The resignation of Suzlon Energy's Independent Director Marc Desaedeleer' amid concerns over corporate governance standards has put its shares in spotlight today. The Independent director said Suzlon Energy's governance standards did not meet his expectations including situations where communications lacked his expectation of openness and transparency. Suzlon Energy CEO clarified that the issues raised were soft in nature and process-oriented, which would be implemented in due course. The management reiterated that all legal and financial disclosures have been fully complied with, as per regulations. Nuvama Institutional Equities said it finds no reason to stray away from its ‘Buy’ thesis on Suzlon Energy Ltd, backed by the wind sector’s structural upturn and financial turnaround of the company. It suggested a target price of Rs 53 on Suzlon Energy.
The emphatic assurance of maintaining good corporate governance from management during the post-resignation conference call complimented by the favourable macros, improving pace of execution and still a healthy Board composition made JM Financial maintain its rating ‘Buy’ the stock with target price of Rs 54 based on a 30 times FY26 EPS. Desaedeleer resigned from the directorship of the company with effect from June 8 He was associated with Suzlon Energy since April 2012. The reason stated in the resignation letter was instances that occurred where the cooperative governance standards applied by the company did not meet his expectations including situations where communications lacked the level of openness and transparency he expected. "Desaedeleer’s recommendations were soft and process-oriented and were more ‘best in class’/’beyond the normal requirement of law’ corporate governance standards and transparency practices rather than actual operational/ethical necessities. None of the suggestions revolved around financial or operational irregularities or non-compliance with law. Suggestions were on the matters that did not meet Desaedeleer’s personal standard of expectations and speed of implementation," Nuvama said the management as saying. It said the management continues to address the needs of the business while continuing to fully comply with regulations. Desaedeleer’s term was scheduled to end in September 2024. "With Suzlon turning around its financial position and the operational ramp-up expected in FY25, management is looking to address the needs of the business first, and intends to implement such best-in-class suggestions in due course. We, hence, find no reason to stray away from our ‘BUY’ thesis on Suzlon (unchanged TP INR53) driven by the upturn in the wind sector and financial turnaround of the company," Nuvama said.