Suzlon Energy shares in focus on order cancellations; here's latest order book size

Shares of Suzlon Energy Ltd are in focus on Tuesday after the renewable energy solutions provider said it has seen cancellation and truncations of a couple of orders since January.   

In its filing with the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), Suzlon Energy said its current order book stands at 5,622 MW against 5,523 MW reported as of January 28, but it witnessed a couple of cancellations and truncations. 

Suzlon highlighted the cancellation of a 99 MW order from Vibrant Energy and the truncation of a 201.6 MW order from O2 Power Private Limited (Teq Green Power XI Private Limited) to 100.8 MW. Additionally, a customer has decided not to proceed with a 100.8 MW order for the 3 MW series. These orders were bagged from May 2023 to December 2023.

Suzlon Energy, meanwhile, also won orders and said the above cancellations would not have any material impact on the order book position of the company. 

In a note on March 24, Geojit Financial Services expected order inflows for Suzlon Energy to remain strong in the near term and the C&I portfolio to expand further in the mix. 

"WTG deliveries have been robust, but installation pace is satisfactory due to execution issues like transmission delays and land-related challenges. 9MFY25 installation/deliveries ratio is at 0.25X, indicating a slack in installations. Hence, we cut FY26E/27E revenue estimates by 10 per cent/21 per cent, respectively, to be in line with the guidance and to account for this execution risk," it said.

Geojit forecast a margin expansion of 70 bps as higher Ebitda contributions and improving profitability of the WTG segment due to better project mix is seen driving consolidated Ebitda margins. 

"Suzlon’s PAT is expected to grow at a 30 per cent CAGR in the FY25-27E period. Therefore, we value the stock at a 40 times PE multiple on FY27 EPS to arrive at a target price of Rs.71," it said.

MOFSL in another note suggested a target price of Rs 70 on Suzlon Energy. 

This is at a slight premium to historical average 2-year forward PE of 27 times given execution as earnings are just picking up for Suzlon Energy, MOFSL said. 

"While valuations across the capital goods space have come off, they remain elevated given a healthy earnings growth trajectory, a decent order book, improving cash flows, and a positive industry outlook," MOFSL said.