JM Financial continues to remain positive on Suzlon Energy Ltd and sees more upside in the stock after a strong set of numbers in the June 2024 quarter. The domestic brokerage firm has maintained its 'buy' rating on the stock and has increased its target price by 31 per cent compared to the previous one.
On the other hand, another homegrown broking firm Anand Rathi Shares & Stock Brokers has downgraded the stock ratings but has increased the target price on the stock on the back of steep increase in wind-turbine deliveries.
Suzlon Energy reported Q1FY25 net revenue of Rs 2016 crore, while consolidated Ebitda came in at Rs 370 crore with improvement in margin due to higher volume of equipment supplies and lesser execution, said JM Financial. Adjusted consolidate PAT came in at Rs 300 crore due to higher interest income, it said.
"On account of strong deliveries, revenue and Ebitda margin in wind turbine generator (WTG) business for Q1FY25 and Q1FY24 stood at Rs 1,490 crore and Rs 800 crore and 10.4 per cent and 5.5 per cent, respectively. The installed capacity base for the operations & maintenance services (OMS) business increased to 14.8 GW in Q1FY25," it added.
Shares of Suzlon Energy extended its gains during the trading session Thursday as the stock hit an upper circuit of 5 per cent for another trading session to Rs 63.74, with a total market capitalization of more than Rs 86,000 crore. The scrip had settled at Rs 60.71 in the previous trading session on Wednesday.
Shares of Suzlon Energy surged more than 700 per cent in the last 15 months period, while the stock has zoomed over 265 per cent from its 52-week lows at Rs 17.43 a year ago. The stock has rallied nearly 65 per cent in 2024 so far, while it is up 15 per cent in the last one month.
With an over 32 per cent market share in India’s wind turbines, Suzlon’s Q1 net cash was Rs 1,190 crore, said Anand Rathi. "We expect its focus to shift to deliveries on the impressive 3.8GW OB, and factor in 1.5GW/2.2GW deliveries for FY25/26. India’s wind capacity installations are on track to rise to 8-9GW by FY27, given the government’s insistent thrust, and commercial & industrial demand, it said.
India is committed to achieve 500 GW of non-fossil fuel capacity by 2030 which includes 100 GW of wind capacity. Suzlon has recorded the largest-ever order book of 3,817 MW during Q1FY25 with a diversified mix, spread across 7 States. The company with its positive net worth has started bidding for PSU tenders.
On the 3.8GW order backlog, we build in 1.5 and 2GW WTG deliveries in FY25 and FY26, respectively. Challenges in grid connectivity and land acquisition could delay delivery, denting earnings. We expect orders from PSUs to pick up, given the relentless green-energy target, said Anand Rathi.
"We lower our rating to 'hold' with a higher 12-month target price of Rs 69, 40 times FY26e PER (35 times earlier), given the impressive growth opportunities. It previously had a target price of Rs 60 on the stock. Anand Rathi has cited adverse government policy, slower-than-expected pickup in WTGs, keen competition as the key risks for Suzlon.
"We believe that gradual building of momentum for higher execution, healthy order book, more healthy bid pipeline, strengthening of balance sheet and the organization are driving the company for the next-level of growth," JM Financial added with a buy rating with a revised target price of Rs 71 (from Rs 54 earlier), suggesting an upside of 17 per cent from its last close.
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