After the company's March quarter results, a few brokerages have kept their "Buy" recommendation on Suzlon Energy Ltd. It has been a true turnaround year for Suzlon Energy, according to ICICI Securities, which raised its target price for the shares while noting the company's net debt elimination, robust execution increase of 10% to 710 MW, and order intake of 3.1GW in FY24. JM Financial maintained its 'Buy' rating on the stock and did not tinker with the target price.
Suzlon Energy's sales increased by 30% YoY in Q4FY24, while EBITDA increased by 53% YoY and adjusted profit after tax increased by 4.1 times YoY. With an increased target price of Rs 54 per share from Rs 48 previously, ICICI Securities said it will continue to retain its "Buy" rating on Suzlon due to the company's positive medium-term view on order intake and execution growth.
The brokerage has updated its Suzlon Energy FY26 projection in light of the company's robust order inflow during Q4 of FY24. Order backlog as of FY24 was 3.3 GW, with a total order intake of 3.5 GW. The FY26 Ebitda projection was raised by 5% to Rs 2,750 crore, while the profit estimate was lowered by 1% to Rs 2,100 crore.
Suzlon has recovered from a turbulent decade by getting back into shape. Through a variety of debt to equity conversions, it has lowered its debt over the last three years, going from Rs 12,000 crore in FY20 to zero in FY24. As a result, it just achieved net cash positive status with a cash reserve of INR 11 billion as of March 24, following a successful equity raising of Rs 2,000 crore for debt reduction in Q2FY24," the statement stated.
According to ICICI Securities, significant improvements in commercial and regulatory policies ultimately portend well for the wind sector. The government has made the decision to offer at least 10 GW of wind capacity per year in response to the growing need for a continuous supply of power from commercial and industrial organizations, the statement said.
"Suzlon Energy, being the market leader in wind turbine industry, is the natural beneficiary of this shift, in our view," it stated.
Suzlon Energy's future is cautiously bright, but its present is good, according to a report from JM Financial earlier. The firm upheld its 'Buy' rating on the scrip, with a target price of Rs 54 per share remaining unaltered.
According to JM Financial, Suzlon Energy has begun to submit bids for PSU (including NTPC) tenders. Since January 1, 2023, there have been 44 utility-scale bids totaling 43 GW.
There is a good pipeline of future chances due to the fact that vanilla wind and other wind-combinations with an anticipated wind component of 15GW have been issued, it added.
"This leaves out the C&I segment's potential. Given the scale of the industry, the small number of competitors, and the fact that it is the only turnkey OEM player, the firm does not expect the level of competition to rise, according to JM Financial.
Ebitda for Suzlon Energy Ltd. improved significantly in FY24 and FY23 due to a rise in wind turbine generator (WTG) deliveries. The Operations & Maintenance Services (OMS) business's installed capacity base grew from 13.9 GW in FY23 to 14.7 GW in FY24.
A significant portion of the 3,372 MW current order book is expected to be delivered in FY25, in accordance with management expectations, and is scheduled for execution through FY26. Future prospects are promising due to a growing percentage of C&I projects (58%), a variety of orders from seven states, a larger percentage of non-EPC contracts (66%) and a supportive regulatory climate (tariff pooling). But land availability and ROW (right of way) continue to be obstacles to a large scale-up, the statement stated.
