Nuvama Institutional Equities has initiated coverage on Suzlon Energy, with a positive outlook on the renewable energy player as it sees Suzlon as the leader in the wind energy sector, holding the pole position. Like other domestic brokerages, Nuvama also sees about 20 per cent upside in the shares of Suzlon Energy.
As the generation mix is shifting towards renewables, particularly in favour of solar, bringing diversity into the supply mix by enhancing the share of wind is imperative. The lowest-cost solution for an optimal decarbonised grid is a mix of wind, solar and battery storage capacities. Wind generates power in monsoon and at night when solar generation is low, said Nuvama.
Suzlon has enjoyed a market share of 30 per cent in the domestic market driven by technology superiority and reliable O&M services. The order book has grown 5 times from 652MW in FY23 to 3.3GW in May-24, with a better-margin product mix lending revenue visibility for the next two years, it added.
"We argue Suzlon is capable of sustaining its lead in WTG/turnkey EPC execution, translating to OB and PAT CAGR of 21 per cent and 61 per cent (FY24–27E)," Nuvama added while initiating coverage on the stock with a target price of Rs 53, at 35 times FY27E EPS for the WTG and foundry & forgings businesses. Nuvama sees an upside of 20 per cent from its previous close at Rs 43.96.
Following a positive brokerage outlook, shares of Suzlon Energy rose more than 2.85 per cent to Rs 45.20 on Wednesday's trading session, commanding a total market capitalization of more than 61,000 crore. The stock has surged about 20 per cent in the year 2024 so far.
Among other brokerage firms, Anand Rathi has maintained its 'buy' rating on the stock with a target price of Rs 58 apiece, suggesting an upside of 32 per cent, while JM Financial has also a 'buy' tag for the counter with a target price of 54.
"With more than a 32 per cent market share in India’s wind turbines, we expect its focus to shift to deliveries on its impressive 3.3GW OB and factor in 1.5GW and 2.2GW deliveries for FY25 and 26, respectively, said Anand Rathi." India’s wind capacity installations are on track to rise to 8-9GW by FY27 given the government's insistent thrust and traction from commercial and industrial demand, it said.
"With a healthy order book and more-healthy bid pipeline, strengthening of balance sheet and the organization, amidst the execution challenges for step-up in annual capacity addition beyond 5GW, we maintain our 'buy' rating on the stock with an unchanged target price," added JM.
In an exchange filing on Wednesday, Suzlon announced a new order win for the development of a 551.25 MW wind power project for the Aditya Birla Group. Suzlon will install 175 wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower and a rated capacity of 3.15 MW each at sites in the Barmer district in Rajasthan and Bhuj district in Gujarat.