Buy Suzlon Energy shares, target price upped, says JM Financial

JM Financial has increased its target price on Suzlon Energy Ltd, as it feels the renewable energy solutions provider is gearing up for the next level of growth. JM Financial said the momentum is building up for higher execution. It said Suzlon Energy's order book is healthy, the bid pipeline is strong and the balance sheet is strengthening, making it suggest a 'Buy' on the stock with a fresh target price of Rs 81 against Rs 71 earlier. Another brokerage Nuvama Institutional Equities, however, stayed 'Hold' on Suzlon Energy and  suggested a target price of Rs 67. 

JM Financial said Suzlon Energy's higher other expenses in Q2 largely pertained to various capability building efforts like up gradation of SAP, restart of Pondicherry facility and engagement of strategy consultants for diversification. Adjusted PAT for Suzlon Energy came in Q2 came at Rs 200 crore, up 46 per cent. This is against JM Financial's expectation of 41 per cent YoY growth. 

India added 707 MW of wind energy capacity in the September quarter against 412 MW in the year-ago quarter. Suzlon commissioned 130 MW of projects in Q2FY25 against 70 MW in Q1. 

Nuvama expects Suzlon Energy to remain a key beneficiary of rising mix of FDRE/RTC/Hybrid in government tenders. Suzlon, it said, remains a key player in C&I (two–thirds of OB) and benefits from a duopolistic market in EPC capabilities and maintains an overall 30 per cent-plus market share.

"While we stay long-term positive on Suzlon Energy, the stock price is already factoring in the uptick in OI/profits at 45 times FY27E EPS of WTG business. We are tweaking FY25–27E to account for the Renom acquisition and ESOP charges in FY25E and FY26E, yielding a target price of Rs 67 at 35x FY27E WTG + F&F EPS + DCF of O&M; reiterate ‘HOLD’," Nuvama said.