Shares of Suzlon Energy Ltd. are trading with gains of as much as 5% on Thursday, July 25. The stock, which has risen 63% so far in 2024 and 230% in the last 12 months, reported a strong set of June quarter numbers, surpassing Street expectations.
Domestic brokerage firm JM Financial has maintained its 'Buy' rating on Suzlon Energy. What caught the street's eye more though, was the fact that it raised its price target on the stock to ₹71 from ₹54 earlier, a 31% hike from previous levels.
The brokerage believes that Suzlon Energy is poised for the next-level of growth due to a gradual buildup of momentum for higher execution, a healthy order book, a robust bid pipeline, and the strengthening of both the balance sheet and the organisation.
Suzlon has recorded largest-ever order book of 3,817 MW during the first quarter with a diversified mix.
As the company becomes eligible for bidding PSU tenders e.g. NTPC, JM Financial expects it to book healthy orders during FY25 and beyond, also supported by likely moderation in competition.
Another brokerage firm Anand Rathi, after a recent plant visit, projected a price target of ₹58 on the stock. It said that Suzlon Energy is well-positioned to benefit from the rising demand from utilities and the commercial and industrial (C&I) segment, which represents 58% of the May 2024 order book of 3.3 GW.
Meanwhile, Nuvama Institutional Equities has downgraded Suzlon Energy to 'Hold' from 'Buy' earlier.
While Nuvama stays long-term positive on Suzlon Energy, the uptick in order inflows and profits is already factored in, as the stock is trading at 40 times estimated FY27 earnings per share (EPS) of wind turbine generator (WTG) business.
"We remain long-term positive on the sector and Suzlon Energy; however, the expected uptick in order inflow from H2FY25 seems to be already baked in the current market price," Nuvama said while suggesting a target price of Rs 64 on the stock.
Suzlon Energy reported a net cash position of ₹1,200 at the end of the June quarter, which is a testament to the balance sheet clean-up undertaken by management, and now the company directly qualifies for bidding for NTPC, PSU, and other government tenders.
Suzlon also remains a key player in the C&I segment (2/3rd of OB) and benefits from a duopolistic market in EPC capabilities and maintains an overall 30% market share (35.5% in Q1FY25).
Nuvama has tweaked its FY25–27 estimates for Suzlon Energy to account for slightly lower realisation per MW and edging up of FY27 execution to 3GW from 2.9GW.
Speaking to CNBC-TV18 on Wednesday, Suzlon Group CFO Himanshu Mody said that the company did see some spillover of orders from the March quarter.
Further, Mody said that while financial year 2024 was about balance sheet consolidation, the current financial year will focus on profitability.
Shares of Suzlon Energy Ltd. are currently trading 3.57% higher at ₹62.89 apiece on the NSE.
