Shares of Suzlon Energy rallied over 4 per cent to Rs 49.2 apiece on June 11 after the firm bagged 103.9 megawatt (MW) order from AMPIN Energy Transition to install 33 wind turbine generators with hybrid lattice turbular tower in Fatehgarh, Rajasthan.
As part of the agreement, Suzlon will supply the wind turbines (equipment supply) and execute the project, including erection and commissioning. Suzlon will also undertake comprehensive operations and maintenance services post‐commissioning.
“Suzlon and AMPIN Energy Transition are committed to the expansion of renewable energy in India. Going forward, we will see the industry add on increasing volumes of hybrid renewable energy projects, which will be the cornerstone of effective energy transition,” said Vivek Srivastava, Chief Executive Officer, India Business, Suzlon Group.
Analysts have maintained a ‘Buy’ rating on Suzlon Energy, citing recent strong order wins. The Independent Director had expressed satisfaction with the company’s financial and operational turnaround in his resignation letter.
“The letter does not indicate any financial or legal impropriety. The management is actively working to enhance transparency and improve information-sharing processes. They are confident in addressing specific corporate governance issues and aim to strengthen governance and disclosures. We maintain a BUY rating on Suzlon with a target price of Rs 60,” ICICI Securities said.
The brokerage firm highlighted that Suzlon Energy has prioritised debt reduction and efficient working capital management over the past 15 months. They also mentioned that the company is committed to ongoing improvements in corporate governance and transparency.
ICICI Securities said, “The outlook for the wind industry is positive over the medium to long term, with an expected 10GW of wind opportunities projected for FY23-FY27E. Given the increasing complexity of renewable energy projects, we believe wind energy will play a crucial role in future renewable energy generation.”
Brokerage house Nuvama believes multibagger wind energy stock Suzlon Energy is a ‘good to have’, not a ‘need to have’ one. The brokerage finds no reason to stray away from the ‘BUY’ thesis with an unchanged target price of Rs 53. This recommendation is supported by the structural upturn in the wind sector and the company’s financial turnaround.
The stock is now just 5.5 per cent away from its 52-week high of Rs 52.19, hit on June 4, 2024. Meanwhile, it has surged multifold, 271 per cent, from its 52-week low of Rs 13.28, hit on June 23, 2023.
On June 8, Marc Desaedeleer, an Independent Director at Suzlon, tendered his resignation. In his resignation letter, he cited instances where the corporate governance standards practiced by the company did not align with his expectations. Specifically, he noted situations where communications lacked the level of openness and transparency he anticipated.
However, Suzlon Energy’s CEO clarified that the concerns raised were primarily process-oriented and of a soft nature, which would be addressed in due course. The Suzlon management emphasised that the suggestions put forth by Desaedeleer did not pertain to financial or operational irregularities or non-compliance with the law. Rather, they related to matters that did not meet Desaedeleer’s personal standards of expectations and desired speed of implementation.
Despite this, analysts have largely maintained a ‘Buy’ rating on the stock on strong financial turnaround, wind sector potential, and its recent order wins.
“With Suzlon turning around its financial position and the operational ramp-up expected in FY25, management is looking to address the needs of the business first and intends to implement such best-in-class suggestions in due course. We, hence, find no reason to stray away from our ‘BUY’ thesis on Suzlon driven by the upturn in the wind sector and financial turnaround of the company,” noted Nuvama.
Suzlon Energy is capable of maintaining its leadership in WTG/turnkey EPC execution leading to 21 per cent OB and 61 per cent PAT CAGR over FY24–27E, the brokerage had said in an earlier report. The company is now well placed to capture its previous highs and sustain leadership, it had stated, adding that it expects Suzlon Energy to maintain a market share of around 30 percent and show a strong pickup in order intake and execution.
Morgan Stanley also recently initiated coverage on Suzlon with an ‘Overweight’ rating, citing it as a significant beneficiary of India’s energy shift towards greener sources. Positioned well to capitalise on this transition, Suzlon could potentially secure wind orders totaling approximately 32 GW or $31 billion over the next five years. According to the brokerage, earnings are expected to soar with a 57 per cent Compound Annual Growth Rate (CAGR) from FY24 to FY27.
Morgan Stanley noted that Suzlon 2.0 is well-positioned to benefit from India’s energy transition. The company has become much stronger after deleveraging and leaner by reducing fixed operating costs. Suzlon achieved debt-free status by raising funds through various methods, including a QIP and a rights issue. By the end of the March quarter, the company had a net cash balance of Rs 1,100 crore.
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