The Indian government plans to hold 10GW of exclusive wind tenders annually until 2027, which bodes well for wind energy manufacturers like Suzlon.
Suzlon Energy's total market capitalisation now exceeds Rs 86,000 crore.
New Delhi,UPDATED: Jul 25, 2024 14:05 IST
Shares of Suzlon Energy saw gains during Thursday's trading session, hitting an upper circuit limit of 5% for the second consecutive day.
The stock closed at Rs 63.74, marking an increase from Rs 60.71 in the previous session, and the company’s total market capitalisation now exceeds Rs 86,000 crore.
According to Geojit Financial Services Limited, Suzlon Energy is positioned for considerable growth and gave a 'BUY' rating to it.
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The Global Wind Energy Council (GWEC) projects that India will reach 122GW of installed wind capacity by FY32E.
Additionally, the Indian government plans to hold 10GW of exclusive wind tenders annually until 2027, which bodes well for wind energy manufacturers like Suzlon.
Geojit anticipates Suzlon will deliver 2.1GW of wind turbine generators (WTGs) in FY26E, which represents a 73% compound annual growth rate (CAGR) from 0.7GW in FY24.
"Currently, Suzlon has 3.31GW of unexecuted orders, with its sales expected to grow at a 53% CAGR, surpassing the industry growth of 18%. Despite factoring in execution risks, the EPS is expected to grow at a 66% CAGR, resulting in a ROE improvement from 18.2% in FY24A to 26.8% in FY26E. We value the stock at 50X PE on FY26EPS of Rs.1.4 to arrive at a target price of Rs. 73," said Geojit.
JM Financial also maintains a positive outlook on Suzlon Energy. After a robust performance in the June 2024 quarter, the domestic brokerage firm has kept its 'buy' rating and increased its target price by 31%.
JM Financial said that Suzlon’s shares have surged over 700% in the past 15 months and risen more than 265% from their 52-week lows. In 2024, the stock has gained nearly 65%, with a 15% increase in the past month.
Anand Rathi Shares & Stock Brokers have downgraded their stock ratings but have raised the target price due to a significant rise in wind-turbine deliveries.
Suzlon’s Q1FY25 financials showed net revenue of Rs 2,016 crore and consolidated EBITDA of Rs 370 crore, reflecting improved margins from higher equipment supplies and reduced execution costs. Adjusted consolidated PAT was Rs 300 crore, boosted by higher interest income.
JM Financial highlighted that Suzlon’s wind turbine generator business saw substantial growth in Q1FY25, with revenue reaching Rs 1,490 crore and EBITDA margins improving to 10.4%, compared to Rs 800 crore and 5.5% respectively in Q1FY24. The company's installed capacity for its O&M services increased to 14.8GW in Q1FY25.
JM Financial believes that Suzlon’s strong deliveries, healthy order book, and improved balance sheet position it for further growth. They have set a revised target price of Rs 71, up from Rs 54 earlier, indicating a potential upside of 17% from the current closing price.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
Published By:
Sonu Vivek
Published On:
Jul 25, 2024
