Target: ₹73
CMP: ₹61.46
Suzlon Energy is a vertically integrated wind turbine manufacturer and O&M service provider with over 20.7GW of installed capacity across the globe.
Global Wind Energy Council (GWEC) expects India to reach 122GW of installed wind capacity by FY32E. Moreover, the government plans to conduct 10GW of exclusive wind tenders per annum until 2027. This signals an upcycle for wind OEMs like Suzlon Energy. We expect Suzlon to deliver 2.1GW of Wind turbine generators (WTG) in FY26E, resulting in 73% CAGR from 0.7GW in FY24.
The high-margin O&M segment stands to benefit as these new additions turn serviceable over the next 2-3 years, given high renewal rates with annual escalation clause built into it.
Suzlon 2.0 is a de-levered, optimised, profit making business which has done away with its troubled past and is looking at a vibrant landscape of opportunities in India and abroad.
Currently, Suzlon has 3.31GW of unexecuted orders, with its sales expected to grow at a 53 per cent CAGR, surpassing the industry growth of 18 per cent. Despite factoring in execution risks, the EPS is expected to grow at a 66 per cent CAGR, resulting in a ROE improvement from 18.2 per cent in FY24A to 26.8 per cent in FY26. We value the stock at 50X PE on FY26EPS of ₹1.4 to arrive at a target price of ₹73.