25 Mar , 2025 By : Debdeep Gupta
Renewable energy player Suzlon Energy shares rose in early trade on March 25, after domestic brokerage Motilal Oswal initiated coverage on the firm with a bullish 'buy' call, seeing strong growth prospects as Suzlon Energy is the top wind energy service provider domestically.
Motilal Oswal issued a target price of Rs 70 per share, which implies an upside of 21 percent from the previous session's closing price of Rs 58 apiece.
At 9.20 am, Suzlon Energy shares were quoting Rs 58.88, higher by 1.7 percent on the NSE.
Wind energy is critical in India's renewable future, noted the brokerage. "By 2030, wind energy is expected to account for ~20 percent of India’s renewable energy mix, compared to 39 percent in the US and Germany, 33 percent in China, and 42 percent in the UK, highlighting the need for
more focus on wind energy development."
India's wind energy sector offers substantial growth potential, as the country aims to increase its installed wind capacity to 100GW by 2030 from 48GW currently. "Suzlon Energy projects India’s new wind energy installations to reach ~4GW in FY25, 6GW in FY26, and 7-8GW annually from FY27 onward. This opportunity positions the firm's Engineering, procurement, and construction (EMS) and operations and management services (OMS) businesses for strong growth."
Going ahead, Suzlon Energy's order book execution is likely to scale up sharply, from 710MW
in FY24 to 3.2GW in FY27, reducing per-unit fixed costs and supporting margins. As a result, Motilal Oswal sees a PAT CAGR of 63 percent over FY24-27.
Once bogged down by debt, Suzlon Energy's balance sheet has been cleaned up, to position it well. Motilal Oswal noted that the company's net debt-to-EBITDA ratio has moved from 6.6x in FY22 to a net cash position in FY24. "We expect the net cash position to rise further by FY27 given limited capex needs in the near term," added the brokerage.
The brokerage believes, at the current juncture, Suzlon Energy's shares are also reasonably valued, given an estimated EPS CAGR of 63 percent over FY24-27, significantly surpassing domestic
capital goods peers ABB India (23 percent), Siemens (20 percent), Thermax (17 percent), and CG
Power (26 percent) and global peers such as SANY (26 percent).
On PEG ratio, Suzlon Energy is favorably trading at FY26E PEG ratio of 0.6x, below other domestic capital goods peers such as Thermax (2.5x), ABB India (6x), and CG Power (1.9x).
0 Comment