply of which would start in the March quarter. Additionally, Suzlon Energy has won 50MW orders subsequently. Suzlon Energy is focusing on high value quality orders (better margins) with a strong counterparty, the domestic brokerage said while adding that the industry has a pipeline of 13GW renewables (including hybrid) projects, which includes 11GW of the wind energy component.
"We expect Suzlon Energy to deliver revenue and Ebitda CAGR of 38 per cent and 43 per cent, respectively, over FY23-26. We have revised our estimates for FY25E/26E upwards driven by healthy order inflow, better execution visibility and an improving product portfolio. We maintain our BUY rating on the stock with a revised target of Rs 37 per share," he said.
The Suzlon Energy management has guided for a doubling of dispatches in H2FY24 compared with H1FY24. JM Financial sees dispatches at 800 MW for FY24. Suzlon said it expects annual addition of 4-5GW in FY24E and 6-7GW in FY25E.
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